All Forum Posts by: Tim Yang

I recently quit my corporate job and am selling on ebay full time. It isn't much income yet until I start growing, but should I wait until my income from ebay is more consistent and performing before investing? Or can I still invest with other people's money?

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Could you add me to your list [email protected],

thank you!

Tim

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I'm looking at this property at commerce city, colorado. The home is in like c-class neighborhood, not much good schools nearby, more industrial area.

Doing the math I figured with a 4 bd home I could rent out each room for about $500, $600 for the master bd, is $2100 gross rent minus the holding costs of utilities, mortgage, cap ex, etc, (1700) = $400 net cash flow (calculating if I didn't live in it, if I did I would be paying out of pocket $100/month to live with 3 other people).

Renting the entire home to just one family would probably just make me break even or possibly lose money, which wouldn't be worth the investment of my money and time. I don't think the home would appreciate much in this area but I guess you never know.

I'm concerned about renting by the room, particularly about vacancy and dealing with troublesome tenants. I know it comes down to screening but if the home isn't in a favorable location, how hard would it be to market to decent tenants?

I mean when I visited the city and the area, I didn't feel like it was a warzone or anything, but you could tell just the house quality is just much different than other more remodeled homes and cities. The area and houses around just looks more run down and cheap. I'm assuming that there are just hard working blue collar workers living in the area that have cheap housing and maybe I should market towards that group?

I'm thinking worst case scenario, I don't rent it out to anyone, my holding costs go down to around $1200-$1300 if I don't save for any repairs/cap ex and utilties much lower, and then each tenant I put in would just make it much cheaper for me to live for free! And the best case scenario, I get decent tenants that all get along fine and pay rent on time and I net $400 a month! This is the goal, but of course we have to be conservative! Thoughts anyone?

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Originally posted by @Account Closed:

Originally posted by @Tim Yang:

Originally posted by @Account Closed:

Originally posted by @Tim Yang:

I am trying to implement the house hacking strategy here so there is this condominium.

Asking price $115,000

3 BR 2 Bath

1008 sq ft

Here are my expenses that I've accounted for when analyzing it with an FHA loan 3.0% interest fixed 30 yr, 3.5% down financing.

Vacancy 5% $82.50, Cap Ex 5% $82.50 (HOA would cover most exterior repairs), HOA $312, Property Taxes $31.42, Repair allowance $165, electricity $75, P&I $467.88, Heat $45,

Everything else is covered by HOAs like insurance, sewer/water,etc.

So total monthly expenses came out to be $1261.29.

I think for Aurora CO area, it's a bit cheaper rent in the area, but I think I'd be able to get at least $500 in rent per room. So if that is the case then my cash flow would be roughly $300.

What do you guys think? Is there anything I'm missing? Or what do you think I'd be able to charge for condominium rent? I generally see at least $500 for rent in aurora area. Is this a good enough deal for house hacking?

I don't like HOAs and I think the HOA fee of $312 is high. Plus, it is an unknown future expense. It can always go up. And HOAs are notorious for changing the rules down the road, as in they may decide that they won't allow any more rentals.

When you say house hack, do you mean you would live in it? Sorry, I don't read or listen to real estate guru stuff, so I don't know the current hip terms. If this means you plan on living in it and renting out the rooms, and it means you don't have to pay rent and other people are paying the mortgage, then it may still be a good deal.

But, I personally, don't like the idea of condos as investments. I bought one in Davis, CA, where there is always a huge demand for housing because of the university, and I sold it a year later because of the HOA. The HOA fees went up 23% in the first year because someone got a special assessment for garage doors on the open carports. Crazy.

I don't like unknown future costs or rules changing on me that I can't control, which are what HOAs bring to your investment. My advice is to keep looking for a property without a HOA, if at all possible.

And just in case you didn't know it - HOAs can actually foreclose on your condo if you end up in default on your HOA fees. They can increase your fees without limit, they can change the rules on you, and then they can take your property away. It's something to seriously consider.

Plus, it's harder to get buyer financing for a condo, so they're harder to sell.

Thanks for sharing your experience! I'll keep that in mind about HOA fees being an unknown factor. Any tips on how to find properties that don't have such high HOA fees or properties without one? I feel like it's hard enough to find a property that can cash flow as it is.

Tips on finding a magical place that you can afford and make you money? Nope. I don't believe in the guru stuff that says you can buy property and make money without first having to sacrifice and save up. Call me old fashioned. But I don't believe in get rich quick schemes. And unless you're born rich, it is not easy to get rich.

So, you'll have to sacrifice and save and wait until you can afford a property without a HOA. To find them, you just do your homework. You don't buy condos, and you read the MLS info regarding whether or not there are HOA fees.

You spend time learning, researching and watching your market, and saving, and wait to buy the right investment.

But, most newbies here don't want to have to do that. And they aren't likely to come back and tell you how they lost their shirts on bad investments.

So, learn, and save, and use common sense, which hopefully, you have. If something sounds too good to be true - it is.

And remember, that many REI gurus make a lot more money on their seminars and books and memberships, than they ever did on their "investments" - if they ever really had any in the first place. Really, who ever checks on these gurus? How do you know whether or not they ever actually bought a property?

Be your own guru. Do what makes sense in the real world. Slow but sure.

