All Forum Posts by: Sam W.

For instance on a HUD house:

"HUD-9548, Sales Contract, dated 1/99, contains a warning to anyone who makes a false statement that he or she may be subject to a fine not to exceed $250,000 and/or a prison sentence of not more than two years"

My experience in Medina county is that a house with a 2 car garage will rent almost immediately...I have a couple and they are never vacant. That said, the difference in rent (in my area) that I can get between a 1 car and 2 car garage is about $75/month. So, about 6 1/2 years for you to recoup the extra $5K putting up the 2 car will cost you. You may be able to get more in Euclid.

If the 2 car garage gets and keeps tenants better than a 1 car, that is worth something and reduces the payback period.

I do not fix and flip so I don't have the experience WRT that.

If it were my property in Medina county, I would not put up the 2 car garage, but you are able to ask more in rent than I can down here and recoup the cost quicker.

Darned good reply Jon Holdman. Serveral books worth of ideas and thousands of dollars in "hard knocks" lessons rolled into 760 words.

Scott Pulling Many other carriers will allow you to carry it as vacant. It is much more expensive (about 1.5x) than occupied, but if it is only going to be vacant for a month or so it might be bearable. Also, depending on the insurer, there may be a reduced coverage amount for a vacant property and you may have to get a rider if you want cover for vandelism.

Hello Darius. Welcome. I think it is excellent that you have begun your real estate education at this point in your life. I certainly wish I had begun when I was 18 or 19 years old instead of much later in life.

Watch, learn, question and prepare - in my opinion the focus when starting out on any new venture; when the first "deal" presents itself you want to be in a postion to recognize it and take action.

Good luck and stay engaged with the helpful people here on BP.

I agree with David Barlow - many section 8 tenants can afford the security deposit and I believe a landlord should require it. Contrary to many believe, many section 8 voucher holders do not live in the less desireable neighborhoods. The HUD FMR limits are, at least in my area, generous enough for voucher holders to rent modest homes in decent neighborhoods - either fully subsidized or with an affordable co-pay.

I have two section 8 tenants and they fully expected to pay a deposit when they moved in. They are wonderful tenants and I enjoy having them in the units.

In answer to your question...in my experience this fee is NOT a standard part of the buyer's fees. I agree with @Sandy Blanton...the agent's broker obviously is charging him an admin fee for the office support he gets - and he is trying to pass that on to you. If you didn't agree in advance then you should not pay it. As Sandy said, what a lousy way to ruin a relationship (and let the agent know that).

Shema - I always wonder, too, if the vacancy rate I experience with my properties is "typical".

I have 16 units and my vacancy rate over the past 3 years has been 4.2% - which translates to about 15 days/year of vacancy. For me, the loss of income isn't as painful as the turnover costs associated with getting the unit back in order to rent, advertising, showing the unit, etc. That is the real killer in my book. For me the 15 days lost rent pales when compared to the other costs.

An 8% vacancy rate means each unit will be vacant 1 month out of the year on average. In other words, on average each tenant will leave after their 1 year lease is up. This sounds a bit high to me but I am not familiar with the area you are thinking about buying in.

Of course the type of property you are buying also plays a part in turnover. I know some might disagree, but in my experience, in general multi-family properties will experience higher turnover than SFHs. Still, 8% would be a little high for my liking - I don't want to turn-over each unit every year. I make it a point to develop a good relationship with tenants so that they want to stay. It is a win-win.

I too have missed out on a few properties during the first look period - some of which I suspected were purchased by investors. It is frustrating but, as many have posted, not frustrating enough for me to bend (or break) the rules. Just not how I do business (or how I want my children to see me doing business).

My hat's off to those who hold the line.

In my mind you may have underestimated repairs/maintenance as well as vacancy and over-estimated property management, but I'm certainly not informed on the historical experience for the property. Also, you did not mention any capital expenditures right up front, so assuming it is good-to-go and needs no rehab / major repairs.

If you assume all of your cost estimates are correct, you realize about $81/month/door. Not too bad. If your goal is $100/month/door, you would want to purchase the property for about $279,000 (which would give you 8.75% CoC ROI). If 10% ROI is desired, look to purchase this property at $244,000 (again, assuming your cost data is correct).

In the final analysis, the determination of what is a good ROI or per door return is up to you. If 8% return and $81/door is acceptable, then this is a good investment.