All Forum Posts by: Raden Mantuano

@Raden Mantuano

I'm a newbie too and totally get your enthusiasm. 5 out of the 6 properties I bought had major things break on them in the first year. Talk about Murphy's law! I won't get into details about what broke or about tenants moving out with damage to a property etc. But I took a major hit and probably won't make money on them for five years or more if you factor in what I spent on each SFH.

You always expect things to break down and better have 10k in cash reserves for each house for when things break. Fortunately I did have a cash reserve for this but I spent on average 10k per house. Over a five week period last summer I spent over 33k on four of the properties. It’ll take me years to recoup based on cash flowing only $300/month per property off 15 year loans.

Just have plenty of dough available to pay for maintenance and unexpected things breaking. And realize once a pipe bursts, foundation settles, HVAC goes out, roof needs replacement, tenant stops paying and ruined the carpet and walls, appliance goes out, pest control for rodents and squirrels out of the attic, landscaping dies because tenant doesn’t water or take care of it, window breaks, house catches on fire because a dryer overheated, tree limb falls causing damage to a roof, plumbing leaks inside walls of the house and the list goes on. I expect just about all these things to happen at some point. Which they did within 18 months of buying the properties. That’s part of being a landlord. But have a ton of cash sitting in the bank so you can pay for it when it happens. And expect a few of these things to add up to thousands of dollars spent, while the rent stays about the same or goes up a little over time. One major expense can wipe out a decade of your cash flow. Especially if you’re not doing a traditional mortgage where principle is being knocked off the loan each month. Maybe the housing market will go up and you make a huge profit, but if it doesn’t you’re kind of screwed.

Run away. You are going to lose your shirt. 

Buy when you actually have money of your own and can get a regular loan and see a decent cash flow. 

@Raden Mantuano Don't forget that a LOT of repairs are going to be needed over a 10 year period. Over 10 years you could very well have to replace hot water tank, HVAC, and ROOF. 

I'm not going to get in to the other things as people much smarter and more successful than me have already chimed in. I just wanted to make sure you are thinking everything through. The HVAC and Roof can end up being very expensive so def check in to those and see when they were last replaced. 

@Raden Mantuano. Multiple people on this thread are telling you not do this current deal as is. If you modify it a bit it could be a decent deal.

Hopefully you listen to what everyone’s saying. Good luck

@Raden Mantuano I'm confused. You tell me you're a REALTOR and have "income coming in" and you tell someone else you "have reserves and will have more." 

Why did you have to borrow $500 if you have a reserve?

IF you're going to ask a question, you should provide all the information. If the water heater springs a leak, do you have the money available to replace it? If the tenant fails to pay rent in March and leaves $2,000 in damages, can you handle the lost rent, the cost of repairs, and the vacancy?

It sounds like you're banking on commission from a pending sale. I'm a REALTOR and know that this is exactly why so many REALTORS fail: don't count your chickens until they hatch.