Someone talk me out of (or into) bying this property.

Buying & Selling Real Estate
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Someone talk me out of (or into) bying this property.

James Thierbach
Member since 2019 · 7 posts · 4 votes

I'm looking to purchase my first rental property by the end of the year and I've been scoping out out-of-state opportunities (I live in So Cal). I've seen a lot of people mention Toledo for cashflow, so I started looking MF in the area and I found this property:

1338 Brooke Park Drive Toledo, OH 43612 (8 Units - 2 Bed/1 Bath each) $280K

I ran a rental property analysis on BP and filled out (conservatively) everything I knew how to (I don't know the area very well). 

25% down, 30 year 6%, $4K monthly income ($500/unit), $3500 property taxes, $5000 annual insurance (shot in the dark, this is one of the things I have the hardest time estimating), 7% repairs/maintenance, 8% capex, 5% vacancy, 9% property management. I know I probably need to pay water and sewage as well, but honestly have no idea what to put for that. As the numbers stand, I come up with the following return:

$873/mo cashflow, 13.8% CoC ROI, cash needed - $76K.

Those numbers look great to me as a newbie, but seeing as the property has just been sitting on the MLS for the past 4.5 months, I'm assuming it's not a fantastic deal. So I was hoping some of you may be interested in analyzing it with me and we can discuss what makes it a good/bad deal. Thank you.

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Account Closed
Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
5y

Brooke Park Dr is a running joke amongst Toledo investors. It’s a shìt street to buy an investment property. You’d need to buy the whole street and clean out the crap tenants and start over for it to work which would require losing money up front which nobody ever does so the buildings keep getting bought and sold as the owners burn out trying to collect rent from the drug dealers etc.

But that street aside there are plenty of great cash flowing investments in Toledo and 43612 is generally a great area for investment properties.

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  • Dani Beit-Or
    Investor · Irvine, CA · Member since 2009 · 261 posts · 183 votes
    5y

    I ran this through my fin. model (see below) and used the #s you have provided. 

    Based on your number I'd say that in my opinion and experience, based on the #s only, this is a good one. 

    I know nothing about the area so I cannot provide an opinion on that aspect.

    With that said I think it is possible you may have missed few things:

    1. Leasing fee

    2. Even if all the units are occupied I'd assume some immediate investment would be needed for some repairs/improvements/fixing liability issue/etc. - did you budget for it?

    3. Did you include mortgage cost and closing costs in the amount of $$$ needed?

    4. Did you make sure property taxes are correct? I hear OH taxes are very high

    5. 6% int. rate? That sounds a bit high to what's available in the market palce. 

    --> best suggestion I can give you is to put an offer in at what makes sense to you. 

    5Reply
  • Peter Pham
    New to Real Estate · Arvada, CO · Member since 2021 · 40 posts · 35 votes
    5y

    Sitting on the MLS for that long might indicate that it might be overpriced or something else is wrong with the property that isn't easily apparent. But with the numbers adding up in your calculations to a good deal, I'd move forward and possibly do a drive-by to check out the property and neighborhood along with a personal inspection before making an offer. You can do this or someone you know can do this.

    0Reply
  • Account Closed
    Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    5y

    Brooke Park Dr is a running joke amongst Toledo investors. It’s a shìt street to buy an investment property. You’d need to buy the whole street and clean out the crap tenants and start over for it to work which would require losing money up front which nobody ever does so the buildings keep getting bought and sold as the owners burn out trying to collect rent from the drug dealers etc.

    But that street aside there are plenty of great cash flowing investments in Toledo and 43612 is generally a great area for investment properties.

    13Reply
  • Nathaniel Walker
    Investor · USA · Member since 2017 · 94 posts · 71 votes
    5y

    Brooke street offers opportunities but you would need to partner with a local person and "Paul Leonard Kersey" to ensure your success. Without Paul it would be tough.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @James Thierbach:

    I'm looking to purchase my first rental property by the end of the year and I've been scoping out out-of-state opportunities (I live in So Cal). I've seen a lot of people mention Toledo for cashflow, so I started looking MF in the area and I found this property:

    1338 Brooke Park Drive Toledo, OH 43612 (8 Units - 2 Bed/1 Bath each) $280K

    I ran a rental property analysis on BP and filled out (conservatively) everything I knew how to (I don't know the area very well). 

