All Forum Posts by: Perry Rosenbloom

Mathew Wray - Not yet. We have all schedulings set for the 15th (about 16 parties so far). Will update this thread once I have an update :-)

Grant P. - Thanks! Paper is paper though... Hopefully I'm not terribly off. Inspection came back just about as expected... except the furnace is a TINY bit older than the impression given (as in 20 years older lol). That will likely change a few things...

Robert Steele - That's what I figured :-)

Mark Ferguson - Any advice on early termination fees? And re: rental and the rates: Off of the research I've done and info gathered, it does seem like a perfect storm for a landlord there. Homes have recovered nicely, accidental landlords are selling and kicking their tenants out, which is creating a surplus of tenants and a decreasing number of rental properties.

Again, hopeful on the 1,500. The one intangible about that property are the exposed beams. It's a luxury aesthetic and is driving these prospective tenants to (theoretically) pay a little more.

David Beard -- Thanks for a quick analysis that makes perfect sense. I agree: If this home instead rents for 1,400/month, does that mean my expenses are suddenly only 700/month?

I'm hopeful on the $1,500! Inspection report came back today and is about as flawless as you can get.

Ali Boone Thank you! Entirely clear. Assuming that it rents at $1,500/month, which I am confident about, this property still flows decently even with the % rule applied.

David Beard - Thank you for that detailed analysis. It all makes sense. And I'm sure I'm estimating on the low side, too :-)

Jon Holdman - I always hope for the best, but prepare for situations far from the best.

Ali Boone - Hey, Ali! Been meaning to drop you a note for a while now... Just always seems to slip through the cracks. I see exactly what you mean re: percentages. I guess this conversation has steered more into a debate of the 40/50% rule as opposed to market value and cash flow (although they are intertwined).

I know expenses over the long run will be higher. I'm more hopeful that in the short run, for this particular property, they will be lower and enable me to see my cash back sooner.

Here's where I have a problem with these rules though... A furnace costs the same in a 1,500 SQ FT home as it does in a 2,500 SQ FT home, regardless of neighborhood. However, the 1,500 SQ FT home will naturally use the furnace less aggressively as there is less to heat. And if the 1,500 SQ FT home has newer windows it requires even less strain on the furnace.

I just don't see how percentages can be equally applied across the board without additional analysis and estimations based on unique circumstances.

Mark Ferguson - I've received 4 phone calls so far today, 3 yesterday and 5 on Saturday. I have around a dozen prospective families lined up to see the place on the 15th. I know you have far more experience than I do in Greeley and in real estate, but this is what I'm seeing. Everyone I speak to is extremely excited to see the property, mainly because of the unique amenities like exposed beams.

Roof hasn't been checked out yet... Inspection is today...

Patrick L. Re: Vacancy rates: That's the state of affairs in areas of Colorado right now. I agree re: time and property management. But I need to learn to manage my tenants before I can manage my manager.

And I'll get there with qualified professionals... One thing at a time...

Matt Devincenzo - Thank you for your thoughts. Yes, my family does fall into one of those 2 categories.

With Insurance and Taxes rolled into the expenses, the % rule of thumb seems much more realistic, long term, in my uneducated viewpoint :-)

And if that's the case, the COC is dropped to 14.77%. Not nearly as attractive. Does it kill me though? No... Like you said, I'd rather get off the sidelines and take advantage of these interest rates, learn, and make a better decision in 6 months - 1 year.

I'm not the type of person to read books about taking action and forums ad nauseum. I'd rather educate myself to the point that I feel comfortable taking a risk and move forward. You need experience to learn, IMO.

Besides... I'll still get equity accrual, which makes the ROI solid enough for me overall :-)

'Pretty sure I didn't claim you would spend $1000 a month on repairs. I did come up with a figure of $750 a month. With the new analysis (below), that's reduced to $540 (the $210 difference being the PM costs, which is $150 a month plus $750 once a year for a turnover.) Out of that $540 you're paying:'

Jon Holdman -- Sorry. I was comparing the $1,000 to what my home would currently rent for (2k-2,200). New roof, new furnace, newer H20 heater...

I appreciate you taking the time to do that analysis. And I agree that the second analysis seems fair long term. I am (foolishly?) hopeful that a newly remodeled property will see better returns initially and allow me to see my money come back to me more quickly.

Regardless, even with 0% appreciation, your analysis + equity accrual is an ROI of 21%. I'm happy with that :-)

Patrick L. -- Thank you and that all makes perfect sense. Are you including taxes and insurance in your 40/50% rule? I know some do and some don't...

I would imagine on a remodeled property overall expenses would be lower in the initial years, allowing me to recoup my investment faster and putting some cash into a piggy bank for the bigger ticket items.

I'm not assuming my only expense will be PITI. 2% vacancy rate + an additional $2,100+/- in yearly expenses for the first few years. After 3-5 years, I fully expect that will begin to increase.

Insurance at 720, taxes at 682. Leaves a cash flow of 7k/year before taxes & depreciation to stash some away for a rainy day and some for principal reduction/another property.

Maybe in a year I'll be begging for mercy at my ignorance. But every property, location, landlord and tenants are unique.

Oh, and yes, Chris Clothier, SEOSherpas is my business. I wasn't aware the benefits of a Pro subscription... Might have to jump on that :-)