All Forum Posts by: Supada L.

Hi Supada. I live in Mississippi and have had rentals and notes in Meridian. I don't know the area extensively but there are definitely deals to be had there, for cash flow. However, don't expect appreciation.

@Supada L. I was having a similar property and there are two ways of looking at it.

1) standard net income or cash flow. At face value your deal seems bad and the ways to fix are: raise rents, hire new property management/do it yourself, refinance and lower interest rate, or sell the property and be done. I chose to refinance mine personally (went from 4% to 2.25% which nets me an extra $120/month)

2) you could look at it as a savings account. Perhaps you have to put away a couple hundred in repairs every now and again, but what you get is a savings account that someone else is contributing to (principle in mortgage or equity). You also get the tax write off for interest expense and any potential appreciation. I know this isn't most people's way of looking at it, but it depends on what you are investing for and what you can afford to pay/lose per month. Best of luck.

@Supada L. Buying in the biggest payday lending state in the country was your first mistake.

MS is an armpit gov’t

@Supada L.

Negative cash flow isn’t everything. In fact it’s only one of the four benefits of owning property (Cash flow, Appreciation, Equity Buy down and Tax advantages).

If financially you can afford to keep the property, even with negative cash flow, then it most likely makes sense to keep it. Selling the property now will only make you realize the losses.

Good luck.

Negative cashflow isn't fun but it's just the profit and doesn't always have to be positive. An investor might accept negative cash flow for a few years in order to build equity for a reposition later. They might even be speculating on appreciation (which for most is not a good idea). You are still building equity in your property. Trying to sell now will probably give you a loss as you will be paying some title work and commissions. If you have the finances to hold on it might be a good idea to sell later. It's unlikely you will have year after year negative cash flow. Rents will go up, you might refinance, and get most of the repairs completed. That low of cash flow isn't great but don't kick yourself too much. It's a good learning experience.

Well to me and I know it’s not the true meaning Turn Key means Newly Renovated and in your case PMed. But even with the property being up to par there are still lots of variables. And those are why I’m against distance real estate investing. There are risks to everything WE do but we must try to hedge against them if possible.

Live and learn.  It happens.  Figure out your resources and end goals as well as if the market has appreciated in that area enough to make a sale worth it.

Supata- lets start with the basics. 

Go to apartments.com, zillow, redfin, hotpads, realtor, domu, craigslist, facebook marketplace, neighborhood paper and see what the comparable rents are in your exact area for your property. 

Once you decide if your property is inline with rents what else can you do to maximize cash flow?

can you rent out the garage seperately?

can you rent out the basement? A couple rooms?

What expenses have you incurred? Can you have a company inspect the major issues now to give you a free estimate for final repairs?

can you add a bedroom or fixup a room and raise the rent? How about a dishwasher? Or a/c unit?

Have you thought of section 8 with this property?

next lets lower expenses.

Shop around for management now. Shop around for contractor/handyman on your own now. How about cheaper insurance? How about getting an attorney to lower property taxes- now.

Go to airbnb and vrbo and see what listings are in your immediate area and see if that is an avenue. 

Check with other cpas for their fee. 

-good luck. Weve all been behind the 8 ball at some point but sometimes we all need to dig ourselves out. 

@Supada L.  As a long term out-of-state investor myself, I think your biggest mistake is not that $100 cash flow, but the property is not located in a growth market(with high population and income growth).  If  it  is located in a growth market, even at the start the cash flow is low or negative, with the property price appreciates fast, rent will catch up and lift your cash flow.

I wrote my own out-of-state investing experience here, in case you are interested:  

As an Out-Of-State Investor for 9 Years… (biggerpockets.com)

As I said  in the post,  for OOS investing to be successful, appreciation must be put in higher priority.