    25% down, 30 year 6%, $4K monthly income ($500/unit), $3500 property taxes, $5000 annual insurance (shot in the dark, this is one of the things I have the hardest time estimating), 7% repairs/maintenance, 8% capex, 5% vacancy, 9% property management. I know I probably need to pay water and sewage as well, but honestly have no idea what to put for that. As the numbers stand, I come up with the following return:

    $873/mo cashflow, 13.8% CoC ROI, cash needed - $76K.

    Those numbers look great to me as a newbie, but seeing as the property has just been sitting on the MLS for the past 4.5 months, I'm assuming it's not a fantastic deal. So I was hoping some of you may be interested in analyzing it with me and we can discuss what makes it a good/bad deal. Thank you.

    while calculators are nice.  you can really just use napkin math on this stuff..  your running costs will be 50% maybe 55% or maybe 45% of gross income.. then pay your mortgage..  calculator is nice and all  but not really needed on this stuff.

    if you run it at 55% costs and then deduct mortgage and you still like it.. then its on to whats the condition etc.. if you do better hey great but you want to look at this stuff worse case not try to bake in best case numbers as best case rarely happens.

    Also 500.00 renter is what ????  need 3 times rent to qualify someone living on 1500 a month  take out 500 for rent  100 for utls  car if they have one etc.. leaves about 700 bucks a month to buy your food  clothes etc.. how would you do on 700 a month ?  point is these can be pretty transient tenants. 

    for anyone who cares for my opinion..  U want to buy top of the market rentals not the bottom.. WHEN YOUR OSS.. if you live there and want another job.. I get that.  OOS no way take the lowest rent in the city your taking on high degree of risk.

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    4Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Account Closed:

    Brooke Park Dr is a running joke amongst Toledo investors. It’s a shìt street to buy an investment property. You’d need to buy the whole street and clean out the crap tenants and start over for it to work which would require losing money up front which nobody ever does so the buildings keep getting bought and sold as the owners burn out trying to collect rent from the drug dealers etc.

    But that street aside there are plenty of great cash flowing investments in Toledo and 43612 is generally a great area for investment properties.

    DID not read your post before i replied. but that was my concern.. buy lowest rents in town and this is what you get..  a local with knowledge would never buy these unless its their job to stack up D class rentals.

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    2Reply
  • James Thierbach
    OP
    Member since 2019 · 7 posts · 4 votes
    5y
    Originally posted by @Dani Beit-Or:

    I ran this through my fin. model (see below) and used the #s you have provided. 

    Based on your number I'd say that in my opinion and experience, based on the #s only, this is a good one. 

    I know nothing about the area so I cannot provide an opinion on that aspect.

    With that said I think it is possible you may have missed few things:

    1. Leasing fee

    2. Even if all the units are occupied I'd assume some immediate investment would be needed for some repairs/improvements/fixing liability issue/etc. - did you budget for it?

    3. Did you include mortgage cost and closing costs in the amount of $$$ needed?

    4. Did you make sure property taxes are correct? I hear OH taxes are very high

    5. 6% int. rate? That sounds a bit high to what's available in the market palce. 

    --> best suggestion I can give you is to put an offer in at what makes sense to you. 

     I did include $6K for closing costs and $10K renovation in the calculation that I forgot to mention. Took the property tax straight from the listing and added a bit to it. I assume I can get better than 6% but Brandon Turner's most recent deal analysis video said 4.875, so I just added 1 percent to his number to be conservative. Ideally, for my first property, I want to run it all with worst case scenario numbers and if it still looks decent then hopefully it should turn out okay.

    Thank you for the insight!

    1Reply
  • James Thierbach
    OP
    Member since 2019 · 7 posts · 4 votes
    5y
    Originally posted by @Account Closed:

    Brooke Park Dr is a running joke amongst Toledo investors. It’s a shìt street to buy an investment property. You’d need to buy the whole street and clean out the crap tenants and start over for it to work which would require losing money up front which nobody ever does so the buildings keep getting bought and sold as the owners burn out trying to collect rent from the drug dealers etc.

    But that street aside there are plenty of great cash flowing investments in Toledo and 43612 is generally a great area for investment properties.

     This is the EXACT type of insight I was hoping to find. I figured someone would know something about this area. Thank you.

    1Reply
  • James Thierbach
    OP
    Member since 2019 · 7 posts · 4 votes
    5y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Account Closed:

    Brooke Park Dr is a running joke amongst Toledo investors. It’s a shìt street to buy an investment property. You’d need to buy the whole street and clean out the crap tenants and start over for it to work which would require losing money up front which nobody ever does so the buildings keep getting bought and sold as the owners burn out trying to collect rent from the drug dealers etc.

