All Forum Posts by: Yuuj V.

Everyone who replied,

Your insights were greatly appreciated.

I decided to go through with the deal, only for the deal to go under because the house was under 2 mortgages and a bankrupt LLC. (Go figure)

It was really a gem in the sand, but onto the next as they say. 

My PM said that's a first for them, but the seller had cancelled the agreement, not only because their mortgages, but because there are some other issues going on that they, the seller, won't release. (code violations and such). 

Ahh well. 

Hey Brent! Always appreciate the insight. 

Laughing as in "People here on BP" :P. I know Chicago doesn't have the best reputation, and I've talk to another whom has property in Texas, and he laughed at investing in IL and another who just gauked at the thought of Chicago. So maybe I should heed their warnings. 

The Statistics I got were from Trulia/Zillow and reading about several websites throughout my research. The area is Country Club Hills in Cook County. 

I was  looking at both the list prices and sold prices. :), glad I did that too. 

As for estimating the rents, I used  Craigslist, Trulia and Zillow to get an idea of the rents in the area. (as well as a few random real estate websites)

To tack on --

The biggest concern of all is the roof. The inspector performed ... the inspection? and found that there was frost on the sheathing which indicates a lack of an ice shield. I'm scare that will cost a pretty penny...

They said that can give the possibility of microbial growth (mold?). 

Hello BP!

I've been looking at my first house (well, 1 of many) and decided to move in on it after really digging around.

Trulia rates other houses in the area a little high ($120K+), I was able to bargain for $100,500. 

Low crime rate, near zero, located south of Chicago, IL. Rents in the area are $1500+

(Queue the laughing of buying in Illinois)

The house already has a tenant, but they will be moving out. 

I'm using a PM, as I am investing OOS and actually living overseas. 

My PM performed the home inspection, and like most, I freaked out at the amount of issues that are shown on the spreadsheet, with pictures and such as well as pricing to fix/rehab. My PM said that if the property does not cash flow positive, they won't even bother with going through with the deal and would advise me to dump it (after already sinking in $1500 for the LPOA (Power of Attorney) and the home inspection.

Anyways, the repair costs will be about $12,600 all said and done. They are recommending I replace a 22 year old HVAC system (~$5000). The house is still in very good shape, the inspector said according to their findings that it's just needs some proper maintenance and fixing up. (All this does scare me of course as some of this I could probably do myself, but than why would I need a PM. And I believe this is the age old question of to Do or Not Do (yourself)), but I can't as I'm over the ocean. 

I expect to rent it for $1600, with close to $400 in cash flow. According to the loan, insurance and tax, PM fee, $1600 would cover it all and leave me with $375-$400 

I expect to put down $20,000 (20%) and have a reserve of about $10K for vacancy and maintenance reserves. 

So all in all... $42,600 initial... for a $100,200K home. 

Anyone who does out of state investing can chime in? Is that normal? About what you would find and expect? Thoughts? Advice? Is my Math wrong?

I want to pull the plug on it and go through with it, but something in the back of my mind is saying "ask BP". 

I'm originally from Boston, but my PM doesn't operate out of Boston. Plus, Boston area is like buying several Park Place and Boardwalks. I'm looking to start with the Connecticut Avenues and Charles Places on the monopoly board. 

@Scott Trench Thank you for the insight, and for writing an amazing book. 

Getting within 20% of my current income wouldn't be too difficult. I would just have to switch jobs / locations probably, but it would not be difficult. I believe I can stay out where I am at for 2 - 3 years, and accumulate several houses and have them managed by a PM. Everyone brings up a good point about leverage, and I will pursue that path myself. 

As for the cash reserves, 6months + $10K is probably not a bad idea either, and something I can definitely do. Thanks for the tip. 

@Anthony Gayden You brought up a good point that I don't think I really sat and thought about. Concentrating all my money into a single house, and hoping it doesnt get burned down :P. Spread the risk, diversify!

It becomes all about scaling the portfolio, it makes more sense now. As well as building wealth and moderate income. 

I won't be buying in Boston, I'll be investing long distance in other states. Even with my salary, I can't afford Boston, nor would I want to. Those properties are really good, duplexes and triplexes, but looking at $550K+, even $350K for SFH. I just rather use that DP and spread it to 2 - 3 houses in cheaper markets. (assuming 20% down payment).

I'll come back to Boston another time when I'm ready for the big leagues. 

