All Forum Posts by: Robert Kincaid

I believe I know property A222, bottom middle photo, correct? 

I did an analysis on this property (I am new to the game and haven't pulled the trigger on anything yet) and couldn't seem to have the numbers work. 

I would love to talk to you about this if you have some time to spare so I can try and figure out what I am missing! 

Thanks!

@Janine Smith

Take a look at your goals first and foremost. Do you want to have a rental here? Do you have a plan for property management? Could the cash from a sale be deployed more effectively elsewhere? There are a litany of questions that could ultimately impact your decisions.

My advice would be to keep the property and rent it out. The market is very hot right now for sellers which also provides a boost to rental values. If you have owned this property for any length of time it is likely that any debt you carry on the property would be easily handled by anything close to market rent. The cashflow potential is high here. To the other end, I do not see the Spokane market crashing. Tapering off, maybe. Spokane has a number of desirable qualities that has been driving the influx of both people and businesses from out of area.

@Sean Tobin

The home sold quickly. We had two showings the day it listed, both with offers a bit over ask. It was my personal residence and we already had another home under contract so we accepted an offer and moved along. This was before the market really took off anyways so we were pleased. Regrettably, I should have kept the house as a rental. 

I agree in that I don't understand how investors are able to make properties like this cashflow well enough. This deal looks to be good but even so, I would expect the returns on a hold to be fairly thin.

The neighborhood is classified as Minnehaha, technically. Pretty small area south of the golf course, north of the river and east of Greene/Market.

@Sean Tobin

I just sold a home in this neighborhood in November of 2019. 

My house was very similar in size though the layout was more friendly. 

If I was swinging at this one I would say it will sell at asking if not a bit more. Probably be in the $215-225 range. It has a larger lot and a real garage, something many of the houses around there lack. Downside is that it is 2 blocks from the North-South Corridor and does not have a history of being the best neighborhood. 

@Nick Beeler

I would think the rent would be more in line with the $900-$1,000 range if finished nicely, but you will be fighting the neighborhood for that value. 

I know what buildings you are talking about and I fell into the same boat but my analysis ran into cashflow issues. I was not as optimistic about rents but I could very well be wrong about that. 

@Sean Tobin I think that trying to reach out to investors looking to liquidate is a great idea. I spend a pretty significant amount of time driving around for work and see properties, specifically small multi-family, with a fair amount of deferred maintenance. I am certainly not afraid of the non-traditional properties and have even considered several mixed-use buildings.

I will completely acknowledge I have to make a shift in mindset here, however. I purchased my first home in Spokane 7 years ago. At that time, livable homes could be purchased for less than $50k and seeing those homes sell for $200k or more just makes me cringe... Missed opportunities and all that. But I suppose that should be motivation to get out there!

Okay folks,

I am new at this so excuse any inexperience that I may be exposing here but why do I feel like there is very little out there in the real of buy and hold property in our market?

A bit of a background here:

I am new to REI.

I have yet to purchase a property for investment purposes but am semi-actively searching and analyzing properties to familiarize myself.

I have experience in property damage estimating. 

I am running my calculations based on the following:

100% financing at 5% (no, I do not intend to do this however if it cashflows at 100% it should be hard to lose money), 10% management, 5% vacancy, 5% maintenance, 10% capex. No renovations. Most houses will require renovation to some degree, even if it is minimal, but for the sake of simplicity I am not accounting for it here. 

When I run the numbers in this manner, few if any properties are cashflow positive or even close. I recognize that Spokane and the surrounding area has seen substantial market appreciation over the last 5-7 years and has continued that path through the pandemic. These numbers also tend to fail with most multi-family properties as well.

Are these numbers too conservative? I have the ability to use private money to buy into some lower end houses here to get started on my journey but I am not a fan of placing my faith so heavily into appreciation and owning an asset (liability) that on paper looks like it won't be doing anything but costing money. Even with self managing they rarely work.

I see some "deals" come across my desk but they appear to have little to nothing left for a buy and hold and I would say are likely marginal for a flip. Are we expecting a significant jump in market rents that will justify the price? Are house prices going to drop enough to support the lower rents? Is my math completely wrong? What are you doing that might be able to help me out?

Thank you!

Scott,

Good on you for making it happen out here! I am from Spokane, born and raised, and over the last 5 years the price of entry in Spokane has risen astronomically. I purchased my first home here in 2013 for $105,000 - sold it for $189,000 last November. When I was initially shopping for homes there was an incredible number of homes available under $100,000, even well below $50,000, that were livable homes with cosmetic issues. Finding homes under the $200,000 mark is becoming a challenge and the market certainly favors the seller right now.

@David Clinton III @David Walker

I’d love to get together and talk sometime. I’m looking for someone to bounce some ideas off of and see how the process works for you.

I appreciate you all offering.

@Kyle Nacci

I will give my insight on this one. I am a property claims adjuster for an insurance company. Every carrier is different and less can vary significantly by state but this is how I would look at it were it a claim I was handling.

You can submit the claim for loss of rent. It will fall under the same loss as the roof claim. As far as insurance premium increases, expect no change in premium from the addition to your claim. You already have the claim. Doesn’t matter if it is $1,000 or $100,000.

Think of insurance like financing anyways. The base rate you pay for premiums is paying towards a worst case scenario - total burn, etc. If your house burned down I would hope you wouldn’t ask about a rate increase. Smaller claims are generally rated for over a 5-7 year period, much like a speeding ticket. Assume your rate doubles, is your claim more than that increase over 5 years? Do you have the cash reserves to cover it outside of insurance if you don’t want to file a claim?

As far as the loss of rent goes I would consider maybe a month. Barring something catastrophic it is highly unlikely that the home would be uninhabitable from this claim. The ceiling damages to the inside likely could have been repaired within a month timeframe. There could be other circumstances that would leave open for consideration an extended amount for loss of rent but it needs to be reasonable.

A year for getting the ceiling repaired seems pretty far out on the long side. Typically a top to bottom rebuild can happen in that time.

I hope this helps!