All Forum Posts by: Son-Hsiung Riu

$1600 / mo rent seems a little rich for rent. Here are a couple rent comps that I see in the area

https://www.zillow.com/homedetails/1872-Central-Pl...

https://www.zillow.com/homes/for_rent/48718371_zpi...

https://www.zillow.com/homes/for_rent/2088540393_z...

Assuming:

$1250  for the 2bd / 1 ba

$1400 or the 2 bed / 1.75 ba

5 or 7 year ARM with a 25 year amort (commercial financing)

25% down

8% management fee

https://www.biggerpockets.com/calculators/shared/3...

This is also assuming there are no big upfront fixes.

Probably explains why they've been on the market for 97 days with no changes in status (no pending inspection / no pending feasibility) with a price drop added in for good measure.

Reserve studies are expensive so the fact that they are foregoing the study until 2019 is ok in my opinion.

The move from 56% to 27% sounds reasonable as I'm guessing paid for a larger project, but you'll want to pay attention to what the study says needs to be addressed and if the condo will have a shortfall.   

The funny thing with reserve studies is that any project that at peak reaches 70% is actually considered well-capitalized. I'd challenge anyone to find a reserve study of an age established condo that is 100% capitalized. 

@Tom Starlin, 

From your purchase price, you have a lot of flexibility. I agree with @Patrick Britton the caution of investing in something "better", especially since you seem to have good handle of the properties. 

One comment I was looking to find is: What objective are you looking to accomplish? And perhaps the true nature of your question is that you are not sure yourself.

With that being said, I also have (had) two condos in Renton (98055) and in a very similar situation as you. I recently sold one (Acquired 2014 for $93k / Improved $35k over the course of 4 years. $25k of which in preparation for sale / Sold June 2018 $233k)

Will sell the other condo once the tenant's lease expired,

The reasons I sold were:

1.) I was using the appreciation to pay down leverage I used to acquire small multi-family in Tac.

2.) I was tired of dealing with the HOA.

3.) Many of the condos in secondary  / tertiary markets are now just starting to recover from 2008 and push to new price highs, but their capital reserves have not (especially in older buildings)  I would go back and review the reserve study of your condo and see how well/poorly they are capitalized. If they are at 20% or less, I'd be very tempted to sell. In my two condos, they are under 25% which is why I made the decision to sell.   

Hi @Julie Marquez, 

Thank you for the invite and launching this. I was just in MV the past few days and would have made it had it been earlier in the week.  I have a few commitments that will keep me in Seattle. so I unfortunately won't be able to make this one. Keep me posted on upcoming meetings, I would love to connect. 

I typically use a 8% vacancy (1 month vacant per year). 

I would also budget 10% for large capital expenditures. 

About 5% cash on cash

About 8.8% return when you factor in principal reduction

About 12% return if you factor in a 1% appreciation rate

@Vlad Didok House hacking is an incredible entry into real estate. Looking back, I wish I had the foresight to house hack my first residence...I would be that much further ahead

@Roger Vi I would love to chat anytime you're available. I like the north end and think long-term holds can do very well. I also think the upside appreciation is there especially through the Everett / Lynnwood / Edmonds corridor.

@Jennifer King My approach is pretty simple.  

The what and why of partners: 

1.) Personally, I would prefer to own 20% of 100 properties than 100% of 20 properties. I'm still invested but it's now spread over a larger and more diverse portfolio. This spreads out your risk significantly such that 1 poor performing / problematic rental is not likely to cripple your personal finances. 

2.) Initial capital calls for bigger items (roof / renovation) are easier to swallow if they're split between several parties as opposed to 1 person.

3.) The partners I'm looking for must be working, have good credit and be able to qualify to mortgages. Every partner acquiring the property will be on title but only 1 of the partners is used when it comes to qualifying for the mortgage. 

4.) Ideally, a partner can add a complementary skill set to the collective. Agents / Lenders / Contractors / Accountants / Web Developer / Etc. I'm not suggesting anyone works for free, but there are mutually beneficial discounts that are to be expected.

Best wishes all. 

There is a soft cap and hard cap of # of financed properties. The soft cap is 4 and the hard cap is 10. Once you go above 4 financed properties, the lender will scrutinize your finances a little tighter and may also apply a loan to value restriction. I'm not sure i fully understand your marital status but theoretically, both you and your spouse could finance and hold 10 properties individually.

Hi BP!

Longtime lurker and podcast follower of BP who inexplicably never got more engaged in the wider community.

I've worked in mortgage lending since 2003 and happy to answer any questions or be a sounding board.

Over the years, I've accumulated a few condos / multi as long-term holds. The insanely hot and crazy local Seattle market has driven me to look farther north / south for more sanely priced holdings.

I'm building my network of friends / families who are inclined to invest in real estate but not necessarily interested in actively engaging / managing properties. 

Ping me anytime.