All Forum Posts by: Mike Huang

I think one of the reasons for a low home ownership at the moment is because people are being very mobile right now. They don't know how long they're going to stay at a place so they don't want to go through with owning a home. 

Good time to be landlords haha

It's always best to get the actual numbers instead of guesstimating with the 50% rule. Because most of the time, your numbers will exceed 50%. You could look into playing around with the numbers you can control. For example, if you're open to the idea, you can skip out on the property management fees if you're comfortable with finding tenants yourself. That's 10% right there off your expenses. 

Also, you can think about what I call an ARV rent. You can increase the value of the house by upgrading the house and thus increasing the rent. This is usually done for flippers but I've seen some people do it quite well for buy and holds.

For that deal though, I don't think you took into account a Vacancy cost.

Just going to jump in here, what is a normal % to put in for repairs/maintenance as well as Cap/Ex?

So I'm going to rehash what my mentor has told me. There can be successful investments found in high crime areas. As a tenant, if you're aware and you're very close to a transportation point (I live in NYC so the subway is an example), then it's generally fine. And I have heard several accounts of people living just fine in areas mapped out as high crime. 

Look into the neighborhood. If it's not in the heart of where all the crime is (or even better, it's in a spot where it could possibly turn over and gentrify), then it may not be that big of a factor.

Is there anything else to take into consideration like a family? Otherwise this does seem pretty good.

So commercial lenders want to see that you have experience in running multi-family units. If you want to go into this, I would recommend finding a partner who has experience and is need of whatever service you can offer him or her.

Brandon Turner recently did a seminar based on apartment investing. I'm not sure if that is still up but check that out. There are also Podcasts 115 and 118 if you want to check that out. 

Two things I can tell you right off the top of my head is that:

1) The value of an apartment is based on how much profit it can bring to its owner(s), NOT based on comparable properties in the neighborhood. Take that into consideration what making an offer.

2) Downpayment will be usually be at least 25%. Having a full occupancy shouldn't make it difficult to get financing. But it might come back and bite you in the end if the previous owner did not screen correctly.

Best way to get rental rates is to ask the owner/property manager/realtor associated with whatever property you're looking at. There's a lot of factors that will play into what rent you can charge. Even if it's the same 3br 2ba when you're comparing two properties in the same neighborhood, you could still get different rental rates due to factors like condition and whatnot.

There have been a lot of times when I used an average rate only to find out the property rented for far lower than what I was expecting.

I was wondering, should I find a partner first so I know I have the financing/skillset/local expertise or should I find a deal first and then ask around to see who would want to partner up?

Got it, thank you all for your quick responses!

Hi everyone,

So I was wondering what you would do when you want to do a 1031 exchange but have a mortgage on your existing property.

Say you're selling a house worth 500k but there's still a remaining mortgage of 300k. 

When you sell it for the 1031 exchange, do you reinvest the 500k or the 200k net after mortgage? If the answer is the 500k, then how do you come up with the difference to reinvest?