All Forum Posts by: Mike B.

@Ryan Green - I would first determine if the deal is good.  What are the comps (sales and rentals) in the area, etc.  Does it need renovation, etc.?  If so, how much.  Maybe you'll get a great deal on the building, do some minor rehab and be able to get tenants on 1-2 year leases paying you more then the current owner.  Likely so, based on similar stories in my area (month to month, owner wants to quit, etc).  

If I'm reading your post correctly, as is currently, you would be collecting (gross) $2800/month in rent or 33,600 annually. I agree with your 50% number based on some quick calculations I just ran.

In terms of your concern with it being "out of your market".  My advice would be, after analyzing the deal, if it is a good-great deal, then buy it and "master that market".  See what others are doing in their rentals (in terms of finishes, etc) and meet or exceed those expectations of renters.  I've done this with 3 properties now and I always get multiple qualified applicants, willing to pay slightly more to me (vs. another landlord) because of the service and quality product I deliver.  This includes in a recent "out of market" area that I spent some time driving and walking around the neighborhood/area, analzying data online of shopping/conveniences near properties, comps, etc. 

Who knows.. maybe this area will become a great area to invest in. 

Hi @Paul Wakim,

Everyone's goals are different, so unsure there's a "perfect" answer to your questions as to say. 

If it were me, and I had the $50K, and wanted to do a lot with it in the future.. then you would need more capital, right?  Having access to a lot of capital, you could thus do more flips/rentals, etc much quicker, but in the beginning go slower, learn as much as possible, etc.  Walk before you run basically.  

So to generate the capital at this stage, I would want to buy a run down looking place (something that needs cosmetic work is preferable to flip it quickly), fix it up, rent it out then cash out refi after 6 months.  You'll then receive monthly payments (hopefully as a net positive cash flow) AND if you renovate correctly on a budget, you'll earn appreciation on the property.  That cash (from appreciation) comes to you during the cash-out refi, that you can then reinvest into another few properties.  Plus you'll get monthly income from rent.

From here (after you've flipped to rent a few places) you could sell (do a 1031 exchange) to get into a bigger building, more units and better cash flow OR start aggressively paying down your mortgages on these places.  Within a few years you should have really good cashflow as these places are paid down.   

From personal experience, I did the BRRR method for my first place, a duplex, I occupied. Bought at the right time, did a lot of renovation work (mostly myself and my father in law, who is a contractor) and 3 years later, we are selling for a large profit. Not to mention rents have covered >1/2 the mortgage while I lived there.. thus saving me more money each month.

The bottom line is (and from what you wrote).. if there's no properties available which will not appreciate quickly in the next few years, then I would say go section 8 for cash flow purposes.  However if you think there are some areas that are "up and coming".. get in there now while it's cheap, do some renovations to collect top dollar, and cash in on the appreciation down the road. 

Hope this helps 

@Martin Nowak I've had great success with Liberty Mutual, but with insurance (for anything.. home, auto, etc) it's always good to shop around to get quotes. Can also speak with local agents to see if you like working with them and are helpful or not. I have been with my same agent for several years now and he's worked with me in the past to match rates when I've found I would be paying too much on a new property. Best of luck!

Thanks @Andrew K.

Here's the link to the original post, which has more details for those interested: https://www.biggerpockets.com/forums/522/topics/378490-flip-to-rent-buy-and-hold-project-in-philadelphia

Hi everyone,

I had been posting some updates in another forum, but here's a more concise review, before and after photos.  Very happy with the final product. Took 3 months of work, but home is now turn key, maintenance free (all systems, etc updated) and is currently rented out to great tenants on an 18 month lease.  Enjoy the photos 

Click here for link to drop box pix

I don't give gifts per se. I do give welcome packages though which I feel is helpful and shows them that I care about them as a landlord. I get a couple rolls of paper towels toilet paper trash bags and a 12 pack of bottled water. The basic essentials so when someone's moving in and they forget something they could still use the sink or the toilet and not be concerned. Since I buy everything in bulk, it only amounts to a couple dollars but it does go a long way and the tenants always appreciate it

Finally wrapping up.. Below are pictures (taken last week, so some more updates since then) of Kitchen, bathroom, and Living/Dining room (new floors installed, painted).  Just need to finish touch-up paint, install light fixtures, cleanup and done! Tenants move in Feb 1st/

Natalie Kolodij I live in an owner occupied duplex as well and my accountant for past years has stated you need to evenly split deductions. My unit is 2/3 sq ft total of the building and my 1st floor rental makes up only 1/3 of total lives or area which we use for deductions. Is that true or is it always 50/50? I was under the assumption the former is true

Gerry Tenebruso the market is competitive and if you're using the 70% rule to calculate an offer price, forget it. Slim pickings. I have found that 80-85% rule applies better depending on the area. I used to try 70%ARV and was outbid on several homes. Once I changed my game plan and went with the 80-85 estimate I got my 2nd investment property within a month. And with some good material finishes you get higher rents and appreciation if you spend rehab wisely (depending on area and comps of course).

I believe this was reviewed in older posts, but my understanding of the law is within 45 days of close of your 1st property, you must be under contract with your next investment property (we'll call that property #2).  Then you must close on property #2 within 60 days from being under contract.  I will preface the above and note that those days are what I believe to be true.  I could be wrong about the closing period (perhaps its 90 days)?  I recall you basically dont have a lot of time and you need to time things correctly to execute the exchange appropriately.