All Forum Posts by: Michael Rossi

SoBeRei,

I would strongly suggest consulting a tax professional. I am not an accountant, nor do I play one on the internet.

NOI (net operating income) is determined by subtracting the operating expenses from the gross rents. Operating expenses include taxes, insurance, paid management, maintenance, office supplies, advertising, legal fees, court costs, fuel for your vehicle (or mileage), some vehicle expenses, some education expenses (possibly depending on your business situation), etc.

You will also be able to deduct the depreciation (on the building only) over 27.5 years as you stated.

Again, you should consult a tax professional.

Good Luck,

ianternet,

You really haven't provided any pertinent information in your post. Real estate investing is ALL about the numbers.

What are you planning to do with the property? Flip? Rent?

What is the market value?

Are any repairs needed? How much?

What are the gross rents?

How much are you borrowing and what are your mortgage payments (P & I)?

If a rental, who will do the management and maintenance?

How do you plan to make money with this property?

Answering these questions would be a good start.

mfalcon,

You don't need coaching, you need to understand the facts. First, decide on a strategy. Are you going to buy and hold or buy and sell. Then, study and research until you understand how it works. Join your local REIA and become friends with the SUCCESSFUL INVESTORS. Learn your market so that you KNOW property values in your target investment area. Go look at 50 or 100 houses (inside and out). Develop a basic business plan to take you from where you are now to where you want to be in the next 5 years. Learn about basic business principles. The number one killer of all new businesses is the lack of cash flow. You should become an expert on that subject.

If you are willing to work very hard, all of this could be done in 2-4 weeks. REI is hard work. Your results will be directly proportional to the work that you put in.

Good Luck,

Also, keep in mind that you don't have $1,000,000. You're favorite uncle is going to be taking something approaching half. If you buy a really nice Mercedes, spend a bunch on your wife, and take a wild trip to Vegas, you won't have to worry about your money because it will almost all be gone.

Good Luck,

So, at a price of $360,000 and a 20% downpayment, you would be borrowing $288.000. With a 30 year term and 6% interest, that would give you a mortgage of $1725. With a NOI of $1,545, that leaves you a negative cash flow of $188 per month. So, you would be putting down $72,000 for an "investment" that would lose $188 per month.

If you live in California and are going to buy property somewhere else in the United States, why would you buy a loser all the way across the country? Surely, you could find bad deals right there in California.

drelly,

Finding great deals is not easy. Nothing about real estate investing is easy. The vast majority of new investors fail in a short period of time because they pay too much for their property and lose money.

Having said all that, there is good money to be made in real estate. First, you need to get some education. Read the posts on this forum, read books and articles, join your local REIA, etc. Then, learn your market by looking at 50 or 100 houses (inside and out) in your investment area. You need to become an expert in your area. Then, and only then, think about buying something.

To answer your question, REOs are normally listed with Realtors. Contact a hungry realtor and have her help you. Give her your purchase criteria and be ready to buy when she finds one that meets your criteria. You should get your financing lined up first.

Hard work and persistence are traits that mark successful investors.

Good Luck,

Mike

You can get a wireless alarm system at Radio shack, Lowe's, etc for about $150. They are easy to set-up and move.

First, you need to decide whether you are going to accept pets or not. I do accept pets, but I charge additional monthly rent and an additional deposit. In my experience, people are MUCH harder on rental properties than animals.

If you decide that you do not want to accept pets and the lease says "no pets", then you should enforce the lease. You need to KNOW what the law is in Missouri. Here in Ohio, if I wanted to make a tenant comply with the lease, I would give them a 30-day notice. This requires them to either correct the problem (get rid of the tenant) or vacate the premises within a month. If they don't comply and don't move, then you would file the eviction in court. That is Ohio - you need to KNOW how it works in Missouri. Screwing up the paperwork will result in a failed eviction and extra expenses.

Good Luck,

denny,

I have several dozen rentals and I can tell you for certain that I wouldn't touch this with a 10 foot pole. It is a money pit!

If you do some research, you'll find that throughout the United States operating expenses run 45% to 50% of gross rents. That 45% to 50% includes paid management, paid maintenance, and capital expenses.

So, let's take a look at the numbers on this "deal".

Gross monthly rents are $3,085 ($37,020/12).

To be on the conservative side, let's assume operating expenses at 50% of gross rents. Therefore, operating expenses would be about $1,540 per month.

That leaves $1,545 per month with which to pay the mortgage and for any profit. In this case, you said the monthly debt payment is $1,918 for a monthly negative cash flow of $368. So, you would be putting down $80,000 of your own money for the privilege of losing $368 per month.

Personally, I would not do that.

With all due respect - that's crazy! Of course you should consider the risk. Moreover, if you know what you're doing there should be almost NO risk. I will be making an offer on a property in about an hour. The property is worth $45K (I KNOW the values in my area) and I will offer $18,000. The seller is desperate. I know that I can rent the property for $500 per month. The risk in this deal is almost non-existent.

I'm running a business, not gambling. When you do a deal, there should be VERY LITTLE RISK. Otherwise, it might be smarter to just buy lottery tickets.

Good Luck,