All Forum Posts by: Nader Hachem

Hate to say it because i'm in the same position, but the right answer would be in a high yield savings account. HYS are probably around 1% if you're lucky. Since you need your money in ten months, think of inflation as your cost of safety. Inflation is what it's costing you to keep your money safe.

The worst thing that could happen would be to invest in index funds and they end up dropping more than inflation will be over those ten months period, which is a real likely possibility. ( not predicting the market will go down, but its very possible!

So i'm currently listening to the biggerpockets book on how to manage rental properties and one point that Brandon brings up is making sure you get references of old landlords for the person you're screening.

Maybe i haven't gotten this far yet and he mentions it later, but how do you know when a potential tenants references are actually their landlords? how are you able to verify they didn't just give you a family members phone number who will just put in the good word? 

Quote from @Drew Sygit:

You can buy a primary with FHA, preferrably 2-4 units, AND buy a rental with 15% down.

You'll have to live in the FHA property for 12 months, but if you buy wisely, you may be able to refinance after 6 months and get rid of MIP/PMI on both loans (20% equity required) and then repeat the process.

That's a good point. I am looking for a primary residence as well in the meantime for my fiance and myself. I'm not sure if we'll be up for house hacking at first (November of 2022). We'll be moving into a primary together in November so that'll be less than a year but it might be worth the discussion for a few months!

Quote from @Andrew Postell:

@Nader Hachem as mentioned above considering a "primary home" transaction would allow you to limit your out of pocket but what if that's not an option? To really limit your out of pocket we use the BRRRR method. That is the dominant technique in buying properties with little to no out of pocket costs. I hope this makes sense how I am describing it but feel free to ask anything else if you need. Thanks!

Hey Andrew. Thanks for that. I've heard about the BRRRR method. Don't you need up front costs for this then you'll refinance and cash out? I mean you could also use a hard money lender but i'd be hesitant to do that on my first deal. Expensive money

I'm looking to get my first property and what i plan on doing is purchasing a property with 15% down, rather than 20% (the lender i work with will allow for 15%). I'm aware this will have PMI for a while but its worth keeping the extra thousands to use on another property. I'll be investing in SFHs and for those of you familiar with the Metro Detroit area, i'll be looking to invest in the Redford area.

One of the things im looking for advice on is how to maximize my money. I can drop 30-35K on this one property downpayment at 15-20%, but is that the best way? i would say it's the most "comfortable" because that's what i know. Any advice on maximizing my money? I don't see 15-20% on every property being scalable as i want... i'm sure i'll find ways around that later, but i just want to focus on the first property for now.

Originally posted by @George P.:

Taxes on a Redford ranch would be around 4k per year

i have 15 there.👍

Sweet! How is your experience in Redford? That's where i think my first property is going to be. Been diving into market research there and it seems to fit my goals.

Originally posted by @Alexander Villamar:

Hi Nader, rather than entering the purchase or market price of the property, enter its SEV (State Equalized Value). That'll give you a better estimate of what your taxes will be once title transfer to you. 

Ahh okay, is that just 50% of the purchase price? Or how is that calculated? 

Hey all,

i've been looking to see how to estimate property taxes for running my numbers. I don't want to rely on the #s that show up in the listing, because i know that is if it's a primary residence.

For those located in Michigan, i've been using the following website https://treas-secure.state.mi.... . I've been trying to do it specifically for Redford, MI. which is a B-, B location. I was able to select options for county (Wayne), city (redford Township) and the different school districts. I'm looking to estimate taxes on a 125K house, so i put $125,000 into taxable value. 

Taxes ended up coming out to ~$10,000 in this situation which i know is ridiculously high for this area... am i doing something wrong here? What tools do you use for estimating property taxes?

Originally posted by @Allan Smith:

Originally posted by @Nader Hachem:

Originally posted by @Allan Smith:

25% is too low and is one of the reasons deals are more available. I wouldn't go lower than 40%.

remember, prop mgmt is a job. You aren't "saving" 10%, you are making $15/hr until you have efficiencies and systems to automate and hire out tasks. Most would say that time is better spent on higher leverage activities. 

Would you say 40% in property management vacancy repairs capex alone? I think my reason to property manage at first is to gain the knowledge. I think hands on is the best way to learn — then eventually hand off to a prop manager ! 

 40% is minimum, and includes all operating expenses. Not debt servicing. Lower clas properties are going to be closer to 50%.

top performers hire professionals to learn from. I think people don't realize how labor and process intensive prop mgmt is. What will be your tenant qualifications? What is your script for answering prospective tenant calls? What is your series of steps if rent is not paid on the 1st? Does your software send automatic notifications? What about sending an eviction letter with one click of a button (I built this into podio.com)? What is going to be your procedure for regular inspections? What items are on the list, and how are you archiving the field reports?

That and so much more is the mountain of work of a prop mgr. It takes years to build, but only costs you 11-12% to leverage someone else's machine.

Another thing with property managers is they probably wouldn't care about my property as much as i would. Property managers get paid per "every new tenant" so isn't that kind of an incentive for them to not have forever tenants in there? I just feel like a property manager wouldn't care about my 1 SFH as much as they would clients who have 100s of properties with them... Like i said, i'm not set on being the prop manager, but i feel like it'll be good to dip my feet in and see what's included

Originally posted by @Allan Smith:

25% is too low and is one of the reasons deals are more available. I wouldn't go lower than 40%.

remember, prop mgmt is a job. You aren't "saving" 10%, you are making $15/hr until you have efficiencies and systems to automate and hire out tasks. Most would say that time is better spent on higher leverage activities. 

Would you say 40% in property management vacancy repairs capex alone? I think my reason to property manage at first is to gain the knowledge. I think hands on is the best way to learn — then eventually hand off to a prop manager !