All Forum Posts by: Alan Grobmeier

@Renee Ren, If it was me I would not look at anything in Ohio/Indiana.  Your probability for appreciation is limited and so is your capability to increase cash flow via rent increases.  It's one of the many reasons the midwest did ok in the downturn.

I am not a fan of the midwest.  Frozen pipes are something I have never experienced.  I have never experienced oil furnaces (or whatever they are called) either.  The properties are generally much older than the west and the south.  I think you get a LOT more maintenance for not a lot of cashflow, at least for an OOS investor.

I think ANY of these rural towns in the midwest can be a gold mine.  As long as you are willing to live there.  I'm not willing to travel or live in those locations.   

As a result, your future cashflow income, inflation adjusted, will be LESS in the future than it is today.  That will be the case with most 'northern' locations.  Many of them are 'net losers' with regards to move in/move out.  In many of these states taxes are high, which will destroy your profits if you have a vacancy.  Almost like a 'double whammy'.  Although not on your list, or mine either, is Illinois.  Their property taxes are punishing.  

Out of your 'list', I would pick the Orlando area.  But not Orlando proper, but some suburb.  I think you can get better value.  The other Florida locations you listed can get hit by hurricanes, which is obviously a 'turn off'.  At least to me. ;-)  Otherwise, I'd say go for anywhere in Florida.  A close 2nd for me would be Mobile, AL.  

The most important thing, however, is your boots on the ground.  Even over the location you choose.  It is DIFFICULT, but not impossible, to manage OOS properties.  I have ONE in California I manage from AZ.  I would not want a BUNCH of them that are outside my purview UNLESS I had a killer team doing my PM.

And you really can't find killer teams everywhere.  Just look at ALL the posts about bad property managers.  

Hope that helps.

@Micah Shelton, I just realized that this is 18 doors!  That's $463 a door rent.  How are these properties NOT D/F?

I hope you own at least a taser.  ;-)

I'm thinking that this deal is 'off market' because no one in their right mind would buy it.  Let alone at 880k.

@Micah Shelton, I am strictly a SFR type of guy. But I do know that commercial lending will cost you a LOT more. You can try @Jay Hinrichs.  He's in your neck of the woods.  If nothing else, he might be able to refer you to someone.

880k is not an easy deal, especially if the owner wants to be completely cashed out. You are probably looking at an interest rate north of 6%, even if you have 20% down. Your best bet would be to try to get some owner assistance here, have them carry back a note on part of it.  Then finance the rest.  It doesn't look like it cashflows to me, depending on taxes, insurance, water, sewer, trash.  If it does cashflow, it seems very thin, especially when divided by that many doors.  

Based on your numbers, it is difficult to believe that the tenants are factory workers.  Based on the price of rent, they might be making $2000 a month gross income?  Seems a little low for me for a factory worker when minimum wage is around $10 an hour.  Then to take them to $766 a month, on the average, seems pretty steep.

1,000,000.00 net worth, excluding personal residence.  OR 200k individual income or 300k joint income.

https://www.investopedia.com/t...

8350/15 = very scary to me.  $566 per unit per month average.  Sounds like a crack house to me.

And stating you ‘could’ get $11,500 a month is pie in the sky.  You will either turn over a lot of tenants and/or do a lot of renovations.  Your pick.  You are assuming the previous owner hates money and never wanted to rock the boat and raise rents.  Don’t be fooled here.  Your average tenant can’t afford a $200 per month increase in rent AND still buy their crack.  ;-)

As far as how to bundle them:  easy.  Owner finance is the most probable.  Otherwise you are looking at a commercial loan.

Best of luck on this one.  You will probably need it.

@Jay Hinrichs are AITD's still allowed? 

@Mike Franco, @Dan H., @Justin R., @Trevor J., @Christine Kankowski, @Kyle J.

New update.  I told all of you that I would keep you updated as things changed.  

I am TRULY ROFLMAO.  Tenant sends me an email yesterday.  States that mom, Uncle, & Grandma (98 years young) are going to be moving in.  She is deciding to stay until at least Grandma passes away.  According to her, Grandma has the blood pressure and heart of a 60 year old.  So I am guessing it might be awhile before she kicks the bucket.

I am in the process of getting applications, credit & background checks on the rest of the clan.  After all, I don't really want any felons or child molesters at my place.  And I do need to know the credit worthiness of the additional tenants.  I will be creating an addendum, adding all to the lease.  

It appears that the attitude has changed.  My 'overpriced $hithole' is now where everybody WANTS to live.  It MUST be a little harder to find something than I thought?

I am both surprised & kind of saddened.  I was actually looking forward in finding my next tenant.  With Cali rent control I can only raise the rent 5% + inflation when the lease expires.  I am sure they will squeal like a pig when I propose a new lease at a new rate.  They thought the old rate was overpriced.  Another option is to just not renew next summer.

As far as the dogs, they are gone to her sisters 95% of the time.  Tenant is afraid to bring them back to the property.  Apparently another incident and the dog(s) will be destroyed.  Not sure exactly what is going on with that one.  The city of La Mesa/animal control has not been very forthcoming for my requests for information.   

I kind of looked forward to getting rid of them as tenants, but they do pay on time and in full.  My property is an upper end property for the area.  I know, moving forward, that it will always be a challenge to find renters that CAN pay the rents I need/want.  

I figured that my next tenant would with the US Navy.  Their BAQ allotment can cover the rents.  The minus is that I would have a lot more turnover than I have experienced in the last 10 years.  

Thanks again for the advice!

@Account Closed, recorded reports go back to the 1950's, long before CNN was a gleam in anyone's eye.  

Don't believe me, that's fine.  Research it yourself.

https://www.torhoermanlaw.com/...

https://truthout.org/articles/...

http://stlouispatina.com/the-t...

https://www.stltoday.com/busin...

Best of luck.

Depends on a lot of things.  Where you are in your RE career, where you are in life.  

30 yr allows you the most flexibility.  You can always pay it down if you want.  It will give you the most cashflow in your pocket in case you hit a recession along the way.  

What takes ppl out in recessions is not the value of their property falling.  It's the capability of not having cashflow to weather the rainy day.  Cashflow allows you to make it thru the RE 'cycle'.  

Stay and school and do RE on the side.  When you can replace your income with RE, then CONSIDER it.  Otherwise, don't do it.