I'm not foreign to hard work and applying principles of success. But what I am curious is to what is possible. I understand there isn't a magic pill you can take to build six pack abs. I workout 5-6 days a week and I also shake my head when there are gurus or programs out there promising ridiculous things when I know the only true way to get results is putting in the work and having the correct info to work efficiently (technique/form,etc) to get the body you want.

Since I am new to investing and the market, I'm simply asking what is possible. What should be my expectation, because on biggerpockets there is a book called " how to buy properties low/no money down"which to me gives the impression that it is possible to invest without having a lot of money.

I understand there is no quick way to success but if there is the most efficient way or the way to leverage my time instead of money, I want to find out.

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Originally posted by @Account Closed:

Originally posted by @Tim Yang:

I am trying to implement the house hacking strategy here so there is this condominium.

Asking price $115,000

3 BR 2 Bath

1008 sq ft

Here are my expenses that I've accounted for when analyzing it with an FHA loan 3.0% interest fixed 30 yr, 3.5% down financing.

Vacancy 5% $82.50, Cap Ex 5% $82.50 (HOA would cover most exterior repairs), HOA $312, Property Taxes $31.42, Repair allowance $165, electricity $75, P&I $467.88, Heat $45,

Everything else is covered by HOAs like insurance, sewer/water,etc.

So total monthly expenses came out to be $1261.29.

I think for Aurora CO area, it's a bit cheaper rent in the area, but I think I'd be able to get at least $500 in rent per room. So if that is the case then my cash flow would be roughly $300.

Plus, it's harder to get buyer financing for a condo, so they're harder to sell.

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Originally posted by @Brent Coombs:

@Tim Yang, so what you really mean is: you'd only be up for "roughly $300" per month, instead of $500 if you were just renting? ie. you would only be grossing $1,000/m while living in the 3rd B/R?

Also, might there be HOA rules forbidding sub-letting there?

In principle, "house hacking" normally infers that you're buying a multi-plex, not an SFR. In the case of FHA-approved low deposit loans, it can be up to 4-plex in size. Cheers...

It's kind of hard to buy a multi-plex in this market. They are way out of my range. I also don't understand how or why there would be HOA rules forbidding renting out other rooms? Ideally if I could find a multi-plex I'd be looking solely for them since it's much more comfortable having my own place and not sharing common areas. But I've got to start somewhere!

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I am trying to implement the house hacking strategy here so there is this condominium.

Asking price $115,000

3 BR 2 Bath

1008 sq ft

Here are my expenses that I've accounted for when analyzing it with an FHA loan 3.0% interest fixed 30 yr, 3.5% down financing.

Vacancy 5% $82.50, Cap Ex 5% $82.50 (HOA would cover most exterior repairs), HOA $312, Property Taxes $31.42, Repair allowance $165, electricity $75, P&I $467.88, Heat $45,

Everything else is covered by HOAs like insurance, sewer/water,etc.

So total monthly expenses came out to be $1261.29.

I think for Aurora CO area, it's a bit cheaper rent in the area, but I think I'd be able to get at least $500 in rent per room. So if that is the case then my cash flow would be roughly $300.

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Ah, ok thanks!

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I am trying to implement the house hacking strategy here so there is this condominium.

Asking price $115,000

3 BR 2 Bath

1008 sq ft

Here are my expenses that I've accounted for when analyzing it with an FHA loan 3.0% interest fixed 30 yr, 3.5% down financing.

Vacancy 5% $82.50, Cap Ex 5% $82.50 (HOA would cover most exterior repairs), HOA $312, Property Taxes $31.42, Repair allowance $165, electricity $75, P&I $467.88, Heat $45,

Everything else is covered by HOAs like insurance, sewer/water,etc.

So total monthly expenses came out to be $1261.29.

I think for Aurora CO area, it's a bit cheaper rent in the area, but I think I'd be able to get at least $500 in rent per room. So if that is the case then my cash flow would be roughly $300.

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Originally posted by @Brent Coombs:

@Tim Yang, you NEED to allow for say a month per year vacancy if you intend to be REALISTIC! If you don't get any vacancy: bonus! So, your projected gross earnings per year, on average, CANNOT be the same as gross rent. But rather than decrease that figure, sensible investors express that decrease in expected cash flow as an increased expense. Comes out the same! See?...

There we go! A legitimate answer. *claps You win a million dollars for being the 1st to answer the real question!

This is a real answer BP community, not the sorry excuse of answers and hostility towards someone who just wants to learn and understand what is actually going on in the calculations instead of mindlessly copying.

I can now understand where Bob Bowling was going with his PGI explanation but clearly I didn't have the right understanding of it, so would've been helpful if he clarified such terms when it's apparent that I'm unfamiliar with the subject.

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All Forum Posts by: Tim Yang

Tim Yang has started 6 posts and replied 22 times.

Post: Looking to Help Beginners ! (Investing , Financing, Managing)

Post: Seller financing multi family with little to no money down

Post: Renting by the room SFH (Experiences and tips?)

Post: Need help analyzing this deal!

Post: Need help analyzing this deal!

Post: Need help analyzing this deal!

Post: Need help analyzing this deal!

Post: Need help analyzing this deal!

Post: Need help analyzing this deal!

Post: Why is Vacancy considered a cost?