All Forum Posts by: Mike Andrews

I'm just starting my search for a property now.  It's unlikely that I'll be able to find something like that given my budget and the market here, but I'd definitely look for it. 

Hi all, I currently rent, but am considering buying a 2 bedroom condo/townhouse.

The main issue: I only plan to live in this property for 1-5 years (unknown, depends on career moves), so long term I'd like to be able to rent it out with at least break-even cashflow.

I think the main problem is though that in any desirable living area, it's pretty tough to do this.  I'm in the DC area where instead of the 1% rule, it's more like 0.5% rule (maybe $2400 rent on a $500k townhome)

Capex is the hardest for me to estimate, but I think I'd see something like this:

Costs

2bedroom townhome purchase:  $475-$500k
Taxes: 1% or so, so figure $5000/yr
HOA fee: $300ish
With a 30yr mortgage, that would put my monthly payment around $2686 @ 2.9%/30yr
+ property management = $2886
+ capex = ???

Equivalent rent I could get for the entire place:  $2500ish

Other notes:

Appreciation: always speculating here, but the DC area is growing fast so I don't think +3% on home value and rent is unreasonable

Given the above numbers, i'm losing at least $300 a month right out the gate, but will have some appreciation. I'm not sure how bad capex would be ($300/month?), and HOA always has a risk of increasing. Am I grossly underestimating capex? In a townhome/condo I would think it would be a bit less than in a SFH.

With capex, I figure $2886+$300-$2500 = ($686 lost cashflow) per month, or around -$8k cashflow per year.  At some point with rent growth that would reduce, but might take around 7 years to reach that point at 3% rent growth.

Is there anyway to better justify a purchase like this?  Plan would be to buy & hold/rent for the next 20-30 years.

Some thoughts that help it:
1.  Rent growth over time
2.  Appreciation over time
3.  Initial years would not have a property management fee while I lived there, so cashflow would be more like -$6k instead of -$8k
4.  Some tax benefits to offset it

Anything else that might help?

Hey guys,

My parents are looking to get out of their current home and downsize at retirement, and I was wondering what the multi-family inventory looks like in the chicago area or northwest indiana area?

The ideal situation would be something affordable in the west suburbs of chicago that's a duplex/triplex/quad type of situation.

We don't need positive cashflow since they would live in one of the units, but if the other tenants could get close to paying 50-100% of the mortgage that might be a good enough solution for them.

Any safe/liveable neighborhoods you'd start looking idea?

Preferred locations (which are probably in opposite ordering of ROI):

1. Near downers grove

2. Other western suburbs within 30min of downers grove, non-cook county to keep taxes low

3. Possibly open to northwest indiana if the investment is very good

Hi all,

I'm looking to sign a lease with another person in a 2 bedroom apartment.  The landlord, however, insists on a joint lease instead of individual leases.

Does anyone have any well written contracts/documents that I could sign separately with the other roommate?

The goal would be three-fold:

1.  While we are both in the residence, a clause that states we each owe 50% of the rent, since if the other roommate stops paying, the landlord could essentially go after me.  I know the landlord's lease would still give him rights regardless, so i'm not sure how this would be worded to state that the roommate would owe me the balance in this scenario.

2.  I'd like some kind of clause that states we can give each other 6 weeks of notice that the other could move out earlier than the 1 year lease ends.  Something along the lines of... once one tenant moves out, the other roommate is responsible for filling the room and/or paying the difference in balance to the person that leaves.

3. Ideally could have some kind of clause that any damage done by a specific roommate should apply only to that roommate (for similar reasons to above).

Anyone have good examples of these, or indicate the legality of such documents?  I assume the joint lease we sign can always be enforced regardless so i'm not sure how to word something like this to protect myself.

I'm in Virginia if that matters at all.

Didn't realize this was 9am and missed the meeting!  Definitely interested in meeting up - if anything is sooner than a month away please let me know!

I don't disagree that it will be challenging, but could you help point out any of the non-obvious challenges I'd have to deal with?  (I assume requiring property management and finding new tenants, dealing with multi-state taxes, etc)

Also, the new location would be SF, not vegas, so buying in the new location isn't even an option.

Hi all,

I live in the DC/NoVA area and have been here a long time, but am considering moving to the west coast at some time in the next 2 years.  (I've said this for years though, so no idea if I'll been decisive enough to make it happen).

Why am I considering buying anyway?

1. I'm really, really tired of renting

2. Speculation on Amazon HQ2 coming here.  While this is speculation, vegas odds seem quite good, and even if they don't come this area has been quite stable.

On my budget, I most likely could afford at most something like a 2 bedroom condo.   The plan would be to buy and hold, and if I move rent it out while I am away using a property management company.  While living in it I would rent out to 1 person to help pay the mortgage.

I know I have to run my own numbers, but I'm assuming that at best I'd be close to breakeven when accounting for mortgage + HOA fees ($400-$600 is common) + taxes vs. rental income.

Does it even make sense to aim for break-even for investments?

I'm new to RE and devouring material here, but wanted to get a placeholder discussion in here to mostly discuss if this makes sense at all.