All Forum Posts by: Supada L.

@Supada L. Personally not a fan of turnkey out of state rentals. All profit for the seller and little cash flow or equity for the buyer. Good luck!

@Supada L. Did you say $100? Why would you do that? Did you read the book?

It is not uncommon to purchase a property with inherited tenants with below market rents that is netting you very little cashflow. Any investor acquiring inherited tenants will almost always encounter this issue, so I would not sell yourself short yet. You need to look at the future potential and stabilize the property which requires raising the rent to market value and possibly getting new tenants. I'm sure you realized by now that $100 a door is not enough. I personally aim for $300+ per door. Also you should always have reserves when your property is not stabilized as the current cashflow will likely not cover it. Every investor and situation is unique, but raising rents in the beginning can sometimes be better as you have yet to develop a relationship with the inherited tenants.

@Supada L. Turn key companies are notorious for skimping on remodeling. Don't ever buy anything for a turn key provider. U should immediately find a new property manager to take over and get real costs figured out. You will probably have to spend a bit of money the first year to fix all the cheap half *** turn key remodeling job. But STAY THE COURSE. Trim your personal expenses and try and build up a cushion of savings. Maybe you can do a refinance and have a real contractor do a small renovation to be able to get top rents. Roofstock is just another legal scam with a license to RIP you off.

@supada l

Yes. I sold a few a long while back when the crash occurred mainly due to 1) high insurance 2) so many properties went on the market that the rental rates went below my hold ability 3) I had a handful of these and couldn't hold onto them easily. I sold them about 2-3 yrs in. I mainly sold them as they were going to negative cashflow longterm at that point. Not short term. I have bought other properties since knowing that there was some deferred maintenance needed and got that all done then kept my reserves in place so that I could easily handle anything coming up. 

 It is my belief that in these low rent markets (especially for OOS investors), the 50% rule is too aggressive.  However, I am curious what the 50% rule would place the cash flow.

You have a 3/1 for renting for $850/month.  What is your monthly debt service (mortgage payment not including taxes and insurance)?

$850 * 0.5 - (MonthlyDebtService) = cash flow.  If you debt service is over $425/month, the 50% rule would indicate this is a negative cash flow property.  

I believe for your OOS, low rent property that the 50% rule is too aggressive.  I suspect even if debt service is $400/month that you likely have negative cash flow.

Good luck

I would get rid of the property manager and keep that money. You can manage it from out of state. Talk to the tenants and tell them to report any issues to you directly. When you buy houses there are always unexpected costs out the gate. Once you fix them you should be smooth sailing after that. Everything you fix is one less thing to have to fix later. And when you do finally sell you can advertise all those items have been upgraded / fixed which means you can recoup those losses. 

I advise studying up more on what you should look for in a rental property, the set aside amounts you need a margin for (vacancies, repairs, capital improvements). You should know ahead of going into one what you can rent the property for. Know what you need in a property mgr. Nothing is every "turnkey" no matter what you are investing in business wise or real estate wise. One piece of advise I found to be the most useful is "Look, not listen". YOU look at and figure out the #s. YOU see if there is going to be enough for reserves for these items. YOU look at the property. YOU are responsible for your investment decisions and for the upkeep of your investments. Also another piece of advice is "If it isn't in writing, it isn't true" so if you have a contract with someone on their service, ensure it is in writing with them on the contract. Even if out of state there are a lot of ways to do all this. I have a few out of state properties & they are all cash flowing well. Unfornutely when I first started out, being from Ca where the taxes don't fluctuate like other states do when prices go up and not being familiar with hurricanes etc, I invested in areas where the taxes and the insur skyrocketed thus leaving a negative cashflow after I had done my #s. I learned the hard way to also invest in areas that don't have the harsh weather/higher insurances or potential high insur due to their location. So, I didnt' really do all my homework back then on that point. I should have called insur agents well ahead and checked out the taxes. It was up to me to do that. I couldn't blame the realtors or anyone for selling them to me. This business is a business as well just like any other. You must train yourself in this area. Read books on it. You can learn as you go as well, but YOU must learn, apply what you learn, and then manage your investments properly. 

Please do not even investigate what a private placement syndication is.   Horrible results, might even be worse than TK-  thats debateable.