    But that street aside there are plenty of great cash flowing investments in Toledo and 43612 is generally a great area for investment properties.

    DID not read your post before i replied. but that was my concern.. buy lowest rents in town and this is what you get..  a local with knowledge would never buy these unless its their job to stack up D class rentals.

     I definitely agree with your insight as to the type of Tennant that would be paying $500/mo. However, everyone talks about OH being the cash flow capital of the world and all these properties seem to be $500-$800/mo. Is there a big difference in the kind of tennant that would pay $800? To me (in my bubble of $2K min. rents) it sounds like the same thing. 

    0Reply
  • Steve RozenbergPro Member
    Specialist · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
    5y

    I would say that all deals in all markets are great and work and all of them don't. This is all depending on your goal and your strategy. 

    My question is cashflow what you are looking for or is appreciation? Is this a short term value play property that will role into a 1031 so you were only going to keep it for a couple years? or is this something that you're going to hold for 5 or 10,20  years and let appreciate do its thing and use the cash flow to grow on.

    Many people buy the property and then decide what the strategy will be without first checking if that property is actually going to take you closer to your goal or maybe it's taking you further away.

    My suggestion before you decide what you want to buy figure out what your end goal is and what the final outcome is you want as a result of owning real estate. After you do that then you figure out what strategy meaning cash flow appreciation depreciation Etc will give that to you and then see what Market provides that strategy.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @James Thierbach:
    Originally posted by @Jay Hinrichs:
    Originally posted by @Account Closed:

    Brooke Park Dr is a running joke amongst Toledo investors. It’s a shìt street to buy an investment property. You’d need to buy the whole street and clean out the crap tenants and start over for it to work which would require losing money up front which nobody ever does so the buildings keep getting bought and sold as the owners burn out trying to collect rent from the drug dealers etc.

    But that street aside there are plenty of great cash flowing investments in Toledo and 43612 is generally a great area for investment properties.

    DID not read your post before i replied. but that was my concern.. buy lowest rents in town and this is what you get..  a local with knowledge would never buy these unless its their job to stack up D class rentals.

     I definitely agree with your insight as to the type of Tennant that would be paying $500/mo. However, everyone talks about OH being the cash flow capital of the world and all these properties seem to be $500-$800/mo. Is there a big difference in the kind of tennant that would pay $800? To me (in my bubble of $2K min. rents) it sounds like the same thing. 

    OK i did not invent this thought process Chris Clothier did and I stole it.. but I really like it.. and its one reason his company left these kind of assets LONG ago and focus on the top of the rental market not the bottom like these are.. 

    800 X 3 =  2400 a month.. minus 800 rent  300 misc  leaves 1200 a month to live on  big difference for folks that are basically living at the poverty line..  our reality and theirs are far different..  this is why Chris company goes for 1200 rents and up.. so 3600 to qualify 2k to live on.  I owned at one time 350 of these doors.  And I can tell you first hand buying the lowest price D class from OOS is going to clean your clock bottom line.. the person who lives there that posted this was a SHEEET street knows the score.. 

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    0Reply
  • Account Closed
    Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    5y
    Originally posted by @Jay Hinrichs:
    Originally posted by @James Thierbach:

    I'm looking to purchase my first rental property by the end of the year and I've been scoping out out-of-state opportunities (I live in So Cal). I've seen a lot of people mention Toledo for cashflow, so I started looking MF in the area and I found this property:

    1338 Brooke Park Drive Toledo, OH 43612 (8 Units - 2 Bed/1 Bath each) $280K

    I ran a rental property analysis on BP and filled out (conservatively) everything I knew how to (I don't know the area very well). 

    25% down, 30 year 6%, $4K monthly income ($500/unit), $3500 property taxes, $5000 annual insurance (shot in the dark, this is one of the things I have the hardest time estimating), 7% repairs/maintenance, 8% capex, 5% vacancy, 9% property management. I know I probably need to pay water and sewage as well, but honestly have no idea what to put for that. As the numbers stand, I come up with the following return:

    $873/mo cashflow, 13.8% CoC ROI, cash needed - $76K.

