All Forum Posts by: Supada L.

A good education always cost money, for me I only invest in areas I can easily drive to within a couple of hours. Cash flow of  $100 is to close for me. I know there are areas where this might work out with potential growth, but those little things , like plumbing issues, HVAC,  electrical seem to always creep up .  A partner has a condo make 100 a month, 1st month needed HVAC unit, $3500, dryer has went out , Small electrical issues have shown up, SO far the condo has never made a dollar.    The rents in that area are low, association fees, Insurance Hikes, Increases in property taxes.  have killed the partner. Loan has been serviced, and more equity has been built.

Turnkeys  and flippers I stay away from.  Good luck to you. 

I would create a simple pro-forma with basic assumptions such as rent growth percentage (3%); operating expenses (15%-20%) and get NOI, this will help you to get a better view of the next 3-5 years. The point of investing in RE is to take advantage of appreciation, tax benefits and hedging against inflation. Positive cash flow can be obtained from operating and reversion.

The is a basic handbook that might help you with some financial ratios - What every investor needs to know.... by Frank Gallinelli.

Best.

@Supada L.

Properties advertised as turnkey are usually marketed towards novice investors and priced so that it is difficult to make a return. They will compare the return to that of the stock markets and argue that there's is higher than 7% or whatever number they use. However the difference is that, as much as people wish it was, real estate is not passive investing. Even if you hire a property manager you will still need to manage them. My advice is to get something in your area and manage it yourself. If it's not in peak condition try to learn how to fix minor issues like leaky faucets and clogged drains. Those things can be resolved in a couple minutes but if you call a professional they are going to charge you a decent amount just to come out. If you need a PM make sure you vet them first, And if you're in town you will still need to check periodicaly that they are doing a good job and are keeping their end of the bargain.

If there’s a history of rent growth I’d stick with it. You probably made tax free money with loan pay down and depreciation included. If the rent is at least $1,000 and you ONLY get 3% rent increases. You’ll be cashflow positive within a few years. But I don’t want to wait that long you say? That’s less than $3600 in cashflow away if nothing gets better until the last month. But that’s not how it works. You’ll be a little better every year. 

When you sell you’re not just cash-flowing negative 6-10% (way more than holding on.) you’re actually spending that money. Right now you’re really just sending that money towards loan pay down. 

I heard this often. Folks when you buy rental, you need to do cost simulation for DSCR and capex projection. If you buy something with less than 1.25 DSCR it's almost guaranteed you lose money, the only way you is appreciation. Your metric shall not be the number of dollars you're making but the ratio between NOI and actual predictable expense and unpredictable expense.

@Supada L., some turnkey companies provide a one year warranty to deal with maintenance issues, so you may have to check with Roofstock on the issues you are having. They may give you refund on the repairs even if not indicated in the contract. Good luck