All Forum Posts by: Tom Wilhelm

The Red Sox pitching staff looks pretty ridiculous this year. Hopefully that and some much much more solid defense will be enough to top the Evil Empire.

You should find a local realtor who knows how to work with investors and is interested in your goals and how they can help you achieve them.

This has been a fascinating cautionary tale. Thanks for taking us through it, Rob!

Pete,

My goals are long-term and straightforward. I'd like to own 4 to 6 income producing properties free and clear by the time I retire, in ~25 years.

This is in addition to a primary residence, which I also wish to acquire, though in an area quite different from what creates positive cash flow, as discussed above.

So my short term options seem to be:

1. Continue to rent, while focusing on getting into the landlord business in a less expensive area.

2. Focus on finding a primary residence (i.e. condo) in the area I am willing to live, possibly integrated into a fix/flip/upgrade strategy.

Right now, I would lean toward 2, with an eye toward capital accumulation, before turning to 1. Unless of course 2 just works out as a much better strategy...

Thanks, everyone. I appreciate the warm welcome!

(and yes, I am very much a Red Sox fan...)

Does the tax deduction for primary residence cover all or 1/2 of the mortgage in this case? Would it still be worth it to start this way anyway, even if the next deal was a flip, conversion, or other shorter term deal?

While upside is high in the area I'm interested in and there is plenty of reason to expect appreciation, assuming appreciation is what got a lot of people into trouble while I was on the sidelines renting.

I'd like to think I'm smart enough not to make the same mistake now that my chance is finally coming.

Let me explain the thought process...

I've spent the better part of 6 months pouring over the market in an area near my current residence. The typical family 4b/2ba ranges from ~$400 to $550k AVR in the area I've been researching.

2b/1ba rents in these multis fall mostly between $1100 and $1500

So let me walk myself through the math and someone can tell me where I've gone wrong:

Assume best case scenario:
$400k ARV
$0 repairs needed

People here seem to think that anything above 75% ARV is a non-starter. Well I've never seen a $300k multi anywhere near the area I'm talking about, but lets assume one exists...

So I'm in for $300k
$60k dp
$240k financed @ 30yr fixed
Payments = $1600/mth

$2400/mth rents
50% rule = $1200/mth

Cash flow = -$400/mth on $60000 invested

Now remember, this is best case scenario that I can even imagine for this area. This isn't conservative at all.

By the 2% rule, I should never pay more than $120k for a house that rents for this little. Yet these places regularly sell for 4x that amount. I understand that the 2% rule doesn't really hold true for the Northeast, but still... this best case scenario isn't even close to any deal i've seen discussed on BP.

Am I simply barking up the wrong neighborhood/town/region if I want to be landlord? Should I consider a completely different strategy for this area? Should I consider a completely different area altogether?

What am I missing?

Greetings all!

A little background:

I've been researching real estate principles and gaining knowledge of the area I'm interested in for 6 months or so. Still accumulating capital for my first deal, but I'm highly motivated and socking it away.

I'm primarily interested in buy/hold opportunities in the Somerville/Medford area, but have considered expanding options or area due to the largely out of whack prices relative to rents around here.

Consider me a sponge, looking for ideas, advice, mentorship, and (hopefully in the very near future) DEALS.

Having lurked for a few weeks now, I'm really looking forward to utilizing BP more fully.

Thanks!