All Forum Posts by: Vincent Phan

I will jump on board with the others. Analyze whether this home qualifies as a "good" rental. Just because it can rent for more than the mortgage does not mean it's a good investment.

Here's a guide that describes what good cash flow looks like and how to analyze a property.

https://www.biggerpockets.com/...

You should always consider first whether a property even makes a good rental, whether you lived there or not. Assuming this property would make a good rental, I would next ask if it would provide a good return. You have 50% equity but that's just a ratio. If the house is only worth $50k, you've got $25k if you sold it yourself. You can't do a whole lot with 25k. 

Assuming it's an average house, maybe $300k, and you've got $150k in it, now you're just using that money to live in a fancier house. You'll have a little smaller mortgage - maybe $700-1000 less - so how does that compare to the cash flow you'd bring in if you left the cash there? If it's going to be dead capital anyway, you might as well leave it where the return is highest. 

Check with your tax accountant.  Recommend you sale your house.  If this is your primary residence, if you live two consecutive years any time during a 5 year period the gain is tax free.  If you have it in a good showing condition recommend you sale and do t rent. 

Personally, I think your calculations are a bit alarming because I do not see any reserve savings. When I do my property calculations, I look for about 8-12% CoC ROI AFTER all expenses, taxes, mortgage P&I and reserves. This way I know if the s**t hits the fan that everything in my portfolio is covered. I typically set aside 30% of my calculations for PM, CapEx + Maintenance, and Vacancy. I think you could find a safer deal if you are strict with your search. The worst thing you can do is buy your first property and not have it be the right deal. That could spoil your experience for good.

Vincent, depending on the neighborhood that doesn't seem too bad for the current Chicago market. Since the property was recently gut rehabbed, I don't believe your repair & CapEx allowances need to be as high as Jaysen indicates, and if you'll be managing yourself that's another 10% you don't need to factor in. His other comments seem very on point though--I'd estimate ~$1000/year for water/garbage. You may also be able to bring in a bit of extra income from the basement, check out Neighbor, which bills itself as the Airbnb of storage.

@Vincent Phan I share your same thoughts, as the reason I am still investing in Columbus. @David Greene 's book https://www.amazon.com/Long-Di... Long distance RE investing  is a good starter read to get into the mindset of OOS investing.

Also if you do ever think of investing OOS in Columbus I'd love to help you with any local information I can!

@Vincent Phan for my campus rental 0%. I actually rent that almost 8 months in advance of the actual start date (high demand on OSU campus). The properties down in Hungarian village, not sure since I just purchased, but the owner figured a typical 5% vacancy.