All Forum Posts by: Sudhanshu Singha

@Dzenan Catic I would definitely recommend always having the tenant turn on the utilities in their name so you don't get stuck with the bill if they end up with financial problems or you end up having to evict them. 

@Dev Paul You can find brand new townhomes for under 425k in Manassas, Va. That also would not be too far of a drive from your brother in Chantilly, Va either. Check out the townhomes from Stanley Martin at "The Landing at Cannon Branch" and "Drees Homes at Signal Hill Crossing". You should definitely be able to negotiate a townhome for under 425k in either of those communities in Manassas, Va.

With the current Covid-19 crisis companies are starved for cash so I definitely think you can get a bigger discount on any move-in-ready home home rather than building from scratch.

@Dev Paul If you are willing to go down further south to Fredericksburg you will be able to able to buy brand new SFR or townhome from RYAN Homes/Stanley Martin within your price range. They are building new 95 express lanes which should go down to Fredericksburg or near it and once that is done you should be able to make it to D.C within an hour.

I would recommend checking out The Landing at Central Park in Fredericksburg. You can get a brand new stanley martin townhome for around 330k there and the location is very convenient due to close proximity of retail and grocery nearby.

Another nice subdivision further north is Potomac Shores. I think you might be able to find/negotiate a Ryan homes townhouse down to 400-425k. The area is very nice and will be the first residential subdivision in Virginia to include a VRE station as part of the development. Because of that reason it should be in high demand for future renters since the VRE has stops in crystal city (future amazon HQ) and D.C (Federal Employees).

@Mike Pastoor I agree with @Denise Brown-Puryear that paying more towards your principal so that you can pay your property off quicker is a good idea and will eliminate some hassle and closing costs but in the long run you will save more money if you either do a cash out refinance or a HELOC since your interest rate should be much lower on your personal home.

I do think your best bet would be to try and obtain a HELOC on your personal home and borrow the amount needed to pay off your investment property. That way you can use the your cash flow to pay off your HELOC as quick as possible and if for some reason you have unexpected costs you can pull money out hassle free which would not be the case if you were just paying extra principal payments on your current loan or if you refinanced your personal home. The trade off would be that your interest rate would be higher but I think it is worth it in your situation where you want to pay off your property as quick as possible.

You are correct in assuming that your tax liability will be higher since you can only deduct the interest portion of your payment so your extra savings will be somewhat offset by having a higher tax liability but that will differ year to year.   

@Ben Sears I agree with @Soddee R. Knight in that you should look at multiple lenders especially since the Covid-19 situation could be making your current lender jittery about refinancing your future investment properties. They may want to see how your cash flow holds up during this crisis before they commit to further lending. 

@Stephen Brown When I said learn about contractors I meant to find out which electricians/plumbers/HVAC technicians are the most reliable and do the most efficient work. You should have a maintenance team in place who do good work but also don't charge the highest prices in the market. You get what you pay for so you will need to find a balance between quality of work and prices. The last thing you want is paying top dollar for a contractor to fix something and then having to get another contractor redo substandard work from the previous contractor. 

@Ganesh S. It's getting much tougher to find properties with a 1% or greater rent-to-price ratio, especially when you factor in repair costs, but you can still find them in the Richmond area. In the last few years in the Richmond area the price growth for SFR has been increasing faster than the rental growth with lack of supply and low interest rates being major factors. Most of the homes with a 1% or higher ratio will be older homes in less desirable areas in the 60k-120k range. The vacancy rate/eviction rates will also be higher along with the possibility of major repairs, so even if your rent-to-price ratio is 1% or greater your Cash-On-Cash Return may not be as high as expected. I'm not trying to discourage you from looking at properties that meet the 1% ratio but just wanted to inform you of some of the drawbacks of only looking at the 1% ratio when evaluating investment properties.

@Jose Tapia I would definitely recommend going to the REIAs or local Meetups to expand your knowledge and meet the other local investors in your area. I am from Richmond area so not too far from you and I know there are a few REIA's and Meetups in my area but I think they be a little far for you but there should be some in the Norfolk/Hampton roads area.

@Stephen Brown I would recommend trying to invest in other areas with a much lower property tax rate since that seems to be the reason you are finding it so hard to find a property to cash flow. Even with a 33% downpayment (I am assuming 150K purchase price and 50k down payment) it does not cash flow well and any type of major repairs like replacing HAVAC or Roof will wipe out your cash flow for years. I would also recommend trying to learn as much as you can about the local contractors who are reliable from local investors, learning the eviction process and the forms involved, and try to manage your first property by yourself instead of using a PM company. With the property taxes as high as they are in your area it would be easier to cash flow if you manage your own properties instead of paying a PM to manage. 

I also agree with @Joe Cassandra in 2020 its getting its getting harder and harder to find cash flowing properties and you will have to be looking much harder and most likely having to deal with multiple bidders for deals that have a decent cash flow from day one so it makes it even more important to be able be self manage your properties by yourself. 

Here is my analysis which is slightly different than yours and has some assumptions with a lower vacancy percentage (5%), no property management costs, and a 50k down payment to give you an idea of the Cash Flow and CoC return if you managed the property by yourself. I do think the 5% vacancy rate is realistic if you do not have to evict a tenant and are able to lease the property within 2 weeks or a little longer.

(Self Managed)

Rent Income=13680 

Expenses= 10648

(Property Taxes= $3254)

(Repairs= $1109)

(Insurance= $777)

(Vacancy= $720)

(Debt Service= $4,788)

Net Income (Year): $3032

Net Income (Monthly): $252

CoC Return: 6.06% 

@Ganesh S. I am originally from the Richmond metro area and overall it is a much easier place to invest due to the much lower barrier of entry and being able to easily cash flow from day 1. The only place in the Richmond area that I would absolutely avoid is Petersburg. In my opinion its not worth investing there no matter how good of a deal you think you may be getting. I am also familiar with the high prices of the Herndon/Reston area due to working in that area and definitely think that it is much easier to build a portfolio of rental homes in the Richmond area with the same amount it costs to buy even a decent sized home in Herndon. Also I believe that in the beginning it makes sense to do a lot of research of the area's you mentioned above and choose one area to invest your money in due to not having to find different contractors/PM companies for different properties.