All Forum Posts by: Matt Gehrls

Nice work. You came to the right place. Basically everything Paul said is great advice. The podcast will keep you busy and will teach you a lot. Even if it's not a subject you are interested in, I suggest still listening. Never know where you will pick up an important piece of information.

 Are you talking about the student ghetto, or Fratville? If you weren't a student at Western, is it west of campus or east of campus? Pro and cons to each. The student ghetto (east of campus) seems to get taken care of a little better, but crime is a bigger issue. Fratville (west of campus) gets torn apart by underclassmen. Pick your poison.

I'm excited to move back and start investing as well. Best of luck!

I hadn't thought of assuming an FHA loan. That's a fantastic strategy. I'm following this, in hopes that I can get an answer too.

Ralph

Ah, forgive me I got ROI and Cap rate mixed up. Showing how green I am.

That said, to me it makes sense to use ROI if you really trust the numbers. It is a better indicator of how your actual money is working for you. While your Cap rate may only be 8%, there could be deals where you have a better Cap rate but your ROI would be significantly lower. At the end of the day that's what we are trying to do? Turn what money we have into more money quickly. ROI indicates that better than Cap rate.

So hard money guy is doing a 30 year fixed at 6% with a bubble after 2 years, at which point you refinance? After you refinance, assuming interest rates remain the same as they are now, you will be making better cash flow. Course it could go the other way.

I don't know how much money you have, or how many deals you have going on. I think if I had this deal in front of me (I have not much money and no deal flow) and I trusted the numbers here, I would do it. It might not be the greatest deal in the world, but it is making you money, and (while it's a gamble) if interest rates stay low, the cash-flow will be better in 2 years. If interest rates go up passed 6% and house prices go down where you are, this could bite you, but prices would have to drop a bit for you to actually lose money here.

I'm sure you are aware that you shouldn't take advice from me. Based on my limited knowledge that's what I think and why I think it. If my knowledge is flawed let me know.

I'm sure you've done this math, and I have no experience. I'm here for practice analyzing so tell me if I messed something up. 

Your cap rate assuming no appreciation or depreciation for the first year is 41.1% including equity built. Meaning the building, assuming all your numbers are dead on, pays for the money you put in after 2 1/2 years. That sounds like something I would want to be a part of. It's a little less than a $100/door/month, and monthly rent is 1.25% of the purchase price. By all of those indicators the deal is pretty good.

If the seller is also an investor, I don't see it being too odd that they found the hard money lender. I don't have experience with hard money lenders, but if the seller wants to make the sale work why wouldn't they bring their own connections? I'm surprised that the hard money lender wants to be in it for 30 years. I wonder why.

Also, why is it structured this way? If the seller is taking a 2nd, that means the first is still a thing. Why not go subject to his existing financing? Is the terms of that loan worse than 6%? Is the hard money lender basically paying off his first mortgage?

I've put in for a few property manager jobs, I haven't heard back from anyone. How does one go about finding a day laborer job? I haven't seen any posted.

Wish my parents did that. I had a friend whose parents did something similar. She had a bunch of her high school friends rent the other rooms and they always had parties and tore that house apart even though she basically owned it. Sounds like your daughter will have incentive to keep it in one piece since her profit on the back end is dependant on it. Also, being in graduate school she is probably more responsible than these fresh undergraduates were.

I've been listening to the BP podcast and on multiple occasions the advice is given to find a job in the field like being a property inspector, working for a contractor/subcontractor, or for other investors. I've done the leasing agent thing, but that market is dead.

I've been searching the online job sites for jobs around Chicago and everything real estate related is either a scam or won't give me a second look because I have next to no experience. Any advice?

Update: I put the request in writing and delivered it to their office myself yesterday. Today, the maintenance guy has been here for 3 hours working diligently. Apparently, it needed a lot of work (like I didn't know that).

Thank you for all the help. Apparently just putting it in a professional letter made all the difference. They must have seen I wasn't going to be a passive, lazy tenant and assumed I knew something. 

New owner, and rents were undermarket before, but the place is in bad shape so it made sense. I'm not complaining about the rent in general. I agreed to pay the rent when I signed the lease.

Landlord pays water here because the building is old. I understand that can affect the pressure, but there are clearly other problems that could make our shower better. I don't need it to be the best shower ever. I've thought about doing it myself, but I don't want to put money into this place that I am leaving in 5 months. If I can do it myself and bill them for it after putting a request in writing like someone said, I could do that. I just don't understand why its so hard to get it done. They basically own my neighborhood in Chicago so they should have the resources.