All Forum Posts by: Nigel Guisinger

Richard P. That’s the way I value it because I plan on holding long term. The agent helps you find the deal but the manager is the one that has to deal with the deal after you’ve made it. That’s who makes it or breaks it. If you hold long term you’ll need to refinance in five or 10 years. A good manager is worth their weight on gold. 

Andrew, 

Some washers have a mechanical dial and others have a digital touch pad. The older models are fully mechanical. You can hear the sound when you turn the knob. The digital appliances have a much shorter shelf life. A mechanical washer will last decades and can be repaired for a very low cost. Think about appliances like a car. Old 19760’s cars can be repaired by most anyone. But newer “more efficient” cars mean more expense to repair due to the technology in them. The same goes for appliances. So if you can have a mechanical washer you have an appliance this can be repaired for a lower cost then replacement and save big time. I was so upset about my repair costs on my complexes that I bought an appliance repair company so that I could cut the costs for the repairs for my apartment holding company. 

Property manager is first

Lender is second

Inspector is third

Real estate agent is fourth

You are the key to putting the deal together using these folks

If you rehab, add in the contractor and subcontractors tors as #4

Start small and work up. You have enough for a down in many areas. Generate cashflow and use that cashflow to buy the next one. Your 25k is enlightening to be 50% down on a place in many Midwest markets. Text small and move up as your comfort level increases.  The key is to start. We all made mistakes when we started so use this start to educate yourself on what to do and what not to do

I wanted to give out some advice on appliances as an investor (I have over 100 units) who also happens to own an appliance store with repair techs. Last year we did over 10,000 repairs.

I’ve seen a few posts taking about repair costs so I thought I’d give some advice. 

I will say that this is just general advice and each repair is specific to its own issues but I hope this helps.

Dishwasher- if the issue is a spray arm that is a simple part to replace. However if you have a pump or a water intake issue in most cases the repair will cost over 50% and some times as much as a new basic dishwasher. In most cases I recommend replacement. Total repair range $150-400

Range- I recommend coil top ranges over glass. The coils can easily be replaced by almost anyone. If the coil is good but still not getting hot check the block that the coil plugs into. This is a part that costs around $10. If there is more issues on the top side it’s the timer or the switch. In most cases that part is around $50-75. If it’s the inside most elements run in the $30-50 range.   Repair range $150-300

Over the range microwave- in most cases, the parts for repair exceed the value of the microwave. A base microwave is $259 or less.  The magnitron, the part that heats cost in many cases more than that  I don’t repair these in my personal units I simply swap if I get a call on them. RepIr range- don’t waste your money

Refrigerator-  there are many styles and many reasons that this may not work. In this I do suggest calling a tech because there are too many verifiables that effect the performance. I would suggest as a rule of thumb to repair only once on these and replace a second time with the exception of if the unit is freezing up. RepIr range on top mount apartment subtle ref $150-300

Now please remember that for most repair companies there is a diagnosis fee, parts and labor. Most diagnosis fees are $75-150 and many companies use a blue book for repair rate that runs anywhere between 75-300 for the labor. So a diagnosis plus part plus labor is the final charge. 

Lastly with regards to washers and dryers. Buy mechanical units if at all possible for your rentals. They have a longer life expectancy and they are easy to repair.  This will keep your costs lower over the life of the investment.

 I hope this helps and if you have any questions please reach out.

Do you remember when you learned to drive. There was excitement and fear and for me I wanted to drive all the time. Then I got my license and my parents said I could drive to the store on my own.  I think I sat in our driveway for 30 minutes before I started the car. I was full of fear. I knew how to drive. I knew what to do. But I just couldn’t do it. After 30 minutes I finally started the car and drove to the store. How you feel now is how I was on those 30 minutes. Eventually you have to do it or you have to understand you won’t go anywhere. 

We all get nervous. I’ve done countless deals. And every time my stomach turns. It happens to us all. Yes you will make some mistakes but you will learn a ton. Run your numbers and double and triple check them. But after you do that and if they hit where you want them and you know it’s a deal, you need to pull the trigger. Because you miss 100% of the shots you don’t take. 

The hold back is a good option. I don’t know your local and state laws there but in many deals so etching comes up. I suggest holding back up to $3500 which is the cost of a new unit installed with removal of the old unit. That way you are covered no matter if the unit can be repaired or replaced. 

Look into Northwest REIA. There are meet ups here in Portland two or three times a month. It's a good spot to meet other investors and industry professionals. While cash on cash returns aren't what you'd see in the mid west, the appreciation we've seen over the last decade has been amazing. We have a lot of regulations but we also have built in inflation of rate so there is upward opportunity.

In order to evaluate the value you need to include some of the expenses. Taxes, insurance and utilities paid would be subtracted from the 700-800 gross. I use a 1% per month rule so if the taxes are 100 a month and insurance 50 and utilities 100. You would have 450-550 a month when completed. My formula makes it worth 45-55k when completed based only off the cash flow. This is assuming the projects are complete. If not we have to subtract those costs from the number I gave.  I hope that helps you. I know it’s lower than most but that is how I value property. 

In the cases where I’ve been successful obtaining seller finance I simply asked the seller of a property I was already planning on buying. It never hurts to ask and when I’ve heard yes I’ve made sure that we both win.