All Forum Posts by: Sameer Kh

I would suggest you sell and 1031. When you've had a troubled investment, and there is a way to make a profit (or break even) and walk away, take it. Killing 4 years of cash flow with $6100 in repairs makes no sense. Get rid of it and move on to something bigger and better. I'm glad it appreciated - overall, you're probably coming out ahead on this investment, so is a good time to walk away. Also, the PM company sounds like they are being outrageous. Unless this person destroyed the place, $6100 for an SFR of this type is crazy. Steer clear of this company again. If you can, use the 1031 to get into a multi unit.

@Sameer Kh if the rent is $1280 and your debt is at $79k roughly there is no way you should be losing money or making $100 a month. Somewhere in this process your getting hosed big time. What are taxes insurance and hoa? $6100 for a make ready is silly ... you can find a good ole boy contractor (the one who is the guy that does the work) pay him $1500 for a week and he will do anything you want over there quick ! I , in general, thing property management companies bring no value and cost investors money outside of their 10%. Generally properties are over maintenance , make readys are always costly and rent is always a little bit low ..

The numbers don't seem to add up, but of course I don't have all the details. I am just thinking that your payment should be $600-700 with taxes and insurance (30 year). Your gross income after PM is $1152 so that leaves a $500 monthly spread to cover HOA and other expenses.

Have you just considered a cash out refinance? Push the term to 30 years an pull out as much of your cash as possible. Even if the deal doesn't cash flow well, there is two things to consider:

1. You can take the loss on this property as a way to help reduce taxes on your other rental income.

2. You are pulling the cash out, so you can go do another deal.

I am just looking at this thinking a $130K property that rents close to 1% that you say will keep appreciating, seems like a good long term play. 

What it sounds to me is happening is the the property management company is the one that's reaping profits of your property.

You didn't specify but I'm wondering if there have been a number of overpriced repairs that have kept this property from cashflowing for you. For what the property rents for, it seems like you should be able to make it cash flow and I suspect to make that happen you would need different management in there.

Have you considered principal pay down (equity growth) in your decision making process?

Also, in retrospect, based on repair expenses since purchase, do you feel the property was in "turn key" condition when you purchased it? If it wasn't, there's always some cost to stabilize a property after putting it in service and that may account for some of your losses.

@Sameer Kh you can rent the property using a lease option strategy (rent to own) and charge higher then market rent plus you don't have to worry about the maintenance as much because the tenant/buyer is in with the minset of an owner, and the move in costs are non refundable so you can get your fixing up expenses upfront.

@Sameer Kh If the property is local, hire out/do your own repairs/make ready. If not, sell. 6k is probably 3 times what you should pay. Sell and do not buy again out of state unless you want to do a repeat.

@Sameer Kh do you mind me asking your loan terms? A 30 year note would be about $600/month at 5.5% based on numbers provided and an educated guess at HOA. If you're in a 15 year note, I assume you'd have a decent amount of mortgage pay down after 20% of the payments made.

Is refinancing the remainder of the balance to longer terms an option you’d consider?

I’ve seen enough people regret selling a few years later here on BP to at least raise the idea of looking at as many creative options as possible before pulling the trigger and selling.

Have rents appreciated in 3 yrs? Can you prepay insurance or change deductible and get better rates? Could rent to own work in this scenario?

Just food for thought. I hope it helps, good luck!

@Sameer Kh when you say it cash flowed $1200 last year, is that after accounting for CapEx, repairs, vacancy, and any other predictable expenses?

From what you described for work and what the price is they gave you, it sounds about double what the cost should be or more. Now that it is vacant, fire your manager, find a few local contractors to get you bids and get it ready for showings. Sell the place and sit on the cash until you find a better deal. Right now you will 100% lose money for a long long time on this property with $6k for turnovers and $1200 cash flow best case. 

@Sameer Kh

I think betting on appreciation is risky. They’re turning every pasture out there into a new neighborhood which is going to increase your competition. I don’t think a 6% increase each year is amazing, especially with how fast the market is growing. So if you’re going to hold it, I would look at getting a new property manager and look at the area to see if it’s appreciating like new stores, Whole Foods, HEB, or something else getting built.