    Those numbers look great to me as a newbie, but seeing as the property has just been sitting on the MLS for the past 4.5 months, I'm assuming it's not a fantastic deal. So I was hoping some of you may be interested in analyzing it with me and we can discuss what makes it a good/bad deal. Thank you.

    while calculators are nice.  you can really just use napkin math on this stuff..  your running costs will be 50% maybe 55% or maybe 45% of gross income.. then pay your mortgage..  calculator is nice and all  but not really needed on this stuff.

    if you run it at 55% costs and then deduct mortgage and you still like it.. then its on to whats the condition etc.. if you do better hey great but you want to look at this stuff worse case not try to bake in best case numbers as best case rarely happens.

    Also 500.00 renter is what ????  need 3 times rent to qualify someone living on 1500 a month  take out 500 for rent  100 for utls  car if they have one etc.. leaves about 700 bucks a month to buy your food  clothes etc.. how would you do on 700 a month ?  point is these can be pretty transient tenants. 

    for anyone who cares for my opinion..  U want to buy top of the market rentals not the bottom.. WHEN YOUR OSS.. if you live there and want another job.. I get that.  OOS no way take the lowest rent in the city your taking on high degree of risk.

    I agree analyzing basically takes seconds if it’s in your target neighborhoods, than a walkthrough

    1Reply
  • Scott WolfPro Member
    Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 960 votes
    5y
    Originally posted by @Steve Rozenberg:

    I would say that all deals in all markets are great and work and all of them don't. This is all depending on your goal and your strategy. 

    My question is cashflow what you are looking for or is appreciation? Is this a short term value play property that will role into a 1031 so you were only going to keep it for a couple years? or is this something that you're going to hold for 5 or 10,20  years and let appreciate do its thing and use the cash flow to grow on.

    Many people buy the property and then decide what the strategy will be without first checking if that property is actually going to take you closer to your goal or maybe it's taking you further away.

    My suggestion before you decide what you want to buy figure out what your end goal is and what the final outcome is you want as a result of owning real estate. After you do that then you figure out what strategy meaning cash flow appreciation depreciation Etc will give that to you and then see what Market provides that strategy.

    Is this Schrodinger's Property Investment theory?

    I do agree, knowing your investing goals is key!

    1Reply
  • Steve RozenbergPro Member
    Specialist · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
    5y

    @Scott Wolf No Clue who or what that is. But I am sure it is someone smarter than me who has already figured it out. And hopefully did not go thru the last 20 years of trial and error like I did to get where I am today.

    0Reply
  • Chris ClothierBusiness Member
    Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
    5y
    Originally posted by @Steve Rozenberg:

    @Scott Wolf No Clue who or what that is. But I am sure it is someone smarter than me who has already figured it out. And hopefully did not go thru the last 20 years of trial and error like I did to get where I am today.

    Ha! I'm not smarter than you Steve, but I know you weren't quoting Schrodinger's theory that an investment can exist in two statuses at the same time.  That would have been a pretty creative pretzel.  If I read it correctly, I see Steve simply saying the exact same investment or property can be a success or a failure to two different investors with different expectations at the same time.  

    For years I have told investors to stay away from low-priced, challenged housing as passive investments.  They often do not match up with the passive investors expected outcome.  At the exact same time, a local, hands-on investor may want as many of those investments as they can get because they match-up perfectly with their expected outcomes.  Same can be said for higher priced investments in less challenged areas. There may not be a enough juice to entice a hands-on active investor, but plenty for the passive investor.  Therefore every investment is a winner and a loser - it just depends on who is making the investment. 

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  • Steve RozenbergPro Member
    Specialist · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
    5y

    @Chris Clothier thanks brotha... Yes what he said 😀

    Chris just says it better because he’s smarter then me

    1Reply
  • James Thierbach
    OP
    Member since 2019 · 7 posts · 4 votes
    5y
    Originally posted by @Steve Rozenberg:

    I would say that all deals in all markets are great and work and all of them don't. This is all depending on your goal and your strategy. 

    My question is cashflow what you are looking for or is appreciation? Is this a short term value play property that will role into a 1031 so you were only going to keep it for a couple years? or is this something that you're going to hold for 5 or 10,20  years and let appreciate do its thing and use the cash flow to grow on.

    Many people buy the property and then decide what the strategy will be without first checking if that property is actually going to take you closer to your goal or maybe it's taking you further away.

    My suggestion before you decide what you want to buy figure out what your end goal is and what the final outcome is you want as a result of owning real estate. After you do that then you figure out what strategy meaning cash flow appreciation depreciation Etc will give that to you and then see what Market provides that strategy.

