All Forum Posts by: Daniel Walker

 Thanks for the advice! Yes, it seems every single town home I look at results in upside down numbers. I have given a little thought to out-of-state, and will be spending more time thinking about that and discussing options with people at local meetups. Thanks for the podcast recommendation. I will definitely check it out!

I have explored the rent numbers that would be necessary to make this work. Unfortunately they're higher that what would likely be supported. The number of $1095 is based on the rate at other townhouses in the same building, and also based on advice from the property management company I used for our other house (which generates a few hundred positive each month). The HOA is a lot, but that number is fairly common here in Fort Collins, CO. Thank you for your advice!

I have had others give me advice that the equity would make this worthwhile. And historically our area is one of the most resistant to negative price fluctuations. However your point still stands. I am feeling out what I should be looking for / willing to accept, by gauging the reactions of people. They do say that there are no stupid questions! Thanks for your comment.

> OK then in response to your "devils advocate" as a hypothetical ... any person that would buy under that scenario is never going to be a investor because they are simply too stupid to ever understand finances.

@Thomas S. Telling it how it is! Thanks for the candor! :)

Thanks for the immediate reactions folks! Looks like my post is generating feelings of repulsion! :) This feedback is mirroring my initial reaction when I put these numbers together. I have a retail RE agent with whom I have purchased the last two houses I lived in. Though she knows I am buying to invest I am thinking I might need to transition to a more investment-minded RE agent. 

@Andrew Johnson I do have a decent W2, but nowhere near that decent! The market where I am is very tight but I am only now exploring ways of looking beneath the surface in terms of finding opportunities. Thank you for taking the time to share your reaction.

@Thomas S. yes I do want to expand in the future. My question above is partly to play devil's advocate, to see what sort of feedback I get from the general community. My main problem seems to be: finding a good deal which requires low maintenance in terms of time and money. I am still curious as to people's responses to the "straw man" I quoted above.

> My question is why would you go into a deal knowing that you will lose money every month?

@Scott Trench  Thanks for the reply! Yes, that is basically my question. The only possible reason I can see is: that the renter is buying the house for you. So the cash flow lost each month would have to be weighed against the equity gained. Let's assume for argument's sake that there is an equity gain of $800/month, then subtracting the negative cash flow of $-310.25 still leaves a positive $489.75 every month ($5877 per year).

Do investors simply not include the equity gains when calculating ROI?

Hi Folks,

I am new to buying real estate for investment purposes, but have held a rental in which I used to live since 2014. With equity I've extracted from the first house I am looking at a 2-bed town house which has the following numbers:

However if I factor in the equity that will be built because the mortgage is slowly being paid off then the ROI becomes positive. Should I not touch this deal with a barge pole? Or are there any of you who have gone ahead with such a purchase based solely on the equity gains?

I should add that I'm in the process of building a local network of acquaintances and contacts through this website and also face-to-face meetup groups. I know that this is a great way to become exposed to more ideas and options.

Advice / criticism / comments most appreciated!

Daniel

p.s. the formatting of the table above was not preserved when pasting into this forum. Hopefully it still somewhat makes sense.

@Kyle Doney thanks for the comment. I was just discussing that strategy last night at the https://www.meetup.com/Northern-Colorado-Real-Estate-Investor-Group meetup. I will definitely be looking into that in the future. 

Does anyone know if there's a way of getting the URL for a specific comment in a discussion thread? If not, is there a place for submitting feature requests?