All Forum Posts by: Account Closed

@Diego Zambrano good stuff!!

I would like to dip my toes into STR but I have to force myself to focus (I want to get a taste of everything lol)

We are looking for a multi-family home to house hack to start our journey. Long term buy and holds is our primary objective. We are staying local with this first buy obviously and after analyzing a few I believe it is viable to stay local for the next several properties. We do not have the biggest cash flows here and we definitely do not have great appreciation. But, getting started in an area we have both lived most of our lives seems like a good starting point!

@Giovanni Branch The 1% or 2% "rule" is IMO only good to determine if you will dig into the analysis a little more. For example, if you have a purchase price of $200k and the listing says they are getting $1500/mo this falls well below the 1% rule at 0.75%. I personally wouldn't spend much time on the property. Unless I believe there is a lot of room to get rents up. 

The 1% (or 2% in some markets) is a rule of thumb because when you go under 1% it is unlikely the rental income will cover all of the expenses you need to account for. Not certain it won't but pretty good chance.

In your example, $100k purchase and $1k/mo in rent you hit 1% on the dot. This warrants going into the analysis deeper. Hence then busting the calculator out and breaking down the expenses. Typical expenses are going to be the following:

Mortgage PITI (principle, interest, taxes, and insurance) - this number is based on the taxes of a particular property and the financing you get. those numbers should be pretty easy to estimate or know exactly

Maintenance - A good starting point is 10% of the monthly rent. However, this could be lower if its a very new build or recent reno

Vacancy - Different markets and properties will have different vacancy rates but I also use 8% of the monthly rent because this assumes you will have 1 month a year without a tenant in the building

Capital Expenditure (CapEx) - I start with 5% of the monthly rent here. Again it could be higher or lower depending on the condition of the property

Property Management - 10% of the monthly rent is pretty standard

Utilities - this totally depends on lease agreements and the standard for the area

I would consider all of these the most conservative numbers to start with and are what I plugged in for your property. Based on these expenses you will only profit $28/mo on this investment. That is not a great return on your money. But don't just trust my numbers.

@Hannah McBee I would immediately pay off the debt, then spend "several months to save up enough for a DPyment and closing costs"

Several months in the scheme of your life is extremely short. Set yourself up even better and spend that time learning and searching even more. I know it can be difficult to wait longer when you are ready to pull the trigger but discipline and a rock-solid personal finance position are WAY more valuable than buying now.

I did not read the rest of the posts and this is just my personal and friendly opinion. Either route you take, good luck! We are all rooting for you!

Hello @Giovanni Branch !

Have you used the BP Calculators? I had to make a lot of assumptions but here is the analysis I did with the numbers you provided.

https://www.biggerpockets.com/...

This is an extremely conservative starting point so I strongly recommend you dig in and learn how and where to modify some of the numbers to make sense for your exact situation. Feel free to ask specific questions here though!

Hi @Joaquin Cruz !!

As Kyle stated, The "traditional bank way" has a lot of benefits. And it is extremely common for real estate investors to use.

What is your or her concern with using a conventional bank loan?

Welcome @Tracy Belizaire !!

It is awesome to see and hear your excitement! Here is another article that I believe will serve you very well.

https://www.biggerpockets.com/blog/4-steps-starting-successful-real-estate-business

@Shweta Bharti I think #2 and #3 are really expensive. I do not have experience or knowledge of Roofstock but that seems viable. 

OR

I know Software Dev can be rather time-consuming and intensive so I understand the desire to have someone manage your properties. There is a scenario where you do a lot of work upfront to find the property, close on it, and then find a PM to manage it.

I recommend deciding whether you want maximum ROI or minimize involvement. The more work someone else does, the less the ROI but you also have less involvement.

Welcome @Diego Zambrano !!

Great to see new faces and you have already jumped in and got one under your belt. Good for you. Would you share some details of your first deal and what your next steps are?

@Ben Clark Based on what you are saying. I would immediately clear the car and personal loan! The student loans are in your dad's name but if you are responsible for paying them I would knock those out asap as well!

Not having that overhead (risk and negative cash flow) in your personal finances is immensely powerful long term. 

@Rodney Turner Can you turn some of your square footage into a half bath? This could get you closer to the comps without having to add an addition.

Consider what type of people are buying in this area and which features are most common. If you are in the same range square footage wise but short a bathroom, then adding the bathroom is probably the best bet.

If you are short on square footage compared to the neighbors then adding some living space could help more. But in that case, you might consider adding the addition and getting the sqft AND bathroom.