All Forum Posts by: Steve Vaughan

Normally an $85k house that brings in $1175 rent is a no-brainer.  That should cash flow all day.  It being out of your area in the hands of a PM is always scary and that risk needs to be accounted for.  The taxes are crazy high on this valuation and why don't the tenants pay water I wonder? (As @William Hochstedler points out.) As-is, you only have $450/mo for debt service or you only have a COC return of 6.5%. I can get that in paper securities without the drama and hassles of out of area rentals. If the PM is solid, offer 1/2 month placement fee, get the tenant to pay water and get another 5% off the price. This will bring your return up a little to compensate for the hassle and risk this will bring you. Good luck!

Great point, @Jay Hinrichs .  Is Bruce related to Chuck? haha  That's cool you actually attended to hear him in person back then.  Thinking of one of your investing strategies just gave me an idea for the cash at time of sale.  The landlord thing is getting tiring so I will consider notes and other secured paper investments until commercial comes back to earth.  Thanks, man! 

In the days before youtube and BP, the returns were there more-so in 2003, but the money and information wasn't as much.  You had to actually qualify for the loan with documentation and a good rate was anything below 7%.  In my area, I was buying 5-bedroom homes for $105k and renting them out for $1150 w/pets. The 5-bed home was the outlier and I made it my niche. These days the same house would be $185k, renting for $1350.  Doesn't work anymore and the lending requirements have tightened again, though the rates are much lower.    I also picked up some multi-families in 2003 that were bank owned in a small town. I still have those today. $25k per unit, renting for $400/unit average with seller (bank portfolio) financing.  This was also before BP and many other investor-friendly educational venues so there were far fewer investors chasing the same deal.  Most thought I was crazy.  Different mentality overall then with much less free info available. 

I'm glad we are at least discussing the possibility of a bubble.  Don't remember talking about it at the end of the go-go years. I would say 2015 is too soon for it to burst, like a lot of you have.  When my 'shoe-shiner' gives me real estate tips, I'll get out LOL.  I am feeling the difficulty finding multi-families that make sense as well.  More so than single-families.   I am considering selling some of my multi's into the froth.  Just got to figure out where to deploy that capital next!

Like @Elizabeth Colegrove points out, don't spend just spend a dollar to save 35 cents. Useless software upgrades have done that to many a 'sophisticated investor'.   I make sure I'm stocked up on stamps (for marketing), gas in my car, maybe some light bulbs and supplies.  Maybe material for an upcoming repair like you point out.  Pre-paying for snow removal you know is coming anyway is a good idea, too.  Talk to your plower.  These are all small things and hopefully won't take much effort on your part. With an s-corp  mgt co, I can establish or fund a defined benefit plan up to $30k/yr to defer the tax bite.  Congrats on 'being in the black' for the first time @Joe Kato !    (No tax advice here. I am not a CPA.)

If you hold both properties in you or your wife's personal name, a lawsuit/judgement will attach to either or both homes. You are more likely to be sued by a tenant, of course, and the first place they will look is to the owner of the rental. If you do satisfy that mortgage, I would put it into an LLC at least. Like @Joe Villeneuve points out, I would rather have my home paid off and carry a mortgage on my rental from a risk perspective.  Worst case scenerio, I would rather lose my rental to the bank than my home.   I guess another option would be to refinance both properties to a 15-yr mortgage, getting your rate even lower.  That's what I did a couple years ago.  The 15-yr rate is almost 30% lower than 30-yr rates!

Pay down another $123k of my real estate debt and keep feeling the peace!

For a vacant lot, I would say to take as much time as allowed.  Stretch to the reply deadline and be nonchalant.  Yawn and be like "if it will help them out, I can do $x , with these additional terms."  Don't be afraid to walk.  Don't give without asking for something in return.   It is hard with all the realtors in the way to get the seller's true motivation for selling, but that is the key bit of info you need.

If I were to use an SDIRA for RE I would use it for my fix and flips only. Long-term holds have too many inherent tax advantages. You will also forever be paying every little expense from and accounting for every rent check inside this separate SDIRA acct. If this is held within a bunch of complicated series LLC cells and whatnot I think it will bite you. SDIRA property is titled "Servicing Agent FBO your name." I imagine the bank acct is as well. Flip the property, shelter the profits, move on. BTW, is this a Roth or traditional IRA?

Thanks for the good info on alternate burbs, guys.  Obviously Detroit is not MI as @Joe Villeneuve points out.  I looked into these super cheap Detroit places a few years ago and aside from the burned out, stripped condition and bad area, they were strapped with often $9-$12k in back taxes and back-utilities due.  Try getting clear title.  The title chains were layered with quit claim deeds, old land contracts and utility liens as well!