All Forum Posts by: Tyler Wenzel

@John Byrne  I'm glad you replied.  The entire question I asked was based of of that very assumption I had about a realtor not wanting to work with wholesalers.  I did have a pretty good relationship with a realtor when I bought my personal residence, but that was a few years ago now.  I'll ask him over email.  

How long does it take to run a list of say, 3 comps?  I'd hate to waste a ton of his time, especially since he would know it.  Also, I'd feel terrible asking repeatedly for comps on different properties.  Any suggestions for me as a realtor?

@Mark S.  A lot of much needed information to make a good judgement is missing here.  Information such as, mortgage, property taxes, insurance, repair costs, ect.

That being said, there are a few rules of thumb that help investors quickly filter out leads.  Please note that these are by no means deal makers, you should ALWAYS use due diligence to get as close to the true numbers as possible.

First, the 2% rule.  The 2% rule says that your monthly rent should equal 2% of the purchase price.  Using your numbers, 475/mo rent would make your purchase price $23,750.

In some markets though, 2% is pretty rare, so some people use the 1.5% rule.  This rule says that your monthly rent should equal 1.5% of your purchase price. So, 475/mo in rent would make your purchase price $31,666.67.  Obviously, 2% is better than 1.5% for us investors, but like I said, in some markets that may be hard to obtain.

Also, their is the 50% rule.  The 50% rule says that your monthly expenses will be 50% of your monthly rent over time.  For example, again using your 475/mo rent, your expenses will be 237.50/mo.  Keep in mind this rule does NOT take into account your debt service/mortgage. So, if you had a mortgage, you'd take 237.50/mo (expenses) MINUS debt service to find your possible cashflow.

Again, these are only rules of thumb and you should always calculate the all the expense/mo you can think of. Lots of time should be taken to research the different expenses one might occur, as I can guarantee as a newbie you will not figure for all of them.

I am a newbie as well, so hopefully others will chime in and help out also.  This is all information I've gained by reading BP and different books the last few months.  

Hope this helps, Tyler 

Hey everyone.  I have a question I hope more experienced investors can answer for me.  Since I don't have much starting capital, I have been driving  for dollars to find distressed properties in my area that I might be able to wholesale. I've found a few that I'm interested in taking a look at, but I'm not sure how to approach a realtor about helping me find comps and other things for a wholesale deal.  How do you guys/girls go about that?  Is their a better way?  I'm still to green to judge my own comps in the area so thats out of the question.

Great story @Sam Erickson

I've never seen a house built entirely out of block before, but having plumbed some commercial jobs built entirely out of block and concrete, you are spot on when explaining how the plumber and electrician were on hand during new construction. We literally have to stand and watch as the masons build up course by course until they are ready for the plumbing to be installed. I'm wondering if the original owner was a mason himself?

Anyhow, I can imagine those three months were the longest three months of your life. It's great to see you turned a negative like that into a positive. Good inspiration for everyone here at BP!

Also, because I live in Janesville, I was curious as to which neighborhood you're referring to? Was it on a cul-de-sac somewhere?

Again, great story. Thanks for sharing!

Lori, I know the madison reia is active on certain days of the month. I have not been yet but there is a session on June 3rd. I planned on going to the last session but had a work emergency come up. www.madisonreia.com

That is all I could come up with for group forums so far in the area but if you find other oppourtunities besides, please post.

Also, good to see another from janesville on BP. Good luck and maybe we can meet up in the future!

@Tom Sylvester Great feedback! Im new to the game as well so reading that kind of drove home what I had kind of came to the conclusion of already. My ultimate goal is to be a buy and hold investor for passive income in order to have a retirement I can be proud of, but the more educated I get, the more I realize I don't yet have the funds needed to start buying and holding. What do you think about starting out with flipping a few houses then buying to hold? I think if I can find a private lender that would except less than 20% down I may be able to get started sooner rather than later.

Please give me your thoughts. Also, may I send you a colleague request?

@Jeremy Sanders The 2% rule and the 50% rule are merely rules of thumb to go by. Basically they are quick ways to tell whether you'd like to put more time into researching the property or not.

What you need to do now is get your gross operating income (all the rents added up, I prefer yearly)

Minus all your expenses, eg. maintenance, management, utilities, accounting, legal, taxes, insurance, ect.

That brings you to your Net Operating Income (NOI)

Minus your debt service (mortgage)

That leaves you with your true cashflow.

It is VERY important that your are conservative with your numbers instead of just trying to make the deal work for you. Also, get as many of these numbers as close to accurate as possible.

Unfortunetely, you don't yet have the details on the lower unit to make an educated guess (through rent comps) as to what the unit would rent for, so you can't even begin to thoroughly run the numbers.

Any other questions, just ask :)

My mistake @Account Closed Instead of .01%/roof, the figure is .1%/roof or $150, whichever is greater.

The way it was explained to me is as follows:

60k SFR = 150/mo

145k triplex = 150/mo

190k quad = 190/mo

The excel formula (which for some reason didn't fully come through last post) would be:

IF(B23*0.001<150;150;B23*0.001)

B23 would be the purchase price.

I hope that makes a bit more sense Chris.

I was told a good number is either .01% of purchase price per month OR $150 per month, whichever is greater. At first I thought that seemed a touch high, but then realized that even if it is, its better to be to high than to be to low. A seasoned investor here on BP gave me that advice.

Excel formula: IF(

I'm glad their are still good people out there that are willing to help out from time to time. Reminds me of a neighbor of mine. He works only nine months out of the year and takes winters off so he takes care of the snow removal for all of us neighbors. Of course, he gets a nice bonus at the end of the season from all of us too. :)