All Forum Posts by: Payton Haight

Hi @Jai Windish, welcome to BP. I just came across this post. I live in Columbus, OH now, but own several properties over in Bloomington, IL that have done quite well. Feel free to reach out. Happy to connect and answer any questions if I can.

@Andrew Rodriguez what makes a good deal is subjective. It would be helpful if you defined your goals (cash flow, appreciation, etc.), plans for the property (long-term rental, short term rental, etc.), and the projected numbers (income, acquisition costs, expenses, CapEx). If you can outline your overall plan and projections for the property, then it will be easier for someone to objectively provide feedback on whether it looks like a 'good deal' based on your goals.

Remington has solid advice. Unless you have experience with rehabs, I would agree that starting with a single family that is either turn-key or needs a small amount of work would be a safer way to start learning without taking on too much risk in your first deal. Starting with a multi-family property can really amplify your risk (rehab budget, learning property management, etc.)

hey Andrew! Welcome to BP and congrats on getting in to real estate investing. I wish I had started when I was 23, that is awesome. Where in Indiana are you looking to buy and what are your goals? Are you planning to buy more Airbnbs, long-term rentals, etc.

I self manage mid-term rentals and long-term rentals in central Illinois (Bloomington) and Ohio. Glad to answer any questions for you if I can.

Hi Adrian,

Welcome to BP and congrats on taking action. I have a couple of questions for you below:

1)  Are you responsible for lawn maintenance or snow removal? Do you pay for water, sewer, trash, etc.? Make sure you are accounting for any of these expenses.

2) What are you planning for your PITI payment to be and what are you setting aside for vacancy, repairs, & capex? I would expect to set aside AT LEAST 15% (personally I would probably be closer to 20%) for repairs, capex, and vacancy, assuming you are updating the major components in both units. Your repair and capex budget could be higher than that depending on what your rehab involves and the age of the property.

3) Is the duplex in a good area that you expect to appreciate (rent and property value) faster than other areas around Philadelphia? I am OK with breaking even if a property is in a good location with long-term upside.

Welcome Prateek! Awesome that you have set a goal to take action this year. The first deal is the most difficult one. Obviously it is important to do your due diligence, but you are going to learn the most from taking action. Do you know what market(s) you are looking to buy in? I own single family and small-multi family properties in Illinois and Ohio. Reach out if you have any questions. Glad to help if I can!

I am sorry to hear about the damage to your property. If you can cover it, I would not file a claim for roughly $3k in damage with a $2k deductible. It will likely increase your premium, though hard to say exactly how much - Insurance premiums have been increasing significantly the past few years even without submitting claims. If there ends up being significantly more damage, it may be worth it to file a claim. Personally, I like to keep slightly higher reserves with a higher deductible and only plan to file claims in cases of large/catastrophic losses. Of course, that is not always an option and if you need to use your insurance that is why you have it! Hope the cost for the damages turns out on the lower ends of that estimate for you.

Hi Timothy, welcome to Biggerpockets! It was a great resource for me as I was getting started (and continues to be). Good questions. See my responses below. Note that I am not a lender, lawyer, or CPA and these answers are based on my experiences.

1) The 'easiest' option with pretty good terms that I have used is an investment property loan with a 20-25% down payment. You would need to be able to cover the loan with your DTI and the loan would be in your name. If you wanted the loan and property to be under an LLC, you could go with a DSCR loan, but I have not found the terms to be as favorable and they can have prepayment penalties. I would not recommend using a HELOC for long-term debt. The rates are variable and generally higher than what you can get with an investment property loan so unless you are planning to pay the HELOC off quickly, there are probably better options.

2) This is up to you. I personally would not delay taking action at this stage to set up an LLC. I have purchased most of my properties in my personal name. If you are concerned about liability, you can increase your insurance policy. Also, if you want to purchase a property under your LLC, you will have more limited lending options. I am sure others will have differing opinions on this.

3) I have used STESSA and it worked quite well for tracking income/expenses, especially with a smaller portfolio. It was linked to my accounts and I just needed to get in once a week to make sure everything was assigned correctly. I also use Buildium for managing my properties. It is a bit expensive, but has worked really well for me. It has a good user-interface for tenants, I collect my rents online through the platform, and it has scaled very easily with my portfolio. If you only plan to purchase 1 or 2 properties, Buildium probably isn't worth the expense.

Feel free to reach out if you have any more questions. Glad to help if I can!

Hi Runbang, make sure you are accounting for CapEx. I assume you are lumping it in with your maintenance (depending on the condition and age of the property, that total number could definitely be higher). Outside of that, I don't believe you are doing anything wrong. As others have mentioned, there are many more factors to consider when evaluating the returns for a residential real estate investment. If you are only comparing the pure cash flow return for a long-term rental purchased at market value and today's interest rates vs. an index fund, I agree the numbers likely don't make sense. Once you start to factor in principal pay down, property appreciation, depreciation benefits, and rent growth over time, the deals start to look significantly better.

Additionally, there are other options to increase your returns such as mid-term or short-term rentals. I have purchased several properties in A and B areas where the cash flow would have been very poor as a long-term rental, but I have been able to get 10%+ returns as a mid-term rentals. These properties are in desirable areas so they have also seen above average appreciation and rent growths. 

I have experience long distance investing before I moved back to Columbus. Iwould be happy to connect with you and answer any questions!

Yes, for sure - send me a message whenever you've got some time. I can show you what I have done and my plans for the property. We should be finishing renovations on my unit in the next month and then will be moving to a live-in flip so we can get this one rented.