@Joe Villeneuve,

Thank you for a breakdown of the different scenarios! that really painted a clear picture for me. 

I should've run the numbers... numbers don't lie. Your make shift charts really hits the nail on the head for me and now I know what I'm going to be doing this year... 2 - 4 houses? :) 

Have the tenants pay down my mortgage, while I make cash and focus on my next investment!

Thanks again!

@Brent Coombs Thanks for your 2c, they are worth more. I believe the property I am looking at is under valued. The houses around it, according to Trulia and Zillow, sell for $20K+. How this one is selling for ~$110K is either really lucky, or something wrong with the house. I'm hoping that they are just motivated sellers. 

I just watched BP PodCast 197, and the guest explains that he only bids for 70%, sometimes not even looking at the prices and just throwing in a 70% bid anyways. Deals deals deals!

@Russell Holmes Appreciate the input. After reading Rental Property Investing, I always include that in my rough draft of a home purchase blueprint. Still a gold nugget to remember for sure. I ballpark myself around $5K in reserves, to account for vacancy, $1K in break-fix. Would you recommend have individual 'buckets' of reserve for each house? I guess it couldn't hurt, but wanted to know your thoughts. 

To add on,

I had to re-read my words a lot. 

I think what this really comes down to is Safety vs Risk. 

Its safer bet to pay off the homes and have no debt and no problems if a tenant leaves vs having homes financed, and when the homes are tenant-less, have to upfront the costs myself from my own pocket, and be able to pay that. 

But, its also monetarily better to have financed homes that are cash flow positive vs using your cash to pay down the house before you see any profit. 

Both have long term positive's. 

Equity is built over time using someone elses money, vs you paying down the equity before you reap any reward.  

Funny what you can learn from writing down your thoughts and than re-reading them :P :D

Hello BP!

So after reading Set For Life, I am finally past the $25,000 threshold and between the $50,000 - $100,000 threshold. 

One question I can't answer for myself and can't seem to find any real good substance is: Should I pay off a house prior to buying another house? Or should I fund as many investment rentals as possible?

Here's where I am at.

I am looking at a investment property selling for ~$100,000. 

It's cash flow positive. 

I can put down $35,000 - $40,000 to cover the initial down payment & closing costs/rehab costs/taxes/insurance. 

Now, I work oversea's, so I don't have rent, food costs, bills of any kind. Debt free. 

My initial plan is to get the rental property with a PM. 

I can realistically pay it off in full in 4 months (April2018). 

My second goal would be to look for a second $100,000 with a PM and funnel the rent from Property 1 into Property 2 to pay it down faster + with my income, have it paid off Sept 2018 time frame. Assuming I pay it off aggressively. 

With 2 houses paid off I can collect 90% of the rents (between $1600 - $1700 conservative estimates) and start funneling it into a 3rd Property, possibly a MFH @ $250,000 or another $100,000 property. Post 2018, into 2019, I can probably get Property 3 paid down to 70% equity or paid off, which will set me up for 2019 to look at a Duplex / Triplex / 4-Plex (which I'd really want). 

Now, thats my plan. Alternatively, I've read people recommend having 70% equity in a property prior to looking for a another property, and some just advise to 'plant as many seeds as possible', obtaining several rental/investment properties as possible. Everything with my job is uncertain, I can be fired today, tomorrow, 1 year, 2 years, 5 years. Tomorrow isn't promised to anyone. But I can say my outlook is very good as far as a longterm job with the income I make. 

I don't want to stretch myself / my finances so thin that a slight bump will knock me over. I'm really curious how others build their portfolio's. Any help / insight is helpful. 

Even if I fund 2 - 3 properties, without actually paying them off, the rents combined would give me between $900 - $1100 in monthly cash flow. Which I suppose isn't bad, but could be better? 

I also understand that I could just put in the initial downpayments have the renters pay down the mortgage, while I continue to use my extra capital for another rental / investment property, but have all financed/loans on houses scares the bejesus out of me, even though I know it's the most touted strategy. 

Appreciate any insight!

Literally have been looking at investing in a home for the past week while I'm oversea's and came across this. Almost perfect timing.

Same thing with Set For Life --

Are you guys mind reading me?!

Grabbed it today!

Thanks Jake,

Appreciate the insight. I'm going to work on a document that outlines every responsibility and share it here on the forum once it's finished for others to use. You bring up a valid point about ensuring everything is covered, especially small things like 'who decides the color of a wall'.

I'll update with more info.