All Forum Posts by: Raj Gandhi

Welcome @Sean Serie , what is reverse wholesaling? 

I don't exactly believe in (forward) wholesaling... maybe I'll like reverse wholesaling better!

Hi.  I get what you're saying but don't necessarily agree, for myself.  :)  More importantly, your advice is good for the vast majority of owner occupants.

I find it interesting that you have an American name and Indian address.  Where I, on the other hand, have an Indian name and American address.  :)

Nice!  I really like terrible looking properties for the profit.  However, I can only handle the stress of a big project one at a time and then I need a cool down as well.  

Congratulations, you should write a blog post about Driving for Dollars with the windows down trying to smell for the bargain buys!

$7k is a reasonable budget.  The big variable is plumbing access.  

Could you sketch the floor plan noting where existing water and sewer lines are?  Take a pic of your sketch and post it to this thread.  

Gut and update the kitchen now.  Remove the existing cabinets intact if possible.  Sell those for $200 on craigslist.  Sell the double oven and fridge for $200 on craigslist.  Put the new 36" fridge where the old double-oven was.  24" wide base cabinet where the old fridge was.  To the left of that, put the new electric stove (need to have >15" counter space on either side of a cooktop).  Install an over the stove microwave.  To the left of that put the new dishwasher.  Left of that will be the sink with shiny new faucet.  Fill-in with corner cabinet, etc.

New cabinets $2000.

New SS dishwasher and microwave $700.

Used SS fridge and stove $1000.

New granite counter top $800.

Sink, faucet $500.

You'll be all-in for $5k. After tax deductions, you'll be at $3.5k (consult your tax pro). Raise rent $200/mo. (ROI ~= 40%) The improvement will pay for itself in 2 years and the property value will increase >$10k.

...that assessment is fairly unrealistic but might be worth consideration.

Do what @Steve Osowicz said.  Schedule the new lease duration to end around peak demand for your region (June?).

Minimizing vacancy is critical to profitability.  On the front-end, make your outgoing tenant pay for any vacancy.  The back-side will be your risk; that's why you're scheduling for peak demand.

It is really important to have a respectful tenant that wants to live there to take care of the property.  Allow your tenant to search for new prospects but also post your property for rent online as you normally would.  It will be more work for you but this is the risk and cost of doing business as a landlord.

Leases are mandatory but all this extra work might mean the difference between 0% and 10% vacancy this year.

@Kyle Evans , I've got five purposeful and profitable rentals.  #6 is is my former home (we moved a few months ago).  #6 looks bad on paper because I have lots of equity and am giving a discount to the current tenants.  They're friends and were willing to overlook some issues for a quicker move-in.  That worked to both our benefit.  Even at market-rate rent, debt service on #6 means weak cash flow.  It would be more logical to sell #6 and buy two quad-plex.  On the other hand, #6 was a 15 year loan with only 3.5 years remaining.  Cash flow will go way up when it is paid-off.  

Good luck Kyle.  Positive thinking is very powerful.

Go with straight-forward conventional financing.  If necessary, find relative to co-sign.

I was in my late 30s when I bought my first investment property.  However, when I graduated from college, I had $50k in student loans and $25k in cash to invest or buy a home.  My first job out of college paid well enough to service all my debt but would have taken 2 years to save-up $25k.  Instead, I was able to immediately buy my own home rather than renting.  A lot of people hate student loan debt but it worked out well for me.

If you're going to college, consider taking (subsidized) student loans for as much as possible.  No payments and no interest until 6 months after graduation.  In fact, you could try to milk your friends to do the same (pay the a %) and then agglomerate the funds to make another purchase.  This isn't really a very good idea but it is a little fun to consider.  :)

Seller takes the second mortgage so your primary mortgage stays at 80% LTV?

@Bob C. thanks.  My answers are usually skewed to buy & hold.  :)  The OP wasn't actually clear with the goal of this property...  we won't let that bother us with our answers!  lol