All Forum Posts by: Sean Gallagher

Maybe there was a misunderstanding, I'm taking over a property with an existing tenant / existing lease. I can't just get rid of the lease and have them sign mine.

But I'm pretty sure I can modify addendums if agreed between both parties.

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Quote from @Michael Smythe:

@Sean Gallagher you should try to get the tenant to sign your lease anyways, which you should be more familiar with!

Maybe there was a misunderstanding, I'm taking over a property with an existing tenant / existing lease. I can't just get rid of the lease and have them sign mine.

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Quote from @Laura Stayton:

It's impossible to answer this question with the information you provided...

How so? Purchasing a home with an existing tenant / existing lease. I have to honor the existing lease. As for the addendums go I feel these two addendums just complicate things and thought of removing them entirely. What information do you need in order to participate in this conversation.

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To simplify the existing lease I thought about asking the tenant if they would be ok modifying the addendums to get rid of the resident benefit package and the building protection plan. I will insure the property as a non-owner occupant. Does anyone have an objection as to why I should continue with these services? I would have to get with the property manager and mimic the exact plans they have set up in the lease, all of which were probably customized by the PM to get a few extra dollars. Just seems like unnecessary work. I'd rather simplify the lease and then raise then rent at lease renewal. Thoughts?

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Curious why you would target Texas? Property taxes are pretty crazy.

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Quote from @Bob Stevens:

Quote from @Sean Gallagher:

Quote from @Bob Stevens:

Quote from @Hassan Asif:

Quote from @Saad D.:

Hi All,

I was wondering are you still using the 1% rule when doing quick and dirty new deal analysis? Is anyone out there still able to achieve the 1% rule and in which markets?

Recently I noticed I get to 0.7 or 0.8% at best (i.e. 100k purchase price, $700-800 rent per month).

Excited to learn from you all!

The 1% rule is still a useful benchmark for quickly evaluating deals, but in today's market, it's becoming harder to achieve, especially in competitive or appreciating areas. That said, you should adapt your strategy based on the market conditions.

In lower-cost markets or areas with less competition, you might still be able to hit 1%. However, with rising property prices and rents not keeping pace, it’s becoming more common to see 0.7% to 0.8%. In those situations, focus on value-add opportunities—like rehab, repositioning, or optimizing expenses—that can increase the return on your investment.

Keep in mind, the 1% rule is just a quick filter. Always dig deeper into the numbers (cash flow, CapEx, etc.) before making any decisions.

2% is my norm :)

Are these section 8? Pretty tough to get a B home in a nice neighborhood to meet the 2% rule. Most likely going to be a C / section 8?

I never bought into the BS ABCD area thing . Makes zero sense . A areas is where you n I would live , can't make money there . So eveything starts with a B . The are not terrible war zone areas . All in full Reno 76kish, value 125-135k 1700 rent . Great deal .

Understood, I'm starting to learn the markets better. Appreciate you sharing this info.

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Atlanta, Georgia

Quote from @Stetson Oates:

Quote from @Sean Gallagher:

Quote from @Stetson Oates:

Quote from @Sean Gallagher:

Quote from @Nick C.:

There is no correct answer. Everyone’s risk tolerance is different. I know investors who leverage 100%, and ones that purchase all cash, and plenty in between.
COC return is a horrible metric. Here's an extreme example to illustrate - if you 100% leverage a purchase for $300k and it's worth $100k and you're cash flowing $5/mo, your COC return is infinite. Sounds good. But the deal is still horrible.

I guess the trouble I'm having is... if I want to maximize cash flow.. analyzing the deal to make a cash offer. I'll keep digging

It's great to buy all cash and maximize the cash flow. It's even better to leverage 25% and still cash flow a ton. Debt is a deterrent for lawsuits too. I'm good with a portfolio being 25% to 45% LTV. Still cashflows a lot and uses debt responsibly to expand a little faster.

I'm curious what you are looking at when doing a deal similar to this to make the right cash offer of not too little but also not too much when thinking strictly in terms of cashflow.

My analysis must cover the payment plus $1,000/month if I'm using leverage. The $1,000/month is a gross number and doesn't include Insurance, vacancy, maintenance, or any other expenses. My thoughts are that the $1,000 cash flow will cover all of these in excess. Now I do know my cash flow number with all expenses, including the ones listed, and I typically end up with a net of $400-$500 per month even though I'm collecting the excess as well. I also do not spend any of the net and reinvest it in RE or equities.

Copy that, this sounds pretty specific for the same type of home with the same expected rent, is that because this is only what you look for? Example a cheap home that rents for 1000 might work well but your analysis from above would be a good bit different.

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Quote from @Stetson Oates:

Quote from @Sean Gallagher:

Quote from @Nick C.:

I guess the trouble I'm having is... if I want to maximize cash flow.. analyzing the deal to make a cash offer. I'll keep digging

I'm curious what you are looking at when doing a deal similar to this to make the right cash offer of not too little but also not too much when thinking strictly in terms of cashflow.

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All Forum Posts by: Sean Gallagher

Sean Gallagher has started 18 posts and replied 139 times.

Post: Taking over an existing lease with addendums, RBP, BPP.

Post: Taking over an existing lease with addendums, RBP, BPP.

Post: Taking over an existing lease with addendums, RBP, BPP.

Post: Taking over an existing lease with addendums, RBP, BPP.

Post: Taking over an existing lease with addendums, RBP, BPP.

Post: Taking over an existing lease with addendums, RBP, BPP.

Post: Need advice regarding which areas to target for out of state investing

Post: Is the 1% rule dead?

Post: COC returns, leveraged versus buying all cash

Post: COC returns, leveraged versus buying all cash

Sean Gallagher has started 18 posts and replied 139 times.

Biggerpockets Logo Post: Taking over an existing lease with addendums, RBP, BPP.

Biggerpockets Logo Post: Taking over an existing lease with addendums, RBP, BPP.

Biggerpockets Logo Post: Taking over an existing lease with addendums, RBP, BPP.

Biggerpockets Logo Post: Taking over an existing lease with addendums, RBP, BPP.

Biggerpockets Logo Post: Taking over an existing lease with addendums, RBP, BPP.

Biggerpockets Logo Post: Taking over an existing lease with addendums, RBP, BPP.

Biggerpockets Logo Post: Need advice regarding which areas to target for out of state investing

Biggerpockets Logo Post: Is the 1% rule dead?

Biggerpockets Logo Post: COC returns, leveraged versus buying all cash

Biggerpockets Logo Post: COC returns, leveraged versus buying all cash

Post: Taking over an existing lease with addendums, RBP, BPP.

Post: Taking over an existing lease with addendums, RBP, BPP.

Post: Taking over an existing lease with addendums, RBP, BPP.

Post: Taking over an existing lease with addendums, RBP, BPP.

Post: Taking over an existing lease with addendums, RBP, BPP.

Post: Taking over an existing lease with addendums, RBP, BPP.

Post: Need advice regarding which areas to target for out of state investing

Post: Is the 1% rule dead?

Post: COC returns, leveraged versus buying all cash

Post: COC returns, leveraged versus buying all cash