All Forum Posts by: Quinton Washington

Hey Quinton, I’m from Toledo. Where’s the property located? If you’re looking to move the property I may be interested or have someone who is. Thanks Rick 

Why pay 20k for a house in Toledo when you can pay under 7k. Either way going into the D-class neighborhoods the level of risk is to high, and the quality of tenants is to low.

I have been a full time landlord in Toledo for 10 years. 43612 is going downhill. It is becoming the next 43608. With that said, Toledo is a very strong rental market right now. My vacancy rate for the last couple of years has been under 3%...that includes bad debt. But I self-manage my properties. My guess is it will be a bit higher with a property manager. This year I have been aggressive about raising rents as well and have had no drop in vacancy because of it.

But again, I urge you to use caution if you are buying in 43612. Values have been steadily falling in that zip code since the crash and they haven't leveled off. It used to be a mostly owner-occupant area, but it is now a mostly rental area. In Toledo, those trends don't tend to reverse. Therefore I would predict that 43612 properties will probably head the way of 43608, meaning they will eventually be worth maybe $15k at best in perfect condition.

How real are your numbers?  To get an abandoned house - like the ones seen by the score throughout the 05 - up to section 8 standards for only a $20K investment (including taxes, insurance and other carrying costs) seems implausible to me.  Paint, flooring, mechanicals, roof (?), appliances, windows (I assume the abandoned property has been boarded up), materials alone add up quickly much less the labor.  

Talk to me about "numbers don't add up."

$40k house that nets you 20k in immediate equity. 

At $900 / month, you're at $10,800 / year. Let's be pretty aggressive with our underwriting costs and assume:

$200 / month taxes

$45 / month vacancy (@ 5%)

$150 / month CAPEX & Maintenance - its a fresh rehab (unless you're spending $20k on lipstick)

$75 / month insurance

$135 / month PM (@15%, which is high.)

So expenses are $605 / month. At the $800 - $1,000 price point you'll likely have a section 8 tenant and, given the price point of comps, this isn't the best of neighborhoods so you're not going to get much appreciation. 

You will, however, have $295 / month in cash flow or $3540 / year. That's 9% CoC which, to be fair, isn't the worst thing in the world.

With some ballpark numbers (made up here) for an alternative exit strategy:

Rent it out for 2-3 years, then set it up with a rent-to-own program: 8 year lease at $1,100 / month. You'll pay insurance and taxes and keep title in your name; tenant is responsible for maintenance and upkeep beyond that. At the end of year 8, the tenant may purchase the home for $1; there is no equity transfer and the title and contract will sit in a land trust. When you sell, you just sold for a "loss" so there's no depreciation recapture. In 10 years you've doubled your money. I'm admittedly not being very nuanced with the numbers here, just throwing you a different idea - all while being pretty conservative with numbers and assuming no appreciation or real rent increases.  

Have a few interested individuals so far, one that wants to start a group, which is awesome. Again, I am willing to host other groups that need more space or a more private space. So if you can think of anyone tag them or let them know about this thread. 

Hi there, I do quarterly meet ups for investors, agents, property managers, contractors, the whole she-bang. I'd love to get ya on the list!