All Forum Posts by: Nik Corbaxhi

@Adam H., when running your calculations, just do it the good old method of CoC return. While @Jacob Sampson's example of 60 times the monthly rent is just one way of evaluating a deal, it might be one that might push you even further away from being able to see the value at your potential investment properties. You have to determine what is a good return for you and then trust the numbers based on your cash flow projections. Some people might not even consider an investment if it does not produce 20%+ return vs. some others might be ok with anything above 10%. Find your comfort zone and pull the trigger. I agree with Jacob that if you find a good deal, doesn't matter how the market is doing, especially if you are looking for long term investment and cash flow is your primary objective. 

@Tony Wilson, how big is this duplex that is going to require 15k of new paint and another 35k of carpet and appliances? is your math correct there?  See if you can save some by buying used appliances, you might have options there. 

As far as whether this is a good deal or not, cannot advise you without knowing exactly what you are paying for PITI. In addition to that, you need to add your cost to the line of credit along with maintenance and vacancies. Convert everything on a monthly basis and add it up. That will give you the total number of monthly cost. Subtract that number from your expected rent $1950 (make sure you are generous when calculating for vacancy as chances of you getting both units rented right away are probably not in your favor). Whatever your cash flow is, multiply by 12 and divide by total cost of your investment (down payment, carpet, appliances, paint, your time converted in money). That should give you your CoC on your return.

@Dennis Callaghan, look at it this way, if a husband and a wife have an argument at home because she did not cook dinner for him, and the wife reaches out to you and tells you they had an argument about it, does it mean that you have to make sure the husband is fed?  (not your responsibility, whether it is food or a table).

What I would be concerned is if you have 2 separate leases with these students instead of 1 master lease agreement. If you have separate leases, you might loose one of them and hence half of the rent. That should be lessons learned and that is exactly the reason why I don't rent by room but rather the house as a whole and I let them pick their own roommates. 

If it is one lease, just tell the girl that this matter does not affect you as a landlord and they should sort it out on their own. 

@Aaron K., you are absolutely spot on and the reason for such surge in finding investors to identify properties for these individuals (mainly beginners) is because they are afraid and need that comfort of having someone that knows what they are doing. A savvy investor will try to give free guidance and share knowledge to help people get there, but will not go identify and buy a property for you because there is no incentive for all of this work. 

@Jim Cellini, other than adding a feature to your rental, I dont see the benefit of throwing 20k out of the window for AC. How are the current tenants dealing with the heat? Assuming window units, why cant they continue doing this? 

Unless there is high competition and you think adding AC will increase the pool of tenants (that is if you are hurting for tenants in the first place), I dont see a reason for doing this. AC is a nice to have, but it is not a necessity. I am conscious that there is going to be resistance on this as some cannot do without AC. Good luck.

Vacancy alone - 1 month a year should suffice. You should also account for maintenance and other items that you know have to be fixed or are towards the end of its shelf life. Usually, 3-6 months of rent, however everyone has different rules on this. I like to keep 5-7k fluid for maintenance or unexpected items coming up. But this will depend on the property type (SFH, Duplex, Condo...etc) as well as number of units in each.

It is safe to overestimate here rather than underestimate.

Try visiting her and knock on the door. While tenants don't like unexpected visits, especially from the landlord, you have exhausted all communications channels with no luck. Once you get her in person, then ask for the lease agreement that you have not received yet and if she dances around it (I would expect she would), then straight up ask her if the rent increase is the issue and how you can work with her, if you want to retain her. If not, just state that if there is no contract, you will have to start showing the property to potential tenants as you want to have lease agreements for 1 year instead of month to month. At this point you can end the month to month at any point, as long as you give her enough notice (usually 30 days in advance). 

@Ryan Proffit, sounds to me like she does not want to sign the lease, and is currently looking for other options. In the meantime, she is paying the rent increase. 

@Michael Ealy,Totally agree with your point of running the numbers and anticipating what comes with the investment, rather than what someone else trying to convince you whether a property is worth it or not.

There is also a human side to being a landlord and not everyone is cut for it. Unfortunately, most see it as strictly a business with no feelings involved.  As a landlord, one rule that I don't break is being ethical. I always do what is the right thing to do and not cheap out on stuff that needs to be fixed, regardless of the cost. I am not writing this up so other people can read it, but because I truly believe in it, every day. How do I know if it is right or wrong? I quickly put myself on my tenant's shoes and ask myself the question. If a property is not good enough for me and my family to live in, it is definitely not good enough for any of my tenants. So far, in my 6-7 years of dealing with tenants in multiple properties, I am still to have 1 tenant that is not satisfied. My consciousness does not allow me to cut corners for a couple of thousand dollars more in my pocket, knowing that I wronged someone to get it. 

@Christopher Leet, I agree with @Will Fraser's advice, and just to add to that, what are your short term/long term goals. Are you looking to purchase a condo for quick appreciation and get rid of it, or are you considering it as a long term investment? 

If short term, then you have to think about the market, future forecast, location, population and other demographic information to be somewhat educated on assumptions for what the future holds. This is tough to do by the way because you cannot predict the market but you can make educated assumptions based on what you know.

If long term, as long as the cash flow is great, there is no reason for you to be concerned about appreciation for now. If the cash flow works, then let it ride until you are satisfied the value is where you want it to be before you sell it. Even if you sell for what you bought many years later, you will have all of the return over time to make it worthwhile. 

I have invested in condos that do not appreciate a lot but have double digit CoC and plan to do the same again. So far so good, no regrets on my decision. I hope this helps.