All Forum Posts by: Mike Schena

oh my bad, you said house, I was thinking 4 unit building.

hi Sondra,  

Thanks for the invite,  I just got home from a trip, but maybe next time. 

Tim 45K sounds like it might be worth looking into, but you can probably guess what it needs by price alone. Probably either vacant with utilities turned off or really run down with a tough tennant situation. Pulling a turn around resurrection job may not be worth it especially on Dorothy Lane, a busy street. But you never know. Don't forget the time value of money if you go forward and say it takes you a year to get going, well the numbers vary depending on how you work the deal but you know you can get essentially the same building turn key on a better street with a 20% ROI. Well that year of rehabbing just cost you 6k -7K extra in lost earning.

Tim,  I've owned it about 14 months now and it has been going well, although 14 months isn't a long data set I think that is about how it will trend. Here are the rough numbers, don't have real numbers in front of me right now.  The big thing before you read on is that the vacancy and mx/repair percents are really dependant on the property/neighborhood.  A lot of the pros. on here are a lot more hawkish, but this is the best deal I could find at the time I was looking to buy.  These are the projected numbers, vacancy was less, mx/repairs more.

Purch: 125,000

Cash to close 30,000

GSI 21,600

Vacancy 4% (so far zero)

GOI 20,700

Tax -4,100 (actual)

Water/Trash -1000(actual)

Common Electric -150

Mx/repairs 7%- 1500 (needs to be more like 10%)

Insurance -600 (actual)

NO 13,350

prin/int -6,100

Pre tax annual return 7,250

 I self manage, I do all the maintenance myself.  I won't always do that but right now my portfolio is so small it's not like I'm too busy for it.  The biggest thing I did right was buying the right properties from the right landlords with good tennant situations going on.  3 years of landlording and my vacancy is zero.  Filled one vacancy so far but literally filled it the same day the prior tennants moved out.  Treat your tennants well, talk to them every month or two even if nothing is going on, give them a call and ask if anything needs to be fixed.  This is a customer service business.  Going forward, I will allocate more % towards maintenance and repairs.  Neither of my properties need major capex for 10-15 years, if it needs something big soon factor a higher percentage to cover that cost.

I own probably a very similar building in Kettering and my experience has been overwhelmingly positive.  Long term tennants, 0 vacancy,  rent is the same as your prospective building.  It could be a good buy if in a nice location.  The price on yours is about what the ones near mine that are in good condition and fully occupied sell for.  One just sold for 140, too much, but the guy who bought it has been doing this for a while so that puzzled me.

Some of the buildings further down the street from mine are a different story, closer to the main road, and gas paid by landlord.  I wouldn't want one of those. 

IMO the smartest thing a young couple can do is get a duplex or quad, and live in one of the units. re invest the extra cash into more rentals, hold off on the nice house until later. My wife and I had this sense that a nice home had to come first. Almost felt entitled to it. That was wrong, and it cost us big time. Remember, any money you have tied up in your primary residence is money that is not out there working for you making you more money. If you don't like living in a duplex, remember, it is only temporary until you are rich.

I have to say, I think Dayton is a tougher market than some for flips just because the scale of home values is lower. It's tough to find the right combo of purchase price and ARV with enough margin in between. Buyers here are also pretty skeptical on flips, first thing they will do is go online to county records and see what you paid for it. Now buy repair and rent you can get outstanding ROI. I have a friend who does quite well at that. I just buy turnkey duplex and quadplexes because I can get the ROI I want without doing any work.

I'm local to Dayton, and can give my opinion on most of the local neighborhoods.

@Darrin Carey I'd be interested in a Dayton meet up some time.

I'm also in Dayton, I'm more than happy to answer questions where I can.

@Darrin Carey this is the number for the vectren program. 855-785-3080. It comes and goes in different forms as they allocate funding to it. I did this on my primary residence as well. Keep your eyes open for mailers and emails from vectren and dp+l. Nothing better than someone else paying to improve your property.