All Forum Posts by: Michael R.

Well I know they exist, but they seem to be the exception and are generally charging much higher premiums.  I also want to utilize a company that will be reasonable to work with in the event of a claim.

How are those of you, with numerous properties, shopping insurance on properties purchased strictly as investments and non owner-occupied?  I've had a few insurance companies tell me that they will not provide a landlord policy on a duplex I'm about to close on unless they are also covering my primary residence.  I understand their point of view from a liability perspective, but I'm curious to know if others have faced this obstacle as it could drive the insurance cost up higher than forecast in your analysis.

I'm not sure why you're using 5% for Vac, Maint., and CapEx, but with PM they all come out to 26% so that's fine. This is what I'm getting with my calculator and assuming you're still going to have some utilities throughout the year:

You're looking at $90 per door which wouldn't be in line with my minimum cash flow.  This doesn't mean I wouldn't offer on the property at the price that would facilitate the cash flow I deem acceptable, but I doubt they would accept such a low offer.

Hey @Octavius Henderson welcome to BP and the world of RE investing!  You have a fantastic resource right here, at your fingertips, to help you along the way.  That being said there are a number of things you will want to get in order before you offer on your first property.  Obtaining financing can be a major challenge without building up your credit.  This will help you get better interest rates, obtain funding more easily, etc.  Once you have your credit straightened out it's important to save a substantial amount of money not only for down payment, but also reserves to help weather the ups and downs should you experience them early on.  You often hear about investing with "no/low money down", but that doesn't mean you shouldn't have a nice chunk of change to cover yourself before you make that first offer.  

While you work on those two things I encourage you to soak up as much information as you can here.  Start with learning how to analyze a deal and, once you've learned, try to analyze a handful of properties each day so you can identify a good deal when it pops up in your market.  Read about being a landlord, read about rental property taxation, read as much as you possibly can and you'll be well on your way, my man!

@Chris V.  It's funny because I watch the webinars and most people want to invest in RE in order to quit their jobs.  I'm of the few, it seems, who will probably continue working once I've reached "critical mass" since I love what I do so much.  

Your input here is golden and in all of the posts I've read I never heard that they would consider the income of the property you're buying after a certain point.  That's a game-changer and was the gap in my explanation to my girlfriend, friends, and family when I explain how you can continue to acquire loans, going forward.  It's also more justification for the frugality I keep preaching.  Thank you so much for your input, I'll keep the 4K and deploy it on the next one. :)

The property is a duplex with tenants in each so this is really just a matter of "will these savings make a difference over the long haul?"  I think hanging onto the extra cash makes the most sense.  Thanks for your input, guys!  I'll pass on the discount points.

@Jorge Magana I found this pretty awesome calculator on mtgprofessor that spit out the return for the low points/high interest and high points/low interest options I received from the lender.  Pretty awesome resource.  It looks like the break even point is just shy of 4 years out.  Are there any other considerations that this isn't taking into account?    

This is for an investment property and the interest rate will be 4.125%.  I can pay a couple points less and get a 4.5% rate.  Does it generally pay off from a cash flow perspective to pay down the rate?

I would suggest house hacking first while soaking up as much information as possible.  It forces you to learn each facet of RE step by step, through application.  Get in the habit of analyzing a handful of deals each day until you know what a great deal looks like.  The above suggestion is great where you pay one or two hundred out of pocket while you live there and making sure you can pull a decent (200 or so per door) cash flow once you move out is the perfect minimum to shoot for.   House hacking will give you a chance to hone your landlording skills and systems so you're ready to scale going forward.  You'll also have a close eye on the property since you'll be living there which, I can tell you from experience, is great training for dealing with tenants.  You can even do the Habitat for Humanity thing at the same time.   Rinse and repeat with confidence from there.  

How do you guys underwrite property taxes before making a purchase? There's always the possibility that they can go up a significant amount based on a number of factors that would really compromise cash flow. We closed on a home last June and added the taxes into our spreadsheet $300 higher than they were the previous year since they seem to go up by a little more than half of that each year and wanted to be conservative. This year there was a big adjustment in our area which caused a $1100 jump in our property taxes. Luckily we're house hacking and the homestead exemption will take care of some of this until we move into the next property, but I wish we would've made our offer taking this scenario into consideration.  Do you call the village and see if they plan on making one of these area-wide adjustments in the coming years?  I understand that this should generally get passed on to the tenant via annual rent raises, but there are other implications of doing so that could add insult to injury.  Especially if your local competition hasn't bumped up their rent pric in quite a while.  Any advice would be greatly appreciated.