All Forum Posts by: Adam Christopher Zaleski

In my opinion, this is unorganized, not unethical. 

Every state is different, but once a tenant stops paying rent, they basically lose all their rights as a tenant. If a tenant threatened me with non-payment, I wouldn't get mad. I would simply explain to them that it's a really bad idea to stop paying rent. My mom had an issue with non-payment and they went to small claims court. The judge asked the tenant when he stopped paying and he wrote it down. The tenant then went on describing why he stopped paying rent. The judge basically told the tenant to shut his mouth and non of his reasons are relevant. Once you stop paying rent, you have no legal right to live there. My mom won in small claims court, but I'm not sure if she ever got any money.  

Get the unit really clean and in really good condition and pay for professional photos. It's expensive, but you can recycle the photos for the next 15 years. 

 So you are saying your options are to (a) rent it out for $1350 and tenant pays utilities or (b), you rent $600 per room and then you pay utilities. My utilities in Pueblo West average around $330/month including electricity, gas, water, trash and internet. 

I wouldn't sell it. Pueblo County is currently appreciating faster than Denver right now (as a percentage). Rent is starting to pick up as well. 

I lived in a rental and the upstairs tenants smoked. They smoked on the curb and the wind blew the smoke into our unit almost every time. We eventually moved. 

Because of the cash flow from our long term rentals my wife and I only have to work 35 hours/week combined at our W-2 jobs, which is really helpful when you have a 4-year old. 

"Chris, the answer is leverage yourself to the point you feel comfortable."

This is the answer. Only you can answer it. As a reference point, in the book, "The millionaire real estate investor" the average equity position for people who own more than 1 million in equity in real estate is 40% equity/60% leverage. I personally like to be 40% equity or above at all times. I might go a little under 40% if I have a ton of cash for some reason. For example, if I just completed a cash-out re-fi. However, once I deploy that money back into another deal, I will make sure that I'm at least 40% equity. I always have at least 6 months of mortgage payments in my checking. It helps me sleep at night. 

You have intimate knowledge of how to manage the townhouses. I would want to keep them and capitalize on this knowledge. If you sell them all and go into a different rental market, there is going to be a learning curve that is going to cost you money. 

If you are willing to buy a 5 bedroom and rent out 4 rooms you should be able to get close to break even. However, your max is 700K based on what others have said the median house price is 1.3 million for that area. A 5 bedroom will probably be 1.6 million. You can probably still do it, but you are going to have to drive farther away from the ocean to a less desirable area to get to your 700K number. 

I lived in San Diego from 1998 to 2005. I ended up moving because I wanted to buy a house and do a house hack for graduate school and the price point of San Diego was too expensive. 

In 2007, I ended up buying a 4 bed/2 bath in Fort Collins, CO for 182K that needed 10K worth of work. I put down 20%, so I was all-in for around 50K. My PITI was $950 and I rented 3 rooms at $350/month. I was cash flow positive $100/month.

You don't need 20% down for a primary. You can do 3% to 5%. I would make sure that you have plenty of cash reserves in case anything breaks. After all repairs are done, I wouldn't want less than 25K in my checking account for emergencies. 

Based on your personal situation, the most common advice from all the posters is that you should avoid the syndications. It's a little weird that you still want to do that. If you really want to still do it, please start off with a very small amount of money. 

The stock market (S&P 500) did 25% last year. I don't understand why anyone would want to do a syndication for 9%.  

The first 80K of capital gains is at 0%. If you quit your job and sold one townhouse a year, the first 80K of capital gains would be 0%. 

Don't forget about principle paydown. If you have 14 townhouses and you are around $200/month for each unit, that's another $2,800/month. 

If you want a more passive experience go for it. However, it's going to take longer to get to $30,000/month going passive. You would most likely get to $30,000/month quicker by just holding. 

The quickest way to $30,000/month (and most risk), is doing cash-out re-fi's and buying more townhouses. It's also the most work. 

What is more interesting to you? Is it $30,000/month with more work or $10,000/month with less work?