All Forum Posts by: Michael Lauther

@Gary Baker Thanks for the interesting post. I invest in single family properties in both NY and Ohio. Over the years I have found that the rules of thumb you refer to are primarily operable on lower end properties and do not account for paying a mortgage. Since i am a cash investor seeking immediate income I have focused on the Ohio market even though I am living in New York because this market can yield the results you speak of and better. Dayton OH for instance has a backlog of inventory and is an extreme buyers market. a $30,000 property will get $600 month rental income with taxes around $800 per year and insurance around $550. You can crunch the numbers and do the math yourself. In NY a property purchased for $700,000 does not cash flow well if at all with taxes close to $15,000 and insurance $4500 ( near the water) it will pay the mortgage with a rental income of $4500  and your tenant will build your equity so that after 25 years you own a valuable asset but doesnt do much for your current cash flow. They all have tax benefits that will positively effect your taxable income. It all comes down to your personal financial goals. Young investors with a long time horizon can do well to use leverage to build equity over time, Older investors like me who need to invest cash will need to go to lower priced homes to get better returns. I would however caution investors who seek these returns in lower priced homes. Even though I can find properties that will generate better returns they take considerably more management skill or they will turn bad very fast. Especially if you are an out of state investor. Also most of these properties are in areas that are being bought by other investors, so don't plan to flip these at a profit unless you buy distressed property, rehab them, get them rented and provide a turn key for investors who dont have the skill or the stomach for this type of investment.

@Karey 

@Karey Wright welcome to BP I am relatively new to Southern Florida and looking to invest in Margate since I am now living in Parkland  My experience is in Dayton Ohio and Hampton Bays NY. I still feel like a NY'er but enjoying the Florida experience. 

You will meet a lot of interesting people on this site. They have been instrumental in whatever success I have had investing in real estate  . 

@Lynn Bown thanks for your input.

@Lynn Bown Thanks for the heads up on cost. It helps .  Why the disparity on offer from cash to hard money?, Is it your estimate of cost of money?  

My rough estimates of rehab: new ac/heat (sosuthern FL),  new tile floor throutgt ,  replace roof , kitchen and bath . I have experience in Dayton OH and Hamptons NY but these numbers mean little in my new market which is in Southern Florida, the Margate area.  I don't need exact numbers but would like to understand approx costs.

These are my initial thoughts for a 900 sq ft 3 bedrooom 1 bath ranch. ARV is $135,000

clean out incl demo bath and kitchen  $2000 

shingle roof $6,000,    ( inc tare down old roof) 

complete ceramic tile floor throughout $9000 

new kitchen cabinets and counter (10x10) incude stove and refrig  6000

 bath 3 fixtures  inc tile walls  $3000

 AC/heat (has duct work intact) $6000

Paint interior $1700 

replace one window and install new sliding glass doors $1700

install base and crown molding throughout.  $2100

tot $37,500 

what would maximum offer be on this property.

Listed for $120K but is a total tare out now heat or ac, electric and plumbing was re done replace electric and plumbing appears to work. The most I would pay for this property would be $70K 

motivate seller, what would you offer. I am thinking $50,000. Property was purchased 2009 for 42K.

what are your thoughts.

can be reneted for 1400 month

would buy to flip but can rent easily if necessary.

@Darrin Carey once again I am going to miss the meeting, I will be in NY. Darrin thanks again for your help in the past looking forward to my next trip to Dayton. I will be looking for a property manager soon, just getting too busy to deal with being a landlord.

@Carl Corvin welcome to Biggerpockets . you will find a wealth of information and make some valuable friends here on BP. I invest in Dayton and live in Florida and the BP Community has been there for me every step of the way. Best of Luck to you, Investing from afar is difficult so  I can use all the friends I can get in the Dayton community.

@Chris Jurgens the values you see on line are not a realistic way to assess what the property is worth in Dayton.  At that price point you will find condition of the property is key and quality of tenant is critical. Were you able to verify length this tenant has been at this property, what is condition of mechanicals , how old is the roof . Taxes on this property if in Montgomery county would be aprox 1100 to 1400 a year, insurance would run 800 year  so you need to make sure there is not lots of deffered maintenance ,new heating system 3000 and new roof 6000, etc. you could eat up your cash flow quickly on these items. I assume you are local and will do maintenance and property management yourself?

@Cailyn

@Cailyn Aune I have invested in Dayton OH from NY and FL residence and would suggest that if you invest out of state you either find a reliable trusted partner or vet your property management company extensively.

 I am able to purchase and rehab properties for less money than turn key it does cost my time and attention.

The single biggest obstacle is being able to manage people long distance. You will have to manage either your own contractors or a property manager so you must vet them in any case.

I have an operation that does well on paper but devil is in the details. a bad tenant or an incompetent contractor can cost you a years profit in a flash.

If I had to do it over I would look to a local market or one where you have a trusted partner.

Be aware that once you commit to one of these types of investment the end strategy is limited. Selling to another investor will most likely not recoup your equity and most markets where rental income provides a good return are not great retail markets.

feel free to contact me if you would like any details. I have tried property managers, realtors and went on my own and am now once again going to look for a property manager because even managing 5 properties from a distance can become a constant source of stress.  

It is not worth it if you go to sleep at night thinking about your rentals and wake up in the morning anticipating the next problem.

Hi Travis, Good to see other Dayton Investors . I own 5 properties in Dayton currently live in Florida. I am always up for meeting new people. The Bigger Pockets community has helped me succeed and has been there through some difficult times. You will find valuable information and make some reliable contacts on this site.

Best of Luck to you