All Forum Posts by: Michinori Kaneko

Hi! I'm a potential new investor in Fort Wayne area. just wanted to say thanks to this helpful thread! I need to check out that FB group.

@Alshan San which area in texas? I was first looking at Austin Texas, but realized the rent to price was way too low (or price to rent was too high).   If I remember correctly, areas around San Antonio had some nice price to rent ratio.

@Matt K. I'm new to real estate investing, so i could be wrong, but average person can't afford $2000 a month rent.  people who can pay $2000 rent are people who are making well over $100K a year.  It's easier for someone making $100K to save $40K than "average" people making $50K a year to save anything (cost of necessity is same for everyone).  Also, a home that costs $85K with 6.5% interest and 3.5% down would still be about $500+ per month on mortgage (depends on your credit score), and on top of that you'd have to pay insurance for having equity less than 20%.  Also note that most of homes that are that cheap are not newest homes, so they can require capital expenditures. considering all of that, cost of rent relative to purchase is not that different for those people. For someone with good credit score that can put 20% down, monthly mortgage would be less than $400 a month.  Credit score and insurance makes a big difference in cashflow.  Let me know if i'm not thinking about this correctly.

There are pros and cons in my opinion:

Pros of many cheaper house:

1. easier to buy

2. higher rent to price

Cons of many cheaper houses:

1. less reliable tenant (damaging houses/less reliable income stream). Also some damage may not be able to covered by security deposit. 

2. more roofs = more capital expenditure. replacing fixtures like roofs/windows etc. costs the same size house, regardless of price of the house

3. less able to utilize leverage

4. higher turn around with these tenants. if you are using a property manager, this also means more replacement fee for the tenants.

One other thing to note is if you can find a home that can be rented for $2000 a month for $200K, why would anyone want to rent that from you? with 20% down and 5% interest, your only looking at monthly mortgage about $1000 (and if someone can pay $2000 in rent a month, they can come up with $40K of down payment easily). so your target for tenant is very limited to someone who has good income, but going to stay in the area for only few years and move out.

In the end, it comes down to what level of risk are you willing to take? Btw, if you are looking to buy multiple cheap house, have you looked into multi family home? this ways, at least con #2 will be somewhat (not completely) out of the equation, and possibly even #3.

Hi Stephen,

Not necessarily RE Market, but I find the data on Citi Data.com to be very useful.  I found this through another member on BP, so i thought i'd share the knowledge.  you can research by city on how much of the area is renting vs owning, average rent, average size of home, income, etc. very useful data in analyzing areas you are looking to invest.  Hope this helps!

Hi, Does anyone have recommendations on properties at Fort Wayne Indiana? Thank you.

@Chris Bodden Thank you, will check out the webinar. Right after i posted this, I saw the calculator and realized i was missing a few things (no wonder i was calcing a whopping 15% IRR on some properties I was looking at).

@Lane 

@Lane Kawaoka yes any inputs would be helpful.  I created a spread sheet with amortization schedule and all that jazz, but would be great to see how other people go about analyzing.  Thank you in advance.

Thank you Aaron! this is helpful!

Hi All,

I've had few acquaintances who has started turnkey investments recently and doing well, and looking into doing a turnkey investment myself.  I live in NY and all the properties here are very expensive, so I am looking out of state to invest.  I want to make sure that I perform enough due diligence before I jump into investing, and I need some help on how to perform the due diligence.  I read a post by Ali Boone somewhere on BP, and came across three factors to consider before jumping into investing, and those were Numbers, Macro Economic of the area, and the quality of PM.

I'm a numbers guy so I like to crunch numbers first to see what kind of cashflow I can generate and what my IRR looks like. All the properties shown on various websites look great with respect to price to rent ratio, but how can I get more detailed stats and perform due diligence on my part? Here are things I would like to incorporate into my cashflow analysis:

1. Rental Income - how do I know if the stated rental income is a reasonable one? How do I know how much the rental income should appreciate or decline on average over time?

2. Property Taxes

3. Home Insurance

4. Property Appreciation/depreciation - how much does real property increase or decrease in value on average in the area?

5. Vacancy Rate

6. Repairs/Maintenance - Is this covered by PM, or does the bill ultimately come to me? I'm new to this so I wasn't sure what's covered in "Property Management". If I'm the one ultimately liable, how much should I anticipate?

7. Insurance

These are the things I factor into my cashflow analysis, but I was wondering if there is a good reliable source to get these stats? If there are other factors I should consider, please let me know.

Aside from cashflow analysis, I'd like to know more about the area.  I suppose I can google these, but factors that I think are important are:

1. Local Population Increase

2. Local Job creation (in my mind, if job creation is greater than population increase, that's also a good thing?)

3. Local School District

4. Local Attractions/Tourism

5. Local Public Transportation.

Let me know if there are any other things I should be paying attention to.

Finally, in regards to quality of PM, is there a good site that has in-depth reviews of PMs? I've been looking at Yelp, but not sure if that's the best source to be checking the quality of PM.  

Thank you all for your help in advance!