All Forum Posts by: Okeoma M.

@Eldon S Bailey

I was looking at a townhouse as a first investment. I like that there is less maintenance and you can usually get a break on insurance as well, since you are only responsible for the "studs in". The numbers looked good until I started to talk to other investors in the complex and learned there were a number of recent special assessments (new roof, paint and upgraded parking) over the past couple years which was eating away at cash flow. I also learned the HOA had decided to upgrade the pool (= more $$ eating at my cash flow). To be fair, all these upgrades would increase the amount I could get for rent but not enough to cover the fees. Over the long run it may be worth it but I decided to holdoff as a first investment.

Point is: I would look also look into whether recent upgrades have been done or if the HOA have any planned. These upgrades may increase the value of the townhouse down the line when you decide to sell but will compromise cash flow in the short-/mid-term.

Congratulations! I always use my 80+ w-2 job as an excuse so this was a great reminder that it can be done.  Would love to learn more about these properties (photos?) and look forward to following your success!!

“Where the determination is, the way can be found.” - Riches Man in Babylon

@Dea Chu

 As usual, I really appreciate your thoughtful feedback. It's interesting that you mentioned that your spouse had no savings. Mine didn't either! To be fair, we were quite young when we met (21/22) so I think I may have been the exception when it came to saving and investing. 

We have talked about how much cash we'll need to reach financial independence but I think getting him involved in tracking out net worth could be motivating. This past week or so, he's been really fired up (ever since I put 4 Hour Work Week on his kindle), so maybe I can leverage that enthusiasm and get him more involved. 

@Tony Christian

 I love that idea! Unfortunately we live in Brooklyn... so first I'd have to get a car!

@Tony Christian

@Benjamin Blackburn

Thanks for the great advice and specific actionable ideas! BY way of update, things have gotten a little better. I think part of the issue was my desire to have him be as excited as I am, which I have come to accept may never be the case.  I did get him to start reading "Four Hour Work Week" to help (re-)motivate him to help me focus on chasing financial independence. Now if I could only get  "Rich Dad, Poor Dad" into his hands, I think we'd be all set!

Brooklyn renter here.... My understand is that a lot of investors in NY buy for appreciation. Is that not the case? I know that we pay $1500 less than the carrying costs on our apt. A friend of mine who has a 2bd/2ba in prospect heights rents it out for a little over $1K less than the carrying costs but the apartment has gone up over $150K in value in just 2 years. 

@Robert M.

 Thanks for the feedback. Yea, it's a pretty small town so $400 is really the max you can get per student. (Just for context: The average income in this town is $40K and an average 2bd/1ba rents for about $600 with 3bd/2ba bringing in closer to $1000) I did make an offer of $105K but they ended up accepting a cash offer of $102,500.

Back on the hunt!

@Stephanie D. Congrats on pulling the trigger! Please keep us updated. 

Regarding exit strategies - I like to have specific strategies in mind. Although I intend to be a buy and hold investor, I only put in offers on properties that I believe could be upgraded for a profit or that are in a location that will continue to be in high demand (for me that means walking distance from a university). 

Just wanted to also share the results of the folliowing studies to remind you that there is a psychological aspect to investing and as a female you are going against the grain but remember that women investors also outperform men so trust your gut and hang in there!!

The Merrill report from Mr. Liersch, based on data from 11,500 investment personality assessments completed by Merrill clients, found that 55% of the women questioned agreed or strongly agreed with the statement, “I know less than the average investor about financial markets and investing in general,” compared with just 27% of the men.

In a 2013 study of couples in a committed relationship, Fidelity found that women tend to have a much lower risk tolerance than men—only 4% of women were willing to invest a substantial amount to achieve potentially higher returns, even if it meant possibly losing some or all of an initial investment, compared with 15% of men.

@Dea Chu  Regarding maintenance, I use 2% of the property value for the purposes of running my initial numbers. My plan is that for the first year this 2% will go into an account for any unexpected expenses and then I will maintain the account at that level going forward after year 2 unless I am saving for a specific maintenance issue/upgrade. More specifically, since I am investing out of state I did a lot of due diligence to identify a property management company that had experience working with out-of-state investors (lots of military families in my target area who buy and leave).  We've discussed putting into place a system of doing preventative maintenance checks twice a year ($100/yr), which will hopeful help identify any issues as early as possible and flag an issues that we should start saving to repair.  I also make sure to get renovation reports for the houses so I can get a sense of the age of all big buget items (roof, floors, windows, siding, etc) and get the same info from the home inspector.  With this information, I can get a sense of what may arise in the next 5, 10, 15 years. Lastly I got estimates for standard maintanence costs  that I may expect to pay each year  (lawn mowing, getting new keys, painting (interior/exterior), plumber, electrician, etc). 

  I am an extremely risk averse individual and I find that hard numbers and information provide me with a great degree of comfort. I am well aware of the fact that I can't plan for everything but I like to believe that at least I am going into this decision as an informed investor.

Hi Stephanie, 

As I'm sure you are well aware, no deal with ever be perfect (and if it looks too good to be true, it probably is!) and you are absolutely right that all those things could happen OR WORSE, but if you aren't taking any risk, you won't be able to reap the rewards. As a new investor I overcome my fears by being extremely conservative with my numbers (by anticipating above average vacancy, maintenance and capex costs) and knowing that I have multiple exit strategies.  I agree with @Tom Mendez. If you can't overcome this fear, then buy and hold may not be the right real estate strategy for you. 

Good luck! 

Okeoma

“Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success.” - Robert T. Kiyosaki