All Forum Posts by: Matt Leber

@Alex Verdugo agree with this approach. I have been known to run my interest rate analysis at 6% bc I know I can get lower than that. Same goes for property tax and insurance. Icing on the cake when the numbers come in better than the worst case.

@Ursula Leake search Zillow or fbook marketplace for comparable properties for rent. Or check out your local section 8 office’s website to see if they have rent payment amounts by bedroom size and zip code. Sometimes I find I can get more listing with sec8. Otherwise, their payment standards are based on fair market rents for your area.

@Jamie Kammers yes! $100 cash flow for your first door worst case is not bad at all. You’ll get better with each deal, too.

@Jamie Kammers for me, it’s about running a worst case, most likely, and best case analysis. Figure out based on your market what the absolute lowest rent you are going to get. If you can live with the return in the worst scenario, you’re not going to hesitate going after the deal. You’re going to love the investment when you come closer to the most likely. Over time, you may be able to figure out ways to get it up to the best case cash flow.

@Nolan Payne I would just get on an HVAC contractor’s schedule as soon as possible after it dies. Get 3 quotes within the first couple days. In Florida, it’s actually not required to provide AC, only heat. I know, that sounds crazy for Florida. Check your local laws they may be similar. It’s going to be hot for the tenant for a little while, but as long as you don’t drag your feet and get on a contractors schedule within the first week after it going out, in my opinion, you are being plenty diligent. No hotel needed, no portable AC needed (unless you’re going the portable route permanently). Tell them to let the breeze in for a few days.

Age 27, 7 rental units consisting of 3 SFH in Brevard County FL and 2 Duplexes in Jacksonville FL. And planing to turn my primary home in Orlando into part of the portfolio one day.

@Ryan Komagome

Pros: Rent stability, downturn resistant, rent paid on time (sec 8 portion at least), incentive for tenant to adhere to lease or they’re kicked out of the program, sometimes you can get more than market rent, providing a nice and safe home to a family who really needs it.

Cons: Stigma of unmotivated tenants, govt paperwork, govt slow process, yearly inspections (could also be a pro), sometimes you get less than market rent.

@Lauren Finn does it cash flow with the mortgage PITI and the HELOC payments? I'm sure you could do OK with it but rent/price ratio doesn't quite check out for me (but I operate in a different market). With a small multifamily you will have higher capex, repairs, vacancy to set aside. I look for a min of 1.3-1.5% on small multifamilies just bc you have more issues crop up.

Are you able to float the property for awhile in the event you have a tenant unable to pay due to current state of the economy?

Are you self managing or using a PM? Personally, I always run numbers on small multis with at least a 10% PM factor just in case it one day becomes a headache to self manage. Don’t want the PM cost to break my cash flow and I don’t want to be trapped into self managing something I don’t want to.

All considerations to make.

@Romaldo Cruz I have been lenient on student and medical credit issues before as long as their criminal, income/employment, and rental history checks out OK. I find almost every renter applying to my properties has bad credit. Gotta rent if you can’t buy. I definitely encourage you to look at their whole picture.

@Teresa Sargeant welcome! If you are looking for buy and hold cash flow in Orlando, I would suggest keeping your search area wide enough to pull in some of the surrounding areas (Deltona, Sanford, Lake County, Brevard County, Osceola, even Polk etc). Harder to find cash flow in Orlando urban core, but not impossible. I see stuff on the market all the time that is .8% rent to purchase ratio. Close enough to 1%. If you buy right and forecast expenses correctly, you can do well with that type of property.