All Forum Posts by: Tavari Keel

Hello,

I currently have a 4plex in which I pay all heating and cooling costs, running about $300-350/mo by itself (two furnaces and two ACs). I'm thinking about converting to electric baseboard heaters and window ACs to pass that expense onto the tenants. For reference, in my area (Cincinnati), in all the apartments I've ever personally rented, having heating and cooling be landlord-paid is unheard of.

Would it make more sense to A. invest about $2,000 into baseboard heaters and window ACs, or B. simply begin raising rents with future tenants to cover this expense?

The downside I foresee with 'B' is that my rents would be higher than what normally goes in my area, and prospective tenants would be too concerned with the sticker shock to care that the extra cost is going towards central heating and cooling (which they'd otherwise pay themselves somewhere else).

What are others' thoughts? Has anyone been in a similar situation?

 Hi Theo!

In truth, I'm a bit too inexperienced to know how to answer your questions, but I'll give it a go.

I've read an article on BP that talk about a 7-year (give or take) plan that eventually leads to owning an apartment building with hundreds of units and generating a million dollars per year or more. I'm skeptical of how realistic that is, even at a 10-year projection. However, if I somehow do wind up getting lucky enough to make a comparable amount with investing, I'd absolutely replace my job and make real estate my retirement plan. Specifically, I'd need to generate approximately $70,000 per year before thinking about leaving my job.

So I hate to answer a question with a question, but my answer to your question seems to depend on how realistic it is to become an owner of a large apartment building (which is my end goal, based on this article). I mean, if it were as easy as the 7-year plan suggests, wouldn't everyone be doing it?

As previously mentioned, I'm more than willing to dip into my own pocket as needed in order to make such a goal a reality.

 Hi Ben,

Thank you for your insights!

Regarding paying off a property quickly, this is my (inexperienced) train of thought, so please feel free to correct me if I'm not thinking it all the way through: it would definitely require dipping into my own pocket, but at the same time, 1. I'd be able to save a considerable amount of interest overall, 2. the cashflow I'd be making on a fully-paid property would eventually (over several years) make up for having dipped into my pocket when I started, and 3. I'd have a considerable amount of equity to leverage for another property.

However, if I understand correctly, you're saying that it would be more beneficial to just run a positive operating leverage while making minimum payments, and then after a year or two, use the accrued equity to leverage into another deal? Even if the accrued equity would be much less than if I had paid off the property in full?

To provide context, I'm looking for a relatively inexpensive multifamily, no more than $100,000 and preferably closer to $50,000-60,000. As far as dipping into my own pocket is concerned, I can reasonably pay off $25,000 of a property per year - that is, assuming there are distinct advantages of paying off a property quickly.

And yes, I'd be very happy to connect with you and discuss this in more depth at some point. Having looked at your profile, I see you're quite busy, so what would be convenient for you as far as meeting is concerned? I work until 5pm Monday-Friday, but have no obligations beyond that.

Thanks again for your input!

Hi Marcella,

Out of curiosity, are you looking to invest in PA more so because you used to live there, or because it's a better place to invest? Or both reasons equally? I've never lived in PA, but have read that it's a great place to invest. I live in Cincinnati as well, but I wouldn't mind investing out of state if the right opportunity presented itself.

On that note, a question for @Josh Caldwell: can you elaborate on "we don't invest for appreciation"? Is appreciation negligible in the PA market or something?

Hi everyone,

I'm pretty new to real estate investing, but will be ready to make my first purchase within the next few months - provided that I find a good deal. A good deal, to me, would be a multifamily (hopefully 3 to 4 units) with cashflow of $200 per unit or better (after applying the 50% rule I've been reading about). I plan on living in a unit and renting the others, and to that end, I do have a couple initial questions to start things off:

1. For those in the Cincinnati or Northern Kentucky area, is there a general preference on renting in either area? I assume there might be, due to factors such as property taxes or landlord laws or something, but I'm unsure.

2. Doing the math, I've found that based on my current income, I should be able to pay off a property costing $50,000 within two years. Do any current investors have opinions on whether it's worth it to focus on paying off a property rapidly like this as opposed to merely taking it slow and gradually building equity? What are the long-term consequences, if any (such as early payment penalties), of doing this?

In addition, I'd very much like to connect with investors, both seasoned and new, in the Cincinnati/NKY area to broaden my knowledge as well as to make connections for potential partnership deals in the future.

I hope I get a chance to meet like-minded people soon!

Hi Matt,

I'm also in the same (Cincinnati) area, and have been debating whether to start out in Cincinnati or NKY. My familiarity with Cincinnati neighborhoods is fairly vast, but I have heard that property taxes can be better in NKY. What's your take on it? Do you have any specific examples to share what you mean about potential returns being greater in NKY?

Thanks!