All Forum Posts by: Matthew Maggy

One more thing: if you house hack, pay rent to yourselves to simulate actual cash flow.

Advice from another first time house hacker (also married) who is in the process of closing on more rentals:

A) Agreed with other poster about not counting on appreciation. Equity happens, but the only appreciation you should be counting on is the forced equity you put in; and even them err conservative.

B) I would definitely make sure that you could actually get $1400. I always look at my worst case scenario, and invest based on that. When we went to house hack I used a $600/month rent even though I thought $650 would be viable and either way I was still profiting, just not as much.

C) At some point, you are not going to want to manage this property. Passive income means you don't deal with tenants, repairs, etc. A property manager would cost you $280/month (10% of $2800/month rent). With your rental calcs, you wouldn't be making money with a manager. I didn't do do this on my house hack and I wish I did, because I do that on all my rental calcs now- even if you plan on managing for a couple of years. I would still cash flow with a manager, but it's not as much as I would like.

That being said, we don't live in a super desirable neighborhood (re: working class) in a much smaller Metro than Atlanta, so we are only about an 8 minute Uber ride from downtown.

D) It might be worth the premium if you absolutely love and want to live in that neighborhood, but if you want to buy a new house after 2 years, and you don't know if you can get that $1400, I'd walk.

E) Another option is to estimate the minimum to make it rentable, and if the numbers work, you can always go for a rehab loan of some kind in a couple of years when you know for sure what rents/prices of houses are. Of course, this adds to your transaction costs. I would talk to your finance professional about this.

Final Philosophical Advice: Sometimes when you're close to a deal its easy to get caught up in trying to make it happen and make the numbers work to justify the purchase, rather than going by the numbers you have as your criteria. (As i almost just did on a deal!) I always look at the worst case scenario and if I'm still meeting my numbers (10% Cash-on-cash) almost, I would go for it. If you go by the worst case scenario and the worst happens, you're still in profit. That's not the case with your deal. 

Personal Verdict: I would walk away.

Welcome! It's a great business to get into I hear. I'm a buy and hold investor and am somewhat hands off, but I'd love to look at your future cash deals.

Welcome to BP! What's your goal? Are you looking to BRRR strategy? Flips? Rentals? Wholesale?

 Have you used them before?

Honestly: no. I used one realtor for my first Richmond transaction who was alright, but not the best for investors. I'm currently using another realtor highly referred to me for these properties who is good so far, but we have just submitted offers, I don't feel comfortable putting out there someone who I haven't tested.   Check out the Richmond REAI.

I'm looking for referrals for foundation repair in Richmond, VA. Anyone know someone that they trust and is a good value (ie: best work for the price)?

We are looking at a couple of properties to purchase as rentals. One is a frame house with a 7' Concrete Unit foundation with a walk in crawl space that is cracked on the rear right corner and slopes. I have an idea of what the foundation repair will cost, but before we close, I want an exact estimate to go off of in case my estimate is wrong to readjust my offer.

The other one that we offered on is brick and has some separation of the brick above the windows. This may be foundational. As such, also looking for a good contractor.

My Contractor mentioned Ram Jack, but I read a bad Yelp review of them and that they are priced pretty far above the competition.

Referrals?

I don't know which local bank to use as I am still trying to get into that, but it's my understanding that eventually when your Fannie and Freddie'd out and have to start looking for portfolio loans that if you have an established relationship with a local bank in the form of regular checking/savings, they'll be more likely to make those loans to you. Park-Sterling just bought First Capital, but my boss uses First Capital for investments.

Welcome! What's your goal with this? What's you "freedom number"?

After talking to my accountant I've decided to just sell straight up. Thank you all for the input.