All Forum Posts by: Mark B.

Just to add my 2 cents.  I get a lot of push back when i mention real estate to career minded people.  It used to piss me off quite a bit when I brought it up, and I get things like "real estate is too risky, you'll never make money", "just wait till someone trashes your place", "you should up your 401k amount instead", and "oh so youre a slumlord now?".  

I've recently started to relax a bit.  Everyone has their own views on money, and although I would love for them to join my school of thought and at least explore ways for their money to make money, its not my place.  Instead, i've just started talking to more people who are like minded. 

And when people do think like your masseuse did that money is evil, i kind of just smile and nod, and then walk away. No sense getting stressed. If they want to work till their in their 60's, by all means! I know a few people who love their jobs and are quite content working 

Will be busy that night but will attend follow up meetings!

Name of bank please!

this was physically painful to read.

but congrats on the sale/deal! gl on the next!

Im hoping someone else comes in that's more experienced than me, but I don't see you accounting for what happens when an appliance breaks, or when you need to repaint the walls. 

Also, vacancy is considered between tenants. So you'll have one locked in for a year, but it might take you a few weeks to a  month after they leave before the new people move in. Between tenants you might need to "refresh" the place even by a thorough cleaning at the least. 

I definitely think you're on the right track but at least using my estimates, I think you'd need to at least do option 2 for it to make sense. 

Depending on your location, have you considered picking up a multi family? For 170k you should be able to get at least a duplex if not a triplex id  think. Might yield more net income 

I really don't know anything about Vacation rentals so I can't comment on option 3.  
As for options 1 and 2, are you really able to raise the rent 750/mo by going month to month? What kind of property is this?

For option 1... 300 HOA + 116 taxes + 100 insurance = 516/mo expenses. Do you have to pay for water/sewer/trash? Do the HOA fees include maintenance and Capital expenditures? Do you factor vacancy into that 1650 /mo income? I'm estimating closer to 1016/mo in expenses (if you manage) leaving you with 7600/year net. Which is only a 4% cash on cash return. I think you would be better off putting the money in a fund.

Option 2- IF you could realy get 2400/mo... same 300 HOA + 116 taxes + 100 insurance + 50 internet + 75 electric + 350 mgmt (your numbers) = 991/mo expenses. And again I'd have to ask about the maintenance/capex/vacancy. Assuming those expenses, 1581 expenses ish im guessing. Leaving you with 819/mo or 9828/year net. Which is 5.6% cash on cash return. Still think youre better off putting the money in a fund.

These are also just my rough numbers, but at least if it were me, I'd pass on this property and keep looking.  Unless of course someone else can chime in on option 3 being viable

@Luke Terry I listened to the Podcast awhile ago and I don't remember his full argument, but at least to your numbers, I think youre missing the investment part in your calc. 

You'd only have about 18k in paydown after 5 years.  So that would be 36k in rent savings + 18k in debt paydown + the original 60k in down payment.  So 78k equity + 36k in rent savings.

If you were to take that 70k and invest lets say into 3 100k properties with 20k down each that rent for 1k netting 200$/mo and for the sake of the argument you put that money directly towards your rent...  After 5 years, you have 36k in rent savings + the same 18k debt paydown + the same 60k (20*3) in equity.  So 78k equity + 36k in rent savings. Which is the same.

Or .... if you took that 70k  and invested it in a 8% fund (very doable at least with today's growth)... after 5 years, you'd have earned around 32k in interest and be up to 102k.  Take 36k off the top to cover your excess rent, and you still have your 70k left.  

I think as far the numbers are concerned (assuming the right investments), it becomes somewhat of a wash, although my numbers could be very wrong.  Just wanted to give it a whack.

Of course, I know I'd rather buy but that's because i want to build a large garage :D

It sounds like youre finding pretty amazing single family homes. In your case, I think SFH's are fine and multi's are not worth it.

In other markets, its the flip.  You could be finding lets say duplex for 30k a unit and single families for 45-50k with similar rents per unit making the duplexes much better.

Alina - Im going to be using the manager I currently use, she charges 50 a unit at the moment. 

As for the banks and insurance companies, will do! 

Do you have any companies you've worked with that you like?

Okay thanks.  This is essentially turnkey as both units are rented and the only work is just the downstairs updating