(mostly) New Investor question for the seasoned

8 Replies

Hello to anyone, I've been a landlord to my homes before but never looked into real estate investing beyond until the last several months. I'm looking for real honest answers to these "calculating ROI" calculators.
I'm skeptical I can reach the 100-250 per unit ROI I have as a goal. 
-What is my reality for say a 95k condo @ 20% down, $200 HOA, 12% management fees. I find about a $50-$60 ROI/month when my realtor is saying it should be closer to $150. But I'm not buying it in punching the numbers.

I'm starting to get cold feet about pulling the trigger this type of investing. I see the possibilities in the numbers if all the factors are correct. I find it difficult to attain the purchase prices needed for that much cash flow.

Any insight in this new world be greatly appreciated. 

Cheers. 

Listen to the numbers! Are you including maintenance in your calculation? If not, $50 projected monthly isn't going to end up positive after you have to fix things.

Solid, cash flowing deals aren't just sitting on the MLS in most markets these days. The economy has done well for quite a while (since the crash) and there's a lot of money out there looking for a home right now. As investors, we need to create better deal flow.

You might consider looking at turnkey properties in other markets, if this is how you'd like to proceed.

The key is not to give up, just because it's tough to find deals. Be rigid in your goals but flexible in your approach. The most successful real estate investors stay dedicated, despite the difficulties!

Thank you both for your replies and encouragement, yes 12% is high I agree. I have factored all costs into that for a real honest view of cash flow. I don't want to buy a property without at least a solid $250 monthly cash flow. 
To Taylor, will you elaborate a little on Turnkey properties? I've contacted JWB but I don't know what's in it for them. They claim a $200+ cash flow but I don't see where they make out? Management I guess, but why not just keep the properties themselves? And "Flexible in approach"?? like buying foreclosure? 

Originally posted by @Taylor L. :

Listen to the numbers! Are you including maintenance in your calculation? If not, $50 projected monthly isn't going to end up positive after you have to fix things.

Solid, cash flowing deals aren't just sitting on the MLS in most markets these days. The economy has done well for quite a while (since the crash) and there's a lot of money out there looking for a home right now. As investors, we need to create better deal flow.

You might consider looking at turnkey properties in other markets, if this is how you'd like to proceed.

The key is not to give up, just because it's tough to find deals. Be rigid in your goals but flexible in your approach. The most successful real estate investors stay dedicated, despite the difficulties!

 

Thank you both for your replies and encouragement, yes 12% is high I agree. I have factored all costs into that for a real honest view of cash flow. I don't want to buy a property without at least a solid $250 monthly cash flow.
To Taylor, will you elaborate a little on Turnkey properties? I've contacted JWB but I don't know what's in it for them. They claim a $200+ cash flow but I don't see where they make out? Management I guess, but why not just keep the properties themselves? And "Flexible in approach"?? like buying foreclosure?

@Charles Conroy What's the projected monthly rent for the unit? What does the condo fee include? Is heat, water and hot water included in the $200 monthly fee? The other thing to mention is, how strong are the financials of the HOA? From my mind, the biggest risk with HOA's are special assessments which would likely chew up all cash flow, if you were to get hit with one.

Originally posted by @Dennis M. :

Buying a condo is your first mistake

Haven't bought anything yet. I have owned single family rentals in the past. I thought condo market was better in some places but I'm seeing not at this point. Thank you to everyone for your input. 

 

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