All Forum Posts by: Teri B.

@Jaron Walling  Thanks for the input - yep, I ended up backing out for the very reason you mention, mostly.  There is just not enough diversification in the workforce.  Michigan, huh?  I'll have to look into that.  I know there are boutique areas on Lake Michigan ($$$) and I've heard about the reinvention of Detroit - but that's the extent of what I know.  

I read each comment.  Thank you.

Sorry.  Clarification needed.  I was indeed referring to the rule of thumb.  Rent is 3% of price of house - actually, the all-in price including the rehab.  I always heard 2% was sweet and beyond that was awesome.  I know that's changed some lately.  

Thanks for those ROI calculations!

This is a true manufacturing town.  Good paying jobs are plentiful and there is all sorts of growth happening.  Up and coming.  But, when the economy goes bad, it can be tough.  If I'm not mistaken, Section 8 pays around $900 here for a 3 bedroom, so there's that.  If you have a 4 bedroom, you can get $1000 because single men will live with the families. 

With that said, it's a hour away and maybe a bit too much for my first go at a rental.  Darn shame.

Nothing in life has meaning until I decide to give it meaning!

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This is exactly what I needed today, along with the comments (especially from Mike D - about tying identity to daily activities).  For perfectionists (and introverts), this field can be hard because you are bound to make mistakes and they will eat you up, if you let them.  Get some perspective fast if you want to sleep at night.

Plus, this field has more than its fair share of people that are just . . awful/hungry/aggressive/idk.  Not all, but I went to a real estate training (I just hold a license, I'm not very active) recently and, wow.  I couldn't believe how people were talking about each other.  

When I first started reading here, I remember seeing, over and over again . .   advice that another deal will come along.  And, it always does.  So, there is no point in giving away happiness and health for something so . .   inconsequential.   

Great post and will definitely explore the links.

Hello,

Curious is you would pick up a C class property with a 3% return, roughly?

Purchase price 25,000 + $750 closing costs.  2 bedroom with large landing upstairs.  Add one wall and a door, and it's a 3 bedroom.  Closet there already.

House roof 7 yrs old but shoddy because it has a leak.  Minor localized plaster damage inside.  Plaster has been removed, and buckets are used. 

Needs gutters. Also, 1 stall garage roof caving in.  Basement has it's own door to outside (and also stairs from inside), so something could maybe come of that very clean basement space, eventually.  Enclosed porch foundation has 3 stair-step cracks because of no gutters, ground movement.  Gutters a priority but things seem stable otherwise.

Rent around $900. Comps in better condition but tad rougher area about 42-45k, and they are getting $925-950 in rent per MLS listing.

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Very clean.  Fixed income owner.  She tried her best.

If the roof is not a tear off, the rehab would be about $5000, includes sprucing up inside.  That includes the garage roof.  So, all in at 30,000.

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It's in what was a rough neighborhood - it's been gentrified (in many spots) by a hardworking, lower income population.  Hit or miss. But, this sits on a alley by itself - literally, the only address on the 'street' and directly behind a beauty shop (shop is on a busy street with lots of open space).  So, buffered on 2 sides with much open space and/or a business, from the very C-class of the neighboring houses.  Neighbor (from adjacent street that butts up to the side of this house) has a Pit Bull, but this home has a newer tall wood fence and a huge deck in need of minor repair.

Have you ever taken on a C for the good returns?  Thanks.  

Also thought about cleaning it up a bit and flipping it privately to an investor (BP?) for a few grand.

Thanks for the additional input gentlemen.  As always, so helpful!

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Upon further thought, I'm reclassifying it as a B+.  The true A's around here are the million dollar lake front homes.  Still a great neighborhood.  And, I should be able to be selective with tenants.  

Thanks @Dustin Beam for your reply!  Just needed to hear it from someone else.

That 2% rule thing is ground into my mind so I was wrestling with it. I may try to cash out at just 50-60k to keep those payments low.  

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This summer I had to do some training and all the local seasoned realtors were warning that the market is going to slow in the next year - state wide, not just local.  I also worry about politics, trade wars, etc.  I want to have cash on hand.. but giving up 40% on flips is a big trade off.  

First world problems.

Hello.

I have a small investment (in another town) that I've held for 5 months and just finished rehabbing.  It's a 2/1 with a detached 1 car garage.  Less than 1000 sq ft.  Good solid house with new air.  Roof and furnace about 10 yrs old.

It's on the edge (yet inside) of an older, established 'A' neighborhood.  1940-60 builds but well maintained.  Immediate area ....  houses range from 100k to 250k.  Physician neighbor is caddy-corner and paid $190 for a larger house last year.

The town is working hard to gentrify, but speculation can be risky.  No new builds or subdivisions, yet - to maybe weaken these older areas.  Or, not?

I'm all-in at about 61k. Could sell right now for about 105-110 (but - the taxes on flips!). If I sit on this, my capital is tied up. In between jobs or else I'd BRRR. Job hunting now, moved and took a break to rehab. So BRRR could be on the horizon this winter. My credit union needs a 12 month seasoning - I tried.

