All Forum Posts by: Nicole W.

@Leigh Whiting Sorry...1000 a yr/not a mo.

@Leigh Whiting 

I agree with @Evan Polaski's info. 

I use 5.5% vacancy and 1000 mo reserves (repairs/utilities/pest control/appliances), 8% management (I negotiated this with no lease up fees as I have a few with 1 property mgr/otherwise I figure 10%/you must shop for the best person/company & rates), taxes, insurance and interest. I also make sure it cash flows at the highest and lowest rents in the area. I bought a few in Phx metro which work for me. Just figure in these #s. 

I haven't found the 1 or 2% rules helpful as I have found properties in bad weather/hurricane area or in areas where taxes can really jack up with values going up, and they end up not cash flowing at all. In other areas I found I can go below the 1% and it works out just fine due to low fixed costs. It is relative and involves many factors. I had to go to my own little formula and it works for me.

I just purchased a few SFRs in Az and the closings were spread between three Title Companies. All did a great job but one was almost 1/2 the price in closing costs which was First American Title. I see they are in Ohio as well. 

I have 11 rentals and State Farm handles all the policies (300,000 business liability each) in a 1mm Commercial policy (no limit to # of rentals in it). 

I used to use Markel Insurance as they also have a no limit for rentals for their umbrella. They were the most economical when my house was considered in a fire zone and I needed a non conforming type insurance co.

But now my primary home is no longer considered in a fire zone per State Farm, so by bundling my home, my vehicles, a personal umbrella and the commercial umbrella with them, believe it or not they came out the lowest and I did call quite a few others.

I talked to some roofers who advised me to go with State Farm as they are the fastest and best at replacements as well. I have used State Farm for underlying for a little under 20 yrs and they also came out with the lowest quotes. I have had to use them twice in natural catastrophes and had zero problems, fast service with good results.

I do not work for either of these places.

@ Sean Lee

I messaged you all the info.

I am in So Cal. I just invested in central Az and it is cash flowing well. 215,000 is the average house price that I paid in Nov/Dec. 1500-1550 rents for 3bd/2ba. Low insur and taxes. Great weather. Houses are nice. Some with and some without HOAs. Good rental market now.

From my experience as an investor it can be so different depending on a lot of factors. I always just call State Farm nearby and let them know I am looking to purchase this property and they will happily give you an exact quote on it.

I haven't been able to find any decent loans for my rental SFRs since Covid. My %s are lower than I could get. 

Navy Federal Credit Union was willing to do a cash out refi but my interest is so low now with only 1/3rd of my loan left it didn't make sense but they were willing. 

I go for an area that sees both...good rents with low enough purchase for a good property. When I started I just got a lot of houses & an apt with loans. Over time I built equity up and did an exchange to some properties for cash. I am now retired and live off that cash flow. Some advise against doing this cash buying and not using the equity but I am happy where I am at and it is what I dreamed of. When I started though, I had a regular job that I could help pay expenses and mortgages should something happen to that property. It was tight at times but I kept it all going. I had to sell a handful that were in areas with hurricanes (and resultant mold from floods). The insur just skyrocketed destroying my cash flow. The equity was increasing at one point but it pushed the taxes way up so that destroyed my cash flow and then the crash occured in 2008 . There were so many properties on the market that the rent rates went down. I couldn't hold onto all of them due to the amount of debt I was in with having 9 SFR that I only put 5% down on and an apt, I could've held on better. But I did keep some (+ the apt) and their loans have been getting paid down by the tenants. Even with no equity left in the ones remaining back in 2008, I held onto them and now the have great equity and the cash flow over time has been better and better. So, you have to weigh all these things.

I advise ensuring you have a great Property mgr ahead of time. Also check the taxes and insurance rates for that area. I try to stay away from strong weather areas. It can really cost a lot in the end on insurance. I am from Ca and purchased in Az. Both north and central. The one I purchased yrs ago has appreciated very well but the rents are not as high there. The rents are better in central Az. The taxes and insur is low in comparison to many other states I have researched.