All Forum Posts by: Michael Johnson

1. FHA requires you to move in within 60-days with some exceptions. Your broker will know your situation better and can give you info on that product. In regards to your tenants, I am not 100% on AL laws but, generally you can serve the tenant notice and they have to move out in x days.

2. FHA is an option if you live in one of the units. Your realtor needs to do some homework, after-all it's their job to be your trusted agent in this process.

3. Do you plan to manage it yourself? Have you factored in your PMI costs? Do you have someone who can fix the other unit or are you handy?

In addition to what Mo said, I like to compare these two from the standpoint of cash flow = dividends, and property appreciation = stock price increase. Buying a property is like investing on margin and the increased leverage allows you to boost your return. If you put 20% on that $150,000 property, and then that property goes up 6%, that's a 30% return. Additionally, your tenants are paying off your loan and putting a few bucks in your pocket.

Ryan,

What I did is drafted partnership agreements with each partner for each property that clearly defines each person's interest, responsibility, and repercussion for breach of contract. This works well since each property may be a little different as far as money, time, etc. invested and isolates each asset in case one partner decides one day he isn't getting a fair deal. 

While I can't say this will work for everyone, it has served me well in my situations.

Just a quick input, I'll usually start with repairs and capex at 8-10% each in my spreadsheet if I'm doing a rough est. If in going all in, I itemize each capex item and expected life to yield an accurate monthly allowance.

I am along the same lines of Matthew,

10% for management

10% for maintenance

8% for cap ex

and 4% vacancy (depending on the area I am researching)

For insurance I have found the best bet is to call and get an actual quote as rates tend to vary significantly and are tough to estimate with a % of rents

One last note, with commercial financing many lends want more than 25% and base their lending on debt coverage ratios not % of purchase price.

I have found the hardest part of the process is finding a management company that you like and can trust. Interview several companies, don't just base your decision on lowest price. 

My first was 5 hours away in another state.

As someone who has spend the better part of a year researching places to live in Texas, start with Austin. Look at the job and population growth. you won't find a much better market than there. 

Mel, I'm not going to touch on TK properties, but I have used out of state agents before and bought property sight unseen. I found them on biggerpockets and utilized their network in the repair work. 

You also need to consider the time value of money. A dollar spend on tax 10 years from now is worth significantly less than a dollar spent today. This principle, as well as the ability to time your tax payments, is the real power behind the 1031.

Look at all these San Diegans on here! And such varying opinions of the market here as well.  I don't think we have it the top here yet, though we may see some cooling depending where interest rates go. Supply is extremely low (1.5 months for most residential types and prices last I checked), and vacancy for MFUs is also low.

Alissa, feel free to reach out to me at any time with any questions you may have.

@Ali Boone I would like to have something that is pretty close to turnkey. I have relatives in the Birmingham area that could help with a remodel if needed, but I don't have anyone in Indy. 

@ Lane Kawaoka If you don't mind me asking what price range are your rentals and what areas (feel free to PM me for privacy's sake)?