     Thank you for the reply. I've definitely set my eye on cash flow to begin with. I have a small business that gives me stable income and requires less than 20 hrs/week of my time. Ideally I'd like to build up enough cash flow in managed rentals to replace the business income so I can sell it off or hire someone to manage it and no longer have an active role. From that point I would want to switch gears toward appreciation so I have retirement goals. I also feel like now isn't the best time to be making appreciation plays, but people much smarter than me would disagree.

    0Reply
  • James Thierbach
    OP
    Member since 2019 · 7 posts · 4 votes
    5y
    Originally posted by @Jay Hinrichs:
    Originally posted by @James Thierbach:
    Originally posted by @Jay Hinrichs:
    Originally posted by @Account Closed:

    Brooke Park Dr is a running joke amongst Toledo investors. It’s a shìt street to buy an investment property. You’d need to buy the whole street and clean out the crap tenants and start over for it to work which would require losing money up front which nobody ever does so the buildings keep getting bought and sold as the owners burn out trying to collect rent from the drug dealers etc.

    But that street aside there are plenty of great cash flowing investments in Toledo and 43612 is generally a great area for investment properties.

    DID not read your post before i replied. but that was my concern.. buy lowest rents in town and this is what you get..  a local with knowledge would never buy these unless its their job to stack up D class rentals.

     I definitely agree with your insight as to the type of Tennant that would be paying $500/mo. However, everyone talks about OH being the cash flow capital of the world and all these properties seem to be $500-$800/mo. Is there a big difference in the kind of tennant that would pay $800? To me (in my bubble of $2K min. rents) it sounds like the same thing. 

    OK i did not invent this thought process Chris Clothier did and I stole it.. but I really like it.. and its one reason his company left these kind of assets LONG ago and focus on the top of the rental market not the bottom like these are.. 

    800 X 3 =  2400 a month.. minus 800 rent  300 misc  leaves 1200 a month to live on  big difference for folks that are basically living at the poverty line..  our reality and theirs are far different..  this is why Chris company goes for 1200 rents and up.. so 3600 to qualify 2k to live on.  I owned at one time 350 of these doors.  And I can tell you first hand buying the lowest price D class from OOS is going to clean your clock bottom line.. the person who lives there that posted this was a SHEEET street knows the score.. 

     The simple breakdown of renting at the top of the market vs the bottom (even though both values sound low to me) is super helpful. I agree with the thought process. It's coincidental that you should mention Chris Clothier as I have had my eye on REINation. I think it's possibly a good way for me to start, but my goal is not to be as hands off as possible. My biggest concern with going the TK route isn't that I would be paying retail price and profiting less (which seems to be most people's concern). My concern is that I may not learn as much as I would if I get in there and do it myself, make my own mistakes, etc. Either way, you gave me great insight. Thank you.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @James Thierbach:
    Originally posted by @Jay Hinrichs:
    Originally posted by @James Thierbach:
    Originally posted by @Jay Hinrichs:
    Originally posted by @Account Closed:

    Brooke Park Dr is a running joke amongst Toledo investors. It’s a shìt street to buy an investment property. You’d need to buy the whole street and clean out the crap tenants and start over for it to work which would require losing money up front which nobody ever does so the buildings keep getting bought and sold as the owners burn out trying to collect rent from the drug dealers etc.

    But that street aside there are plenty of great cash flowing investments in Toledo and 43612 is generally a great area for investment properties.

    DID not read your post before i replied. but that was my concern.. buy lowest rents in town and this is what you get..  a local with knowledge would never buy these unless its their job to stack up D class rentals.

     I definitely agree with your insight as to the type of Tennant that would be paying $500/mo. However, everyone talks about OH being the cash flow capital of the world and all these properties seem to be $500-$800/mo. Is there a big difference in the kind of tennant that would pay $800? To me (in my bubble of $2K min. rents) it sounds like the same thing. 

    OK i did not invent this thought process Chris Clothier did and I stole it.. but I really like it.. and its one reason his company left these kind of assets LONG ago and focus on the top of the rental market not the bottom like these are.. 

    800 X 3 =  2400 a month.. minus 800 rent  300 misc  leaves 1200 a month to live on  big difference for folks that are basically living at the poverty line..  our reality and theirs are far different..  this is why Chris company goes for 1200 rents and up.. so 3600 to qualify 2k to live on.  I owned at one time 350 of these doors.  And I can tell you first hand buying the lowest price D class from OOS is going to clean your clock bottom line.. the person who lives there that posted this was a SHEEET street knows the score.. 

