All Forum Posts by: Account Closed

Thanks for the inputs. Uncle Sam always has his hand in the cookie jar, that's for sure.

@Christopher Brainard , these houses are on the west side of Youngstown.

 As for holding any value.... That depends if you believe in miracles. City population has been at about a 20% decline every ten years according to census. The house has lost about $10k in a 5yr span on the auditor site from recent appraisals, but that was also through the recession. Unfortunately this area doesn't rebound like other areas of the US.  I am definitely looking to expand my portfolio. Realistically I would like to have 10 more units in a 5 year goal and settle with about 30 units in 10yrs.

A little about my situation is that I live in a depressed area of the United States and have been investing in just buying rental properties and managing them myself. I only have 2 right now and so far have avoided all the nightmare scenarios experienced by some of you. My renters have been clean with the property and have been on time with their rents, even if they will be a day late they will text me. Because of the area I have a rule of about $25,000 that I will spend on a rental property, that is including any rehab work. Living in the rust belt there is more of a demand of people looking to rent so it is fairly easy to find people, but I am a little bit more thorough with background checks so I may sit on a property for a month and wait for decent prospects.

That being said my scenario (A): I just bought a house that was up to sell quick because the previous owner is elderly with dementia without  any kin. I spent $23,000 cash for it. The house is in very good condition, it was well maintained and is in a decent neighborhood. I can sell the house quick for $50,000 (appraised for $60,000 on auditors site) with maybe investing $2,000 so I would have a 100% return on investment, (there are 2 people I now that are interested in buying right now). I can just sell it quick with great profit and would be able to buy 2 more rental properties without financing @ about $25k. Reason I wouldn't ask for the appraisal price is the competition of other houses on that street are all around that price and I am just undercutting and selling to a friend to make a guaranteed quick profit.

scenario (B): Now the other option I was considering was keeping the house and renting it. I would get $650/mon for it and I would take a HELOC on it for $50,000 @ about 6.50% ARM and buy 2 more rental properties from the HELOC and say get approximately $550/mon per house. I would take the rent from the original rent and put it toward payment on the HELOC and still have about a $500/mon profit, expecting payment around $150/mon, give or take a few since my minimum payment would only have to be on the interest until the ARM is up but then I just refi anyways to keep the payment low. My concern is however that I am not sure I would be able to sit on the house while renting through the years and be able to make the same amount of equity on the house down the road as to what I am offered now. The city I am in has little chance for bouncing back and for property values to rise again. There is a better chance for the values to drop some more then remain stagnant.

My gut is telling me to go with scenario (B) for the long term rents, but I keep thinking about how easy it would be to make the quick flip now. Any advice or experiences like this encountered?

My sister has 22 properties in the Pitt area but does her own CC and asks for Proof of income (meet 3x rent). Odds are you will have a couple bad apples but learn from your mistakes and strengthen your standards. Make sure you follow the eviction process to the end so it will show up on further reports and you can still stick them with a bad report since they stuck you with not fulfilling their part of the lease agreement.

Your Lawyer is correct. Don't you have a trusting friend that could partner with you and has their license? They could turn you on to more properties that are potentially more profitable and with a partner you could potentially turn more houses. Better safe than sorry, follow your gut and don't get greedy.

How is her credit? How about your friend's, is he/she willing to help?

I tried to do the same thing and the only option to do that with a mortgage is if one of the houses is worth the amount you are looking for. Otherwise you have to take out a mortgage on each property separately. The cheaper way I was able to work around that was to get a HELOC out on my primary residence, the rate was lower than a mortgage and the bank i went with only required payment to cover the interest. Ex $80,000 HELOC @ 2.89% minimum payment would be $192.66/mon for 10yrs and after you will have 20yrs to pay the remaining balance. That helps in case you are in a situation where you have no tenants or some other fiscal emergency. Otherwise you can pay as much as you want towards it. In that sense you can keep doing the shuffle and take out a HELOC against your rentals and go around and around and around ;). Get the cash flow rolling before you go buck crazy though. Speaking from Ohio here.

Good points, Thanks for the input!

So I am a greenback when it comes to investing in real estate. My plan is to take out an equity loan against my personal residence for a low rate @ 30 year fixed rate. I was thinking of taking $40k and purchasing a duplex for $18k (generate $800/mon) and a single family residence for $15k (generate $500/mon) and use the residual cash for emergencies or repairs. Now I work Full-time as a firefighter and have a pension, house, and other personal belongings to protect from potential lawsuits. On a liability standpoint would liability insurance be enough to protect myself from losing my assets or should I put the houses under a LLC? If so, do I put them under 1 LLC or separate? Is there a better way someone else knows? What about if I get into more properties, is there a way to consolidate everything but separate the liabilities from each property? In Ohio here...