All Forum Posts by: Raj Gandhi

IMO, flipping makes sense in certain markets where there's both a good supply of distressed properties and demand for nicer properties.  Profit from flipping depends on one's ability to find deals and move a large volume of properties.

Buy and hold renting is less exciting.  You should be able to determine a rate of return for your area based on comps and rental rates.  The downside of renting is managing tenant issues and slow cycle time between purchases (boredom).  One way to manage risk of really bad things (eviction, furnace, foundation, etc) with buy and hold is to have a larger number of properties.  That is, you're bound to have unexpected repairs and vacancies.  It is better to have several less expensive properties bringing in income while one is out of commission than to risk having a single expensive property out of commission.

One can certainly go broke with a bad rental purchase but I think flipping caries a greater risk.  During the housing crash, flippers were the ones stuck with inventory they couldn't sell and debts they couldn't pay.  Landlords in a reasonable market (not Detroit) can weather a storm like that of a few years as long as their original numbers made sense.

Welcome!  Let me know if you're interested in Eastern suburbs.

My leases say tenants are responsible for the first $50 of any service call.  Without anything in your lease for guidance, the bill is a toss-up and depends on the relationship you have or want to have with your tenants.  I'd probably pay it.

I'd have a conversation with the tenant reading the notes from the plumber.  Don't make value judgements but try to understand the information together to ensure the problem doesn't come back.

@Mark Turnbull welcome to the forums as a poster.  10 to 15 properties is reasonable but don't set goals that are too easy to achieve.  Be outrageous!

Seriously, Ferguson?  I thought for sure this was some troll.  Hope you have good fire insurance!

...attempting to be serious.  I'd suggest going back to your title company and pay for their services including title search and title insurance.  Your purchase price is so low, you can afford to pay $500-$1k for that assurance.

Your property manager can probably handle Section 8.  Although you might consider managing it yourself.  Your local PHA has education resources for landlords.

Leverage this property by doing a cash-out refi but take your time (3 months?).  Can you do some low-cost fix-ups like paint, flooring and landscaping?  If so, the appraisal might come back better.

Are you over-estimating insurance or maintenance?  Under-estimated affects of depreciation on cash-flow?

If not, I'd suggest keep searching.  The current market is high but there are still rentals priced better than negative cash-flow.  What if... we're at a peak, market prices drop 20% and rental market gets soft like it did in the late 2000s?  You could be weathering negative returns for a decade.

If you can't find a decent deal in real estate, put your down payment in a stock index fund. In 10 years that should at least double (8% return).

@Jeff Trevarthen and @Michael Henry both have good advice with the cash-out refi.  A worse idea, but viable, would be to sell your existing property and use the proceeds as a downpayment to buy a much larger rental.  You'd avoid paying capital gains in this process with a 1031 Exchange.

I personally use craigslist for the stove and fridge. The down-side with used appliances is moving them and the longevity. However, for the discount, I can afford to buy replacements.  Microwaves at big box stores are $150.  The most difficult one is the dishwasher.  Used dishwashers are generally nasty.

If you buy appliances on craigslist, write yourself a receipt so you can depreciate the purchase on your taxes appropriately (and send use tax to the state).

Ikea has appliances but they're not much cheaper than big box stores.

In the Twin Cities we have some scratch and dent places including Appliancesmart.

@Mitch H. I'm pretty sure my friendly, locally-owned title company would have generic forms necessary to put together the offer with creative financing.  I like my REA but it would certainly be nice to save 7% commission.

Looks good to me.  I'd ask for P & L for the last four years.  I'd also ask the seller to take a 2nd mortgage to decrease your down payment.  Get a firm number on insurance.  Is there income from laundry?