All Forum Posts by: Sebby Gabre Madhin

as others have said, neither is definitely better.

We use Home Depot because, with a $1500 order, we can use the Pro desk and get significant discounts, but this very much depends on the pro desk person you are dealing with.  We have one who is awesome and gives us discounts that are great (they have discretion to do some overrides).

I didn't think it was all that terrible of a deal to start. He puts his money at risk. You contribute no money but instead put in sweat equity. At the end of seven years you've essentially earned whatever half of the building is worth (sounds like its worth $140k now). Other than your time, which does have value, you're not risking anything. If the market crashes, if the rental market dies off, etc etc your friend is out all the $$$. As for the second iteration, sure, if you need the money to live. Otherwise, if you have enough other income, I'd chose the first and be 1/2 owner of the fully paid off property twice as fast. Sounds like without him you are tapped out of cash and would have no opportunity to buy at all.

Why is everybody ragging on the OP?  He already admitted that that he didn't know enough and has made mistakes....

Anyway, I would agree with advice to keep the multi and ditch the townhouse, even if you have to pay a little to get out from under it.  It's hard to get a good multiproperty and it sounds like you have a good deal which you (by luck or by skill, who cares!!) bought right.  Now you just need to decide if you really want to stay in real estate.  If not, sell and take your $$ happily elsewhere.  If you do want to stay in the game, LEARN. 

An empty unit is such a drag on your bottom line, need to correct that immediately.  Nothing should be more important to you than rehabbing and getting that unit back on ASAP.

Unless Michigan is very different from Florida, if you have a tenant in place that hasn't paid in 3 months and you are, JUST NOW, getting to your court date, then you need to evict your property manager as well as your tenant. Go to your local REIA, look for recommendations, and, again, LEARN.

IF you want to get out of real estate, no shame in selling, but if you want to stay in, you are not very  likely, in today's hot multifam market, to get as good of a deal as the one you got in 2014. So the idea of selling this one to reinvest in another doesn't sound good to me unless there is really something fundamentally wrong with the property, not just with how it has been managed so far.

Another vote for landlord locks. We are getting up to our third order soon as we continue to grow rental portfolio. All under the same master key. We just randomly switch out cores between tenants. Yes tenants lose keys (and we can't duplicate them) a bit of a PITA to order more, but well worth it.

Thank you Dan!

Dan. Thank you again. This is a great thread and I'm learning tons. 

I may have missed it somewhere, but do you have a paint sprayer you would recommend for someone who does rental turnover and occasional rehab but no large scale painting?

DONATE IT! Give anything salvageable to your local Restore/Habitat for humanity and let them do some good with it. They have trucks and will pick some stuff up. I've both donated to them and bought stuff from them to use in rentals.

This is also how we have chosen to approach the work, a mix between doing a little ourselves and (mostly) farming it out.  You definitely need to build a good team and will need to have much of the work done by others. However, you should find out what you CAN do, even as a busy professional, and do that. 

For example, we lay our own LVT floors, pretty simple to do in a weekend after watching some online tutorials, and flooring person or handyman will charge .75-1.5/sq foot for this job. We do some light painting, change out fixtures/fans, change out cabinet pulls, do caulking on bathtubs and trim, etc etc.  Not easy, not fun, but helps the bottom line. 

In addition, doing SOME of the work yourself will help you know, to some degree, what things should cost...and what you don't want to do yourself, even if technically you can (laying laminate, mudding drywall, etc, etc)...Even if you don't do the work you should at least "watch the work." if you can.  It is a continuous learning process.

I don't really know enough of the numbers to be definitive, but on quick review this does not seem to work at all as a flip, not enough meat on the bone. If you buy at $180k and the FMV is $200k, not enough room to make a meaningful profit after holding costs and closing costs (on both ends, purchase and sale), not even counting the rehab cost (don't get fooled by that "coat of paint" argument)-- even if you were buying with cash and have no "cost of money" other than opportunity cost.

For a buy and hold...may be ok, but also doesn't seem great.  In my part of the world, and I think in most of Central Florida, you should be able to meet the 1% rule.  (actually, in Lake County I am going for 1.5% or better, but probably will be less in Orlando).  Buying for $180k and renting for, at best, $1675 doesn't meet that criteria.  You've done your calculation, although I don't know if you have accounted for vacancy, capex, repairs, property management etc, with some cash flow, but again, seems like a lot of capital tied up for $100/month cashflow.  You can likely do better in Central Florida, or elsewhere. 

If you're counting on appreciation...I don't have a crystal ball but I think that we are running a little high around here already, so wouldn't bank on it.

One final update..

We CLOSED yesterday, despite a couple more blips along the way (basically the sellers title company/closing agents sucked as much as their real estate agent)... but the best part was that the properties appraised for $65000 more than we paid.  Our reward for patience was well paid with EQUITY!

Thanks again for all the comments. Love BP!!!