All Forum Posts by: Michael Lauther

@Sabrina Brown based on what I have read so far you purchased these properties for approximately $215,000  and have had repairs over the last five years of $20,000  but have had 9 months of vacancy (I gather vacancy was intentional while trying to sell.)  you have  invested little or none of your own money and have netted $1000 a month for 50 months .

$50K less $20k in repairs is still a decent return since you had not cash of your own invested. Am I missing something?

Yes you overpaid for the property but I am only guessing that if you have a 15 year 6% mortgage you will own the property outright in another 10 years while continuing to reap a positive cash flow.

Your solution is to find competent management because turnover, vacancy and repair will eat up that $1000 cash flow quickly.

There are many blogs about investment property and the 2% 50% rule and your property  would fall short but depending on your goals it can still work to your advantage.

Selling and moving on of course is your other option and I don't know your market well enough to evaluate this but I do know you spent 9 months spinning your wheels trying to sell your property at 25% below what you perceive as its value. Apparently you have been mislead or your property would have been sold.

I am a buy and hold investor. I invest cash to generate income. The "market value" of a property is less important than its cash flow. I do not use leverage but in your case leverage is serving you well. If you stay the course  and my assumptions are correct you will have built future income for yourself with little or no cash outlay .

This is how I view your situation. I would not sell but that's just me. If the post is to discusses the merits of Turn Key investments. I am happy to have that conversation.

I invest out of state and have put together my own portfolio.  I did not go the turn key route .  You could have done better but all things considered you could have done  much worse.

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@Sabrina Brown I have been checking in on your post and see lots of talk about LTV, and Turn Key properties, but very little analysis of the investment worth of your particular property.

I briefly looked at the zip codes you posted and see that at least one of your houses are in an area with a price point of between $30000 and $60,000 . In my experience these properties are in neighborhoods that have over 50% non owner occupancy and often have an abundance of foreclosures and vacant property. Investors in these areas are looking for a price point that will cash flow immediately and look for a 1 1/2 to 2% rent ration to purchase price. This is known as the 2% rule of thumb. for instance if you had a gross rental income of $800 monthly a purchase price of $40,000 would be a starting point for an investor to consider the property. If we estimate expenses such as taxes , insurance, management and repairs at 50% of rental income or $4800 that would generate a cash flow of $4800 a year from a $40k investment.

This is how many investors look at these type of properties. How do yours stack up using this type of analysis?

@Eleonora Grynivetskaya If your father only qualifies for a $200,000 mortgage and you live IN NY city, that will mean you will need to invest out of state or at least upstate . Being a new investor, and having to look out of state or long distance into markets that you don't have time to get to know is a recipe for disaster. Adding leverage to the equation makes it even worse. If you plan to  take the 200k as an equity loan as a down payment on a NY property you are inviting a bigger disaster. Please learn more before you squander your fathers money.

@Sabrina Brown It appears that you may have overpaid for these properties or at best paid what an investor might pay. How do the numbers stack up as an investment? what are the gross rents?. What net return can an investor look for from your package?

I am a buy and hold investor in Dayton OH and find that the only market for my property there are other investors who of course will not pay retail. For now my best option is to hold and recoup as much as I can of my cash investment. Memphis is a similar market from what I have read. Investors I know are looking for at least a 12% Cash on cash return after PITI , management and maintenance. The expected return will vary depending on the characteristics of the neighborhood. A poorer demographic and older homes require a larger return to offset the larger risks.

@Dustin Fisher if the property in Dayton is vacant you can be reasonable assured that the electric, and plumbing as well as the HVAC has been removed and rehab will be in excess of 25K and unless you have contacts in the area or can go there and supervise the rehab you can look forward to many sleepless nights/

Start by going to the Dayton Ohio auditors page and look up the property. it will give you information you need to start looking at.

I have 5 properties in Dayton all in the east side of the city zip code 45403. You can buy property all day in Dayton for $5K to $10K that are in need of repair. Don't forget about the past due water and sewer. that can run you thousands as well.

feel free to contact me if you need to talk.

@Darrin Carey

 Hope your meet up goes well

I am back in Florida but hope to catch you all next time.

thanks for the help while I was in Dayton. Your HVAC contractor did an outstanding job for us.

@NA Jones  I did not read whether or not you paid any money up front and not withstanding the stipulations in your contract, in my experience,  once calls are not returned and continued no shows occur it never ends well.

@conner 

@Conner Smallwood

Welcome to BP 

Dayton is an excellent buy and hold market and one of the

most affordable places to live and invest.

You will avoid many mistakes if you research this site .

@Zach Mitchell

 I own 5 low rent single family properties in Dayton Ohio . on paper the returns look good.

In practice replacement of some systems will cause profit to vanish.

property purchased for 24k gets 530 month rent. from sec 8 between taxes 1100 ins 700 and estimated maintenance 600 should leave me a positive cash flow of 4900, bring in 2900 to replace furnace over and above scheduled maintenance and you begin to see the problem develop. The tenant is now behind I his share of the rent and if I have to evict him the cost begins to mount.

my point is that a good profit can disappear quickly. How old is the furnace, the roof the appliances. replacing these items will be necessary a some point. the question is how soon.

your seller may feel its time to get out before these expenses materialize.