 Rent - eh, probably about 800.  Tried in vain to figure out how to add a bedroom on main level  - no go.  9 foot ceilings in basement but big money finishing didn't make sense for flipping.  Could maybe get $900 with a 3rd bedroom.  Taxes $100 a month.  Prob same for insurance.

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* If this wasn't an A area I'd flip it, but do things change in A areas?  Do you accept lower cap rates to be more 'certain' about long-term resale value?  I remember Jay talking about how C and D landlords can be in for a rude awakening when they sell.  That stuck with me and I've passed on lower end, but cheaper, stuff because of this.

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If anyone knows a flip friendly CPA I'd love to know? Mine is good and suggests to hold all things for at least year. I'd just like more options. Titled in LLC name, so not sure if S corp and salary could work? I didn't file paperwork to S corp and not sure if too late.

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Sincerely appreciate your time.

@Jonathan Yip

Yep, same kind of neighborhood.  I see what looks to be a Simplisafe.  I also got a loud $10 door alarm for the back door but had to go over and disarm so not to draw attention to it being there.  I'm probably going to get something better this time around.  

Staging does not have to be high-risk (expensive).  I borrowed some lower end pices from my home and bought stuff on clearance and also things from thrift stores (then spray painted white).

 I was going to rent furniture, but the space was so small I made it work without the need.  Nicer pillows and throws can add the wow.

I've done this same thing on 2 properties, and it seems to have worked each time.

I also debated putting food in the fridge and some shoes/clothes in the closets (etc) in case someone cased it out during a showing.

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Can you power wash the concrete areas, both by the house and behind the garage?  Get one strong enough to remove the paint/stains (borrow or rent).  Also, if there is mild damage get some concrete patch - it's relatively easy to use but better to pay someone to smooth out if not expensive.  I did it myself and . . . ugh. 

I'm in the midwest so I don't know temps, but is it warm enough there yet to put out a few large planters with flowers, outside?  Espeically in concreted areas.  You can get the huge, tall cheap plastic panters and spray paint to minimize wasting lots of money if stolen.  If you put bricks in the bottom they may not walk away as easily.  That's what I did, and they weren't taken.   Sod in the dirt areas?  The curb appeal is in need of help but it will be inexpensive to fix.  Powerwash all walkways if possible, too.

I'd stage the bathrooms with a few plush white towels and white shower curtains.  Can you skirt the pedestal sink in the bathroom with white fabic (no sew)?  Some strategically placed fresh cut flowers inside would be nice.  Can you put a few small plants (I used fake that looked fairly real) in those bump-out windows with shelves?  Just trying to think of small inexpensive changes.

If you could add a sofa and a table (rentals?) that could also help.  Also, I took over a spare bed from our house and a futon that I laid flat.  I decked both of them out in clearance white linens and lots of pillows. 

If you can afford a stager, it's easier and would look better.  But, I DIY'd.   

I was in a very similar situation recently, including the proximity to the multi-family and other things.   I like Russel's idea about relisting and dropping price.  So, in our case we priced it at market value (minus . . .  enough to get people excited) - right under a common price point as mentioned.  

We were selling in an inventory starved area, and had showings come pouring in quickly.  But, when people got there the area ended the excitement.  Strong unanimous dislike.  

The first offer we got on Day 3, we jumped on it . . . even with more showings scheduled over the next few days.  Still made some money and learned a very good lesson.  We sold a bit lower than we planned on - but, we don't regret selling and moving on.  The price was key. 

I'm a believer in staging - at least a little.  If it is not staged, consider that.  I don't use a pro, and I'm not above renting furniture, borrowing from my home, etc. 

We used the profits to move on quickly and buy a house in a much nicer area with a good bit of equity already.  It gets better.  There is also a cost of missed opportunity as your cash is tied up. 

Good morning,

I want to make an offer on an occupied house. Single Family. Landlord is hours away and tenants seem to be behind on rent. He hasn't moved to evict yet and it's on the MLS. I could offer what I think is fair, and set our close date to . . within 5 days of home being vacated by tenants. Lease has expired. They are month to month. They stated they are looking for housing.

Or, I was thinking that I could offer less and take the tenants along with the house.  I'd offer cash for keys.   My purchase price would reflect that - I'd probably offer them $1000 and shave my offer price to seller by another few thousand.  I'd have to make my offer contingent on getting the M2M lease paperwork so I was sure I could give them the 30 day notice to vacate.  This is risky and I fear I'm getting in over my head.  But, I'm tempted.  

Tenants 'appear' nice, but already full of baloney.  I imagine they have a sweet slow-paying deal right now.  House has to be renovated and it's under market rent.  They couldn't stay.  Worst case scenario, I'd have to give 30 day notice.

Anyone actually used this strategy before to buy at a better price?  I've seen it mentioned here.   Thanks.