All Forum Posts by: Tony Xu

Where do we RSVP for this event?

I will chime in here since I'm currently in this situation but on the other side, it's my girlfriend's house.

So I live in SF where the housing prices are insane, and she got a great deal on a government sponsored condo. So now that we live together, I pay for her mortgage, while she pays for all the utilities plus HoA, groceries, etc. She ends up paying a little bit less but its not a huge deal. I am paying less than if I had to rent anywhere else and she saves money every month because I pay for her mortgage.

I also think in my case its fine that I pay a bit more because we try to split expenses up proportionally to our incomes. 

I talked to my PM and those are just his current numbers. But I have adjusted the numbers just to see and even at 8%, its still a deal that I would be willing to take. I just wanted to make sure things are not super crazy and I'm not even in the ball park.

Thanks for all the replies!

@Christie Gahan thanks for the response. So it's actually a turnkey property and most of the big items have been recently replaced, like roof, hardwood floors, etc. So it might be more realistic to set 7.5% as repairs and 5% as cap ex.  The numbers are from the property management company, in terms of vacancy, average lease times, renewal fee, etc.

Hi guys, 

I am thinking of making my first offer on a property in the KC area.

Here are the numbers:

Sale Price: 85000

Down Payment: 17000

Closing: 2000

Rent: 950

Insurance: 595

Taxes: 857

Vacancy: 29 (3%)

Property Management: 95 (10%)

New Tenant Placement: 40 (assuming 2 year tenancy)

Repairs: 48 (5%)

Cap Ex: 71 (7.5%)

Projected NOI: $547

Mortgage: 365

Cash Flow: 182.13

Cash on Cash %: 11.5%

What do you guys think? Let me know if any numbers here look crazy

@David Faulkner

Thank you for taking the time to write this detailed response! I definitely agree with a lot of your points. I will do more research in to how to filter out a great PM, I know there are a lot of great resources here. And I do eventually want to get to the point where I am finding my own properties, either through MLS or through an agent, have a great relationship with a PM, contractor, etc. Thank you for all the advice!

@David Faulkner

Definitely some good points. I don't actually expect this to be a purely passive thing. I've always been interested in investing and am willing to put in the time to build my team, handle issues, etc. I am definitely not just expecting me to put some money in it and just sit back. I think ideally I would do everything I can myself remotely, and maybe heading to the area once a year or so. More and more I'm thinking it might be better for me to just find a real estate agent and manager vs a turnkey company, because it seems like they eat up a decent amount of profits. 

@David Faulkner

Yes, I definitely get what you are saying. I think I am okay with consistent cash flow, even if its not growing. I think my plan would be to scale to more and more properties so that I get economies of scale. 

So I would not consider moving away from SF because I currently live with my gf in a sweet deal for the city, in a condo that she owns. Also, I make probably 4x the salary that I would make anywhere else because I'm in tech. Even though I know I might not make as high a return as if I lived locally, the different in income definitely makes up for it.

@Hank Keller That is great advice! I will definitely look in to that

@Ali Boone

Thanks for the response! I think after all the amazing responses here and more research, B properties definitely make more sense for cash flow.

So like I said in my initial post, I just started with the survey and took the top 10 markets for cash flow, and then narrowed it down based on tech growth. I am definitely open to researching about other markets if you have any suggestions! 

I am thinking of doing what I can on my own, I think instead of just relying purely on a turnkey company, I'm thinking of finding my own agent, property management, and doing the math myself in terms of income, expenses and cash flow. 

I will definitely reach out since I've actually seen a lot of your posts and many of them seem very helpful.

Thanks!