All Forum Posts by: Steven Lebischak

Brent Coombs I appreciate the reply and the good points! 

I understand the vacancy issue, and I may have  jumbled my train of thought, I don't foresee any repairs being needed because of all the work I put into it, but vacancy is a real concern. I have read both 3% and 10% are good numbers when calculating that expense. And you are right, I did not account for a management fee since I am planning on managing the property myself. My thinking was a management fee for a self managed property would be the income generated from the positive cash flow. I can see how that is a flawed way of thinking. 

To answer your question, I am planning on building my next primary residence, with an apartment over the garage. As for the second part of your question, I purchased the property I am currently living in with the intention of turning it into a rental in the future. I had just gotten a new job, and this proerty was a 10 minute commute from the job and well below what I was willing to spend. So I was always looking at this as an investment property, butI didn't know the first thing about REI at the time.

Let me ask you a question: The property value has increased by about $40k with comps selling for close to $200k. I am expecting my total rehab cost to come in at $14k. Would you suggest selling the property and looking for a better deal? 

While reading the Ultimate Beginners Guide I was introduced to the 50% Rule and the 70% Rule, and the 1% Rule I have heard was bumped up to 2%. I like the 70% Rule as a good guide to make sure you are getting a good deal, but when I crunched the numbers on the property I currently live in, using the 50% Rule I found I would actually have negative cash flow.

Ideally I would rent the property for $1,400/month, my mortgage comes to roughly $830/month which includes the taxes and insurance in escrow, bringing my operating costs to $1,530/month. 

I undertand the 50% Rule is there to cover vacancies and repairs, but just about everything in the property is new from the roof to the central air, and I don't foresee any major repairs for the foreseeable future. And as I stated, the taxes and insurance are escrowed in the mortgage. Would I be correct in assuming I could knock the 50% down to say, 20%, to net a positive cash flow of $600/month?

Thanks for the warm welcome everbody! I'm really oppimistic about investing in real estate, and I have already learned a lot and there is so much more to learn. It is great to see there are people that have faced many of the same things I am facing, and are willing to offer help and guidance to a newbie.

And it's great to see other Delaware investors here :)

Okay so after reading about the 50% Rule, I have a few more questions. If I escrow my taxes and insurance since this property is my primary residence, they don't count toward the expenses, right? As far as utilities go, is it common practice to cover utilites for properties whose utilites are seperately metered? I always assumed utilities would be covered by the renter, unless there was a situation of a single meter on a multifamily unit, or you were renting out a spare room, or in-law suite.

I don't think I'm following Aaron. Are you saying to get a HELOC and use that to buy another property, so I can rent out the property I get the HELOC for? Or use the money to buy a more profitable rental?

As I mentioned in my New Member Post I bought the house I am currently living in three years ago. It is a 3 bed 1.5 bath with a full basement and single car garage on about a 1/4 acre. I purchased the property with the intention of updating it, and then renting it out. Long story short life got in the way (more on that in the New Member Post). Now my wife and I are finally in a postion to finish the updates and we are faced with a decision to make. I purchased the house for $150k and currently have about $11k wrapped up in new kitchen, heat pump and roofing. I'm estimating another $4-5k for bathroom and flooring. My mortgage runs $830/month and rent in the area for a 3 bed 1.5 bath is around $1,400/month. I would be happy with making $600 profit every month especially since I have updated nearly everything in the house and it should be relatively low maintence for the foreseeable future. But, the market has gone up considerably in the last three years. The house across the street from me which is the same style but it has the garage converted into a living area sold for $205k last year, and similar properties are selling in the high $180's to mid $190's. 

This is a whole new world to me, and now I am questioning if it would be a better move to sell the house and try find a better deal, or if I should stick to my original plan and rent the property. I'm reading through The Ultimate Beginner's Guide now, but I still dont know the first thing about calculating my potential ROI and all the other fancy lingo that the pros use.

Hello everybody! 

I am a 26 year old that bought a house in Delaware 3 years ago with the intentions of doing some small updates and then moving on and renting the place out. But my then girlfriend moved to Florida for school, and I work swing shift with a week off every month, so I would work all the overtime I could during the 3 weeks and fly to Florida for my week off every month. That lasted a year and half. Then we got engaged and she moved in with me. then we spent a year and a half planning and saving for our wedding. Now we are finally in a place to get back on track with my orignal plan. I have a little more than half the work done, with just the bathroom and flooring to update. But I guess I'll start another thread detailing that in the appropriate category.