All Forum Posts by: Alex Brookbank

Jonathan ... good story! I can relate! Hey, is the insurance premiums for both properties $2,300.00? Who did you use - and would you recommend?

@Aaron McMahon

Aaron, a couple of things come to mind. First, those cap rates could actually be higher or lower in reality ... probably lower... but definitely run your own numbers. Even at a high cap rate , some of these may have value add potential... depending where they are located, etc. I wouldn't let the high cap make you suspicious just because - but be diligent with your own due diligence.

Generally speaking, I'd say the higher cap ate compensates for lower appreciation potential + tenant demgraphic. So it's a give and take. In the midwest, it's more important to make sure the cash flow can sustain your return on investment, because appreciation will probably be lower than other markets. But a mix is always best!

@Toby Russell like @Doug St. John said, bigger pockets' rental calculator is the way to go for more in depth analysis.

If you're looking for something real simple that can quickly estimate your monthly PITI download the Zillow Mortgages app and use the payment calculator. I quickly adjust my best and worst case scenarious by moving the interest rate, term, taxes, downpayment, and insurance around. Helps to quickly analyze deals from the computer.

@Ronnie Lanier

Funny post. It may be too your shock but there is in fact a growing Cincinnati community on bigger pockets. If you add a picture to your profile and start posting, there's no doubt that you'll start networking and meeting people off-site, if you choose to do that.

In terms of Cincinnati, there is potential. Not so much with say population growth, but Hamilton County's population is relatively flat now adays, and a large swath of Cincinnati is trending up. Downtown/OTR is revitalized, Oakley is hot. The northern suburbs clustered around west chester and liberty township are growing as well. So there's undeniable progress.

There's lots and lots to learn, build, and decide. Talking to Real Estate Agents, saving money, and networking on BP is where I would start / did start.

Start thinking through your goals and build a plan around that. Do you want to sit back and kick it in 30 years ... when you're ready for retirement. Do you want cash flow as soon as possible, are you saving for future college education, are you handy and like construction? The answers to these questions will guide you to invest in single family or multifamily, lower or upper middle class areas, stable or transitioning areas, and rentals or flips. 

Good luck!!

@Account Closed

@Jake Walroth

Looks like a great find. How much would it cost to renovate the basement? That would only increase your rent by a couple hundred? I was looking at those numbers and I realized there's not really any utilities when it's a SFH.

Who are using for insurance? A local rep? Mind sending me info?

@Vanessa K.

Correct, in my mind a traditional flip is a single family home that is rehabbed and then sold for a small to medium profit within a few months. I have bought two rental properties (1 triplex, 1 quad) that "needed work", so I put money into fixing them up a bit, but I am holding on to them and not selling. For instance, I found a pretty good deal on a 4 unit because the existing front porch/balcony (two stories) was a big safety liability and a moderate engineering problem. That cost over 12k to fix. But the property was on the market for awhile and I'm sure the sellers got beat up over that balcony. If this process was done right, I should be able to pull out equity in the near future through some type of refinance. 

On biggerpockets, this is known as the BRRRR method... more info here :

https://www.biggerpockets.com/renewsblog/brrrr-buy...

@Vanessa K.

Was just trying to understand context. Okay, this is what I would do. I would get pre-approved for a rental property loan with a lender or mortgage broker. This would tell me what I can buy, and help me better understand my options regarding rental properties.

Next I would build my network with real estate agents and general contractors. Start thinking about flipping. Without any third party approvals ... it appears the three of you can access almost 150k in cash. If you want speed, urgency, and momentum, then flipping would make the most sense. 

I have not done a true flip. I have rehabbed rental properties. But for my first flip, I would choose a safe, conservative opportunity. Something that will break even or I could make a small amount of money, so I could learn. I want a base hit, not a home run. 

Dave ramsy has a plan ... a framework. Technically, your credit card debt wouldn't matter if you're flipping, because you're all cash. Dave Ramsey is conservative financial advice ... I tend to roll the dice. :)

@Vanessa K. ... I don't know where to begin. There is so much here! So I'll answer the question you asked, "what would you do?".

First - how am I going to structure the investment? Will it be split equally? How will I protect myself? No offense...but better safe than sorry.

I would determine the basic real estate strategy. Do we want to flip homes or buy rental property? i would not put anything on a credit card ... what if I put more on my card than the other two and the first deal we do goes south ....

Are the lines of credit from equity in personal residences?

Flipping is more cash intensive. Your group's DTI will come into play when getting approved for a rental property loan. Things like student loans and car payments matter.

@Jason Yahner

Interesting. Option 1 is an investment property. You probably are short about 10k. Let's say in my area I buy a 110K triplex in a b- neighborhood that needs 12k of work. It's a good deal, but you'll need 25% down (my mortgage broker says it's possible to swing 20% down instead of 25% with an ARM or a commercial loan with a 25 amortization but the lender will need to love the deal).

25% of 110k is $27,500.00. You'll also need an additional 2-3k for cash reserves (required by lender). In that scenario you would fix the property over time, as you're out of cash.

Then again, you could buy an investment property - single family home - for 70k and put 20% down ... which would be 14k. So in that situation you would have enough MULA$$. Just depends on your strategy and goals.

Option 2 is you buy a duplex, triplex, or quad and live in one of the units (owner occupy). The advantage of this is that with an FHA loan you'll only need 3.5% to acquire the property, and I believe it's possible to wrap in construction costs if needed. The downside of this method is that you'll pay additional insurance, BUT, there's really lots of advantages. First, you can buy a nicer duplex in a better area, say 'b' or b+' for instance. At the same time, you're not going to burn through all of your 20k if you make a mistake or use 100% of the 20k on the downpayment. And you''ll learn the basics of landlording and how to accurately estimate expenses and rehab costs.

I wouldn't focus on timing the market. If you want to start, you need to start at some point. Try focusing on what your cashflow/gross rent will be in comparison to the property's expenses. If you're making at least a little money every month, and you're in a stable neighborhood that always will attract tenants - you'll be OKAY if it's at the top of the market. Once you have the first house, you'll learn quickly.

If you aren't interested in the whole live in the building type of thing. Learn about single family investment strategies. You can get into these with 20% down. And you're really not that far off from having enough $ to start.