All Forum Posts by: Spenser Harding

-My strategy has somewhat changed, I am going to stick to SFR rentals for my first investments.

-I realize now that being a landlord for free sucks, so I look for $100 minimum after expenses and $150 cap ex.

-Pierce Co seems to be the best place to achieve that and the prices are about half of what they were in 2007 so not exactly all time high prices.

-Not quite sure "no one" would rent a 3/1 but I agree a second would be better.

-Not desperate, eager as I have been sitting on the sidelines for about 2 years and am looking for something to rehab, rent, and retain for the long term.

Where do you own and why do you keep saying they are all time high prices? I understand the market in Seattle metro has bottomed out around oct '12 and has been increasing since then so I want to get in on an increasing market. Economically speaking, Seattle has a strong economy, continues to add jobs, and housing prices will only increase, I don't want to wait for the next bust which is probably atleast 4 years away for which I will buy then as well.

Thanks Josh, sounds like you've got a couple of good deals. I have found a 3/1 SFR in Tacoma for $100k that will rent for $1050 after some touch ups. It is right near a mall, 2 minutes from freeway on ramp, 5 minutes from downtown and 8 minutes from a train station so location is great. It is also in a lower crime area of Tacoma.

Ditto the mentioning other uses and looking into the cost/benefit of making it a legit bedrooms. I have been looking at some old 1920 house in Pierce County WA that are legit 2 bedrooms but have other non-conforming rooms that with some money can be made into a 3rd, but the question is how much? It depends on what you want to do.

On the other hand, in the same neighborhood on padmapper.com I saw a place that said something like "huge 2 bedroom/1 bath with extra den/office/nonconforming bedroom etc."

@Mitch Dowler - my goals in general are for strong cashflow, increase the rents to market, and transistion utilities to tenants. I estimate a purchase price for this to provide the ideal numbers is somewhere around 60-65k, I just don't know how to get the seller to agree to that because from what I have read, multi family's should be purchased on the value created by current performance. Any tips on writing a letter to accompany that low of an offer?

Josh and Justin - thank you so much. I may be analyzing it a bit too much then, how much does the fact that these units are rented for under market rates and increasing them to market would increase the current estimated cashflow from $90/mo to $190/month ($50/unit)? Achieving cashflow in Justin's book atleast. Also, the overall condition of the property is good, new appliances, new h20 heater, etc.

You bring up a good point about cashflow vs time/headaches, I didn't really evaluate that. I think in the metro area, prices are very high and buyers are overpaying for homes. But what I have found recently is on the outskirts prices aren't overinflated in my opinion. I bring up this option because it is hard enough to find a duplex anywhere around seattle within my price range.

Ha! Don't steal my deal! It is outside the seattle metro area.

I shot an email to the owner to clarify a few questions. @Aaron - since this would be my first investment - I don't have quite as strict requirements on the return side of the deal. I will get there but I don't mind trading return for knowledge at this point.

My short term goals are to 1) learn how to manage the property by doing it 2) be cashflow positive atleast $50/unit 3) increase rents gradually to market. Through running the numbers using the same info and paying all the mention expenses, doing the PM by my self, allocating $150/mo for "cap ex" ( I orignally planned $100), and including 8% vacancy - get about $45/mo per unit paying full price and a 25% down payment. Now with that beig said, I am looking to get a better deal on this property.

Hey BP, came accross a duplex and I feel the numbers are out of whack some where so I need some help as I don't want to over pay.

-2 studio units @ $500/month, rentometer/market has average rent around $575.
-Listed for $99900
-Total Monthly Expenses $280 (water/sewer/garbage + monthly insurance and tax, $3360 annually)
-NOI of $720 monthly ($8640 annually)
-Cap rate 9.70
-GRM of 30

I don't get how they got 30 for GRM and when I calculate cap rate, 8640/99900 = 8.64, not 9.70. Max purchase price I calculate using the stated rate is 9.7*8640 = $83808. The listed numbers don't add up so I need some other oppinions!

Congrats! That is some good motivation for me as a new investor that has yet to pull the trigger. Thanks for sharing!