     The simple breakdown of renting at the top of the market vs the bottom (even though both values sound low to me) is super helpful. I agree with the thought process. It's coincidental that you should mention Chris Clothier as I have had my eye on REINation. I think it's possibly a good way for me to start, but my goal is not to be as hands off as possible. My biggest concern with going the TK route isn't that I would be paying retail price and profiting less (which seems to be most people's concern). My concern is that I may not learn as much as I would if I get in there and do it myself, make my own mistakes, etc. Either way, you gave me great insight. Thank you.

    Frankly you buy D class in any market and you will get a lesson.. its a tough way to go unless its your life mission and a full time JOB.. just sayin.. like I mentioned I owned 350 of these homes and if for one minute I thought the juice was worth the squeeze I would not have sold the whole mary ann 5 years ago.. I know have all A class rentals and enjoy those very much.. but I am not looking to make the biggest return possible on cash flow I am looking at stability and in crease in value over time. in the meantime I get about 6% COC plus all the tax bene's and I can self manage. I have a broker qualify and place tenant then do the rest myself very easy on us. Plus can drive to them.

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  • Brandon SturgillBusiness Member
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    5y

    @James Thierbach where else can you find a deal for $35k/unit...the play is to improve, increase rents, build a track record, and exit at $55-65k/unit. 

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  • Jacob Bohrer
    Rental Property Investor · Canton, OH · Member since 2020 · 58 posts · 22 votes
    5y

    @James Thierbach Did you say “Broke” park drive?

    0Reply
  • Julie Sisnroy
    Realtor · Papillion, NE · Member since 2013 · 134 posts · 59 votes
    5y
    Originally posted by @James Thierbach:
    Originally posted by @Steve Rozenberg:

    I would say that all deals in all markets are great and work and all of them don't. This is all depending on your goal and your strategy. 

    My question is cashflow what you are looking for or is appreciation? Is this a short term value play property that will role into a 1031 so you were only going to keep it for a couple years? or is this something that you're going to hold for 5 or 10,20  years and let appreciate do its thing and use the cash flow to grow on.

    Many people buy the property and then decide what the strategy will be without first checking if that property is actually going to take you closer to your goal or maybe it's taking you further away.

    My suggestion before you decide what you want to buy figure out what your end goal is and what the final outcome is you want as a result of owning real estate. After you do that then you figure out what strategy meaning cash flow appreciation depreciation Etc will give that to you and then see what Market provides that strategy.

     Thank you for the reply. I've definitely set my eye on cash flow to begin with. I have a small business that gives me stable income and requires less than 20 hrs/week of my time. Ideally I'd like to build up enough cash flow in managed rentals to replace the business income so I can sell it off or hire someone to manage it and no longer have an active role. From that point I would want to switch gears toward appreciation so I have retirement goals. I also feel like now isn't the best time to be making appreciation plays, but people much smarter than me would disagree.

    I am reminded of an old quote, "If it feels wrong, it probably is."  I am not nearly as smart or experienced as some here, but here's my 2 cents... I think what some of the people are saying (and I tend to agree) is just because it looks like cash flow on paper, most scenarios (ESPECIALLY in a low C/D neighborhood with transient tenants) do not mimic a spreadsheet. Besides, cash flow can quickly change with evictions/maintenance/turnovers/missed rent/crime.  Not to mention the stress of it all.  No money is worth that IMO. Have you talked with the PM who manages this property - they should be able to give you some insight?  Since this a 8-plex, have you already been pre-approved by a commercial lender?

    Your goal is cash flow and not appreciation, but why not have both? You can find that in the right market within a solid C/B-, working class neighborhood. Or try a SFH in this neighborhood to get a feel for it - much easier to offload and a significantly smaller investment, plus likely better quality tenants. As a first time OOS investor (3 time zones away), MFH are hard enough, but this property looks like the recipe for a disaster. In this hot market with low inventory nationwide, there's probably a reason it has been on the market for months. Plus if someone with boots on the ground claims it is a joke, I would be running (not walking) away from this.

    1Reply
  • Account Closed
    Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    5y
    Originally posted by @Jacob Bohrer:

    @James Thierbach Did you say “Broke” park drive?

    If you buy on Broke park drive get ready to replace a lot of doors, the cops are constantly breaking them down executing search warrants.

    2Reply
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