All Forum Posts by: Perry Rosenbloom

Jon Holdman

I will not be using a Property Management company initially. What I meant by turnkey is no rehab work.

Maybe I'm naive and foolish (probably), but I know my home has not required anywhere near 1,000 in repairs and maintenance every month. My family that owns property throughout Florida and Atlanta have not had anything near 40-50% in terms of expenses. And local investors I've spoken with outside of this message board disagree with that rule as well.

We'll see how naive and foolish I am, but I would imagine renting to higher quality tenants with higher quality finishings results in lower expenses.

Chris Clothier - Thank you for your insight. I plan to manage the property myself, at least initially. I feel it's important to understand how to effectively manage tenants so that I can effectively manage my property managers.

I am comfortable with my projections... Hopefully they're accurate :-) And thank you for the encouragement on the plan. It's taken some time to educate myself on REI so that I could come up with an effective plan. Although the best laid plans of mice and men... :-)

Mike M. Thank you! My objectives are 20%+ COC. I don't imagine it will stay that way forever... Just initially as everything is renovated and fairly new. HVAC is newish and has been serviced every 6 months for the last 2 years. Hot water heater is 2 years old. Roof is older.

I don't really have an exit strategy. But I do have a 20 year strategy. According to my projections, this first home should be paid off in year 8. After that, things begin picking up steam in terms of principal paydown for other homes. Cash still flows at 10% drop in rental prices... but not great.

Good luck on your offer, Mike!

I agree with Ken P.

In my very limited experience, with this one property we are under contract on, all property management companies said that it wouldn't rent for more than 1,200-1,300/month... Well, we have about a dozen tenants lined up, begging us to lease it to them for $1,500/month, which was our target.

Hi Everyone,

I'm under contract on a 4BR/2BA home. It's very clear that I'm under contract at market value price. 147,500. However, it will rent for $1,500/month and taxes are dirt cheap.

It is also entirely renovated and has many appealing features for higher end clientele in the area (exposed wood beams, gourmet kitchen, hardwood floors throughout). It is by far the nicest home in the subdivision and we are receiving an incredible amount of interest via Craigslist for the home at $1,500/month. I have no concerns about it achieving that rent.

My question is this: Clearly, we are paying market value. However, it flows cash... and should flow very nicely. It is the epitome of a turn-key rental, which is very important for my wife and I at this stage in our lives as I run an Internet Marketing business and we have a 9 week old son.

The home is located in an area that historically does not appreciate well.

What are your thoughts on this as a first investment? I know you make money when you buy, but the market is making this more and more challenging to do in my area. If you find a deal that cash flows, even if it's priced at market value, are you shooting yourself in the foot? I'm estimating a COC of about 21-23%.

My thoughts were, at these interest rates (we are locked in at 4.5% for 30 years), it is OK to buy at market value because you are essentially getting loaned money at below market value.

About me and my strategy:

I'm 28 years old. My strategy is to be acquiring 1 home every 1-1.5 years with 20% down until I hit 4 properties. Taking their cash flow, paying off one home at a time and once one home is paid off, acquiring a new one and continuing that process until I'm in a position to either pay cash for a home, or pay it off within 3-4 years. My plan is to execute that over the course of 20+ years to eventually own 10+ homes.

Thanks, Zachary Sexton... I'm hopeful :-)

Pat Flynn did a good job with his security guard site, but I wouldn't touch his backlinking strategy with a 10 foot pole.

I don't want to stray too far off topic, but my biggest site is on Glacier National Park at www.glacier-national-park-travel-guide.com

I also detail a virtual rehab here: http://www.seosherpas.com/after-buying-an-established-website/ ... There are so many similarities between virtual real estate and physical real estate. Excited to diversify into some physical objects though :-)

Thank you, Mark Ferguson. I appreciate your knowledge, help and guidance here. I find your waterfall investment strategy very appealing and inspiring and is the path I plan to be marching down.

I hope I'm not off on those rental projections. I was surprised by it myself when I posted the ad on Craigslist. Last weekend alone I received close to 10 inquiries, 3 of which are very strong.

I hope I'll be able to update this thread in a month saying that I have found great tenants for a 1 year lease at 1,500 :-)

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Matthew Rutledge - I agree! :-) Just hope that my paper translates to reality.

Grant P. Thanks! We'll see how it goes :-)

Mark Ferguson,

I had looked at those comps and yes, it's clear that I'm paying market value.

The last home we had under contract was very much under market price, but would have required significant rehab work. More than we were willing to do.

From what I have gathered, the homes north of 10th St have very different rental clientele.

And from what research I've done, the further west of the University you are, the lower rent you can command. All things being equal, what is the difference between buying a home for 130,000 that rented for 1,300/month vs 150,000 that rented for 1,500/month? With this property I can target a diverse market of single families, grad students, young professionals, university employees etc.

Looking at house #5 that you bought, you put in a total of 36.5k. Your COC is estimated to be 23.8% (prior to any R&M)

If I were to calculate my COC before any R&M, it would be 31%. Under that model, I would make my cash back in a shorter amount of time and be able to reinvest it sooner.

I understand your point about having more equity in the house. But I have an 8 week old son, run an SEO consulting business and operate 6 (somewhat) passive income websites. My time is limited. And so is my knowledge of rehabbing a property. Frankly I just don't have the mental capacity nor time right now to manage my first construction job.

For a turn key investment, at these interest rates and being 28 years old, I feel that I have plenty of time to ride out a wave, even if I bought at market price today.

Ultimately, I made the decision to have less equity in the home, buy turn key and target a different clientele.

Maybe I'm naive and I'm missing something here. I'm sure I am :-) But in terms of property #5 vs this property, I see my cash returning to me more quickly, whereas you'll have your property paid off free and clear sooner, giving you more cash flow in a shorter amount of time.

Would I rather that route? Definitely. Especially for my next property.

You're fortunate to have the skills and network to rehab a property in a short amount of time. I need to get there still. Until that point, is it foolish of me to invest in a home that could have 23% COC with these interest rates? My gut says no.

(sorry for the essay lol)

Renting as a single family... Although getting a good number of inquiries from young professionals and grad students. Some don't work with the zoning laws while others are a brother/brother + friend or brother/sister + friend.

Looked at some homes in the 24th ave area. Even with all those repairs you had to do on #5, you still got a great deal compared to what is being sold today.

Mark, where is rental house #5 located? The home we're under contact on is just south of the University, near Farr Park.

From my research, it seems like that area commands higher rents than other areas we were looking at (specifically the neighborhoods just west of the hospital).

Love your investing strategy and wish we started looking at homes in late 2012. The market seems to have recovered quite a lot since then...