All Forum Posts by: Supada L.

My basic advice: Avoid (My mantra is never) buy a property that is away rom your residence and depend upon expensive property management companies or Hotel programs to generate cash flows. I see a lot in my area and the owners dumping the homes (Especially condos) back after realizing they are losing $ big time

It may be too late to get help on those repairs, but it'd a) be good to know the options and b) I recommend ALWAYS going directly to the provider of a turnkey property if things start to happen... you never know when they may be more than willing to help. I try to tell people to not just go with it all and not tell anyone! No one can help if you don't say anything. 

@Supada L. I'm curious. What is your dollar amount to your PM? Also are they the one that Rootstock recommended?

@Supada L. Sorry to hear that your first REI experience has sucked so far. It's great that you have a good attitude about it. Learn, grow and don't let it discourage you. After you resolve this situation try again with a much better strategy. Good luck and best wishes!

@Supada L. A couple of things immediately jump out. First of all, Roofstock isn't really a turn key company. They do not own and renovate the properties. They are an alternative marketplace to the MLS. Another big question is why did you choose Meridian, MS? From what I can see, it is a small market of only 40K people and the population has been declining significantly. It has only a 55% labor participation rate (national is 63%). It doesn't appear to have a very broad economic base with the majority of jobs being in military and healthcare. Personally, I don't see anything attractive as an investment market. You've also set your sights too low at $100 per month cash flow. There's just not enough margin there to overcome the times that things go wrong. The declining population doesn't bode well for being able to increase rents in the future.

@Supada L.

Why did you choose Meridian Mississippi? Have you been to the city? What industries were you interested in? We’re you interested in renting to Naval Aviator students? How much are you charging for rent? Where is the house located in Meridian? I did a quick google search and the Basic Allowance Housing for flight students is $1100 -$1300 ish. Is this what you are charging?

Your scenario fascinates me as I have friends in the area. Please feel free to reach out to me. Do you live in the US?

Good luck

Jeff

jeffJhorton-at-gmail.co

@Supada L.

So what happens when rhw roof meeds repaired, ac goes out, or got water heater. A property with 100 cash flow is a rough go. Hopefully you have deep pockets ir some other investor will take it off your hands for a song once normal maintanence is not done.

@Supada L.

You may want to listen or watch BP Podcast #435. The guest talks about some things that pertain to your situation with regards to selling the property.

Best of luck in whatever decision you decide to make.

@Joe Villeneuve I 2nd this comment, completely agree, and

$100/month was never going to cash flow.. there will always be obstacles that you will have to use money to overcome.

I’m a business major, so I see it from a financial business perspective.. lower your expenses or sell the liability entirely. How much are you paying your PM? Could you be charging more rent? (There’s never that easy) Are you paying full price for a tradesman/maintenance, when you can find someone that could do the job for cheaper?

Ask yourself how you can cash flow, if you can’t. Don’t stick around. Best of luck with your property. Hope we helped!

 Did you get this belief (that rent growth is pretty good) from the same turn key provider that did your pro forma?   I find it unlikely the rent growth is good, or even OK.   There is a association between property appreciation and rent appreciation. 

According to neighborhood scout, the annual property appreciation is 1.42% for this century.  That is below the rate of inflation, so properties, in inflation adjusted dollars, cost less than they did in the year 2000.

According to Rent Jungle, the rents have declined in the last 6 months.   Over the last 10 years, the average rent appreciation is 1.52%.  This is less than the inflation rate.  So rent, in inflation adjusted dollars, is less today than it was 10 years ago.  

Rent appreciation is unlikely to significantly improve the cash of this property.  

Turn key providers want to sell you their properties and services.   There is incentive for their pro forma to be aggressive.  The investor should use a conservative pro forma in determine whether to invest. 

Good luck