All Forum Posts by: Account Closed

Thanks everyone. I've talked to a lot of lenders and came to the same conclusion. I decided to buy what I can afford now in full and then refinance as soon as I have an income and rent history.

I'll also throw this out there in case it helps anyone. I learned that one workaround to this problem is to setup a 3 year annuity that pays out regular amounts every month to prove a fixed income. However it doesn't work for me because I'm not retirement age and I would pay an early withdrawal penalty.

Hey @Scott Ellis I really love that GRM trick! I'll be using it from now on. I appreciate your point of view and sharing your unique situation. I did FHA for my first home and am definitely a fan of it for the low money down. I'd consider it in the future if I were to live in the property while fixing it up, which I would love to do at some point in the coming years.

I am starting to see what you mean about seeing the good deal on the pro forma standing out from the typical deal. Once I have done many pro formas I am starting to be able to recognize an outlier.

My biggest concern right now is finding good deals that don't need a ton of work - mainly looking on the MLS I feel I have lot of competition and the greatest deals are rare. But I know they are out there. If any of you find any awesome deals in my price range that you are passing up please send them my way :)

@Scott Ellis Thanks for the info about your property. I didn't even realize I could use the rent multiplier to get my buffer for ARV. That's a neat trick. I want to know how in the heck did you get 20% cash on cash with your triplex? In the examples in my spreadsheet my cash on cash is pretty low and I'm wondering what kind of deal I'd have to find and if it's even reasonable to expect somewhere close to 10% cash on cash with a turn key rental in this market.

@Thomas S. I am not sure I quite understand your logic. Are you saying that I should calculate my proforma with a 100% mortgage with the going interest rate? Is this so that I can evaluate all properties on the same basis?

@Deric Lamphiear thanks for all your insights!

- I like 2-4plexes because of the diversification that's built in but I can see that I have less options in my budget. I'm also going on the advice of my real estate agent that single family homes in Spokane don't cash flow very well. Up until she said that I was only going to look at single family homes because that's what I'm familiar with. I'm glad that she opened my eyes to a whole new world of investing, but I'm wondering if her statement is valid. Do you agree or do you think turnkey single family homes can cashflow well in this market?

- Do you like the Spokane area for investing in the $100-150k range or do you think I might look elsewhere in WA?

- Yes I did talk extensively to a lender about refinancing after purchase. The main reason is because I don't have income right now, as I am currently traveling and unemployed, and I don't qualify for a conventional loan so I would plan to refinance after I secure my next job, maybe early next year.

- I put 10% for capex entirely based on forum posts I've read on bigger pockets and a blog post by Brandon. Also I watched Brandon's webinar last week about rental income and in there he even used 18% capex for a sample property.  Ideally I'm looking for properties that I think would be fixed up with newer roofs and appliances, but I put the 10% capex to account for unknowns and anything that comes up later. Also because all of the 2-4plexes in my budget are built around 1900 and I figure with that age something is bound to come up sooner or later. Can you give some advice and recommendations here and how would I keep my capex low as you suggested?

- I do plan to ask for schedule E's before getting serious about any property. In the meantime what vacancy rate would you recommend using without being too risky or aggressive in the proforma?

@Shawn Peden Thanks for the tip! I put those numbers for the Cheney property in my pro forma and it comes up negative cash flow. Do you mind taking a look? Here is the file.  Are my numbers just way too conservative or not informed enough? What would you be putting differently?

Thanks for sharing this exercise @Shawn Peden. The link came through OK. I'm not sure how to quantify rents for this house - how would you do that without knowing actual rents?

@Sam B. Thanks for your insights about returns in Spokane. I wonder what cities in WA would you recommend for better cash on cash returns  in this same budget of $100-150k?

@Shawn Peden Good point Shawn. I was erroring on the side of caution with the vacancy rate. As an exercise that I can work through can you point to any properties on the market that would have at least $50 cash flow with 3.5% down?

Hello,

As a first time investor I'm looking for a turnkey rental in Spokane, WA that is pretty solid and in good condition so that I can get cash flow going ASAP. Because of my situation I'm looking to invest in cash and then refinance later to leverage equity for future rentals.

My budget is in the $100-150k range and I'm looking primarily at 2-4plexes on the assumption that single family in my price range wouldn't cash flow as well.  Maybe in future investments I'll have more time to dedicate to upgrading.

I have put together a proforma worksheet for a sample property. I am posting it here in the hopes that you can help me review it for any problems or insights that I didn't consider.

Do you see any issues and do you think the resulting numbers look good in this sample considering the Spokane, WA market? I wonder if I should shoot for a higher cap... or a better question would be what's a good cap rate to shoot for in the current market in spokane for something fairly turnkey in my budget? 

Since I am looking to refinance in the near future I put the financing to 30% down. There doesn't seem to be much cash flow. I wonder if my numbers are too conservative or not for repairs, capex, vacancy, etc. 

Thanks in advance for your input!

Thanks Patrick and Scott. There is a doorway to a short hallway and that leads to stairs to a second doorway that exits the building.

hey Scott thanks for your feedback! I agree with your reasoning about safety factor and thanks for the cost factor which is helpful.