All Forum Posts by: Adam Moehn

I bought a 4'x8' harbor freight trailer and a hitch for my car for just such an occasion. It's worked pretty well for moving anything too big to fit in the back seat of my car.

Your state or City probably has some specific requirements as to what defines a bedroom. I have a house with a room that doesn't have an egress to make it technically a bedroom, so I've called it an office or a bonus room.

Welcome, Rebecca! Good luck with your new 4-plex!

Thanks for your answers. Looks like a mix of ignore it, count it in rehab, and just replace anything old.

I'm curious to hear how other people account for phantom repairs when looking at a deal to purchasing a rental property. By this I mean the depreciated value of having an older roof, furnace, etc. in a house you are looking to purchase. I call it a phantom repair because these items are still perfectly functional at the moment so there's no current repair to be done, but you'll probably have to replace them sooner than if they were newer.

For example, say you are looking at two SFH that are identical in every way. The only difference is that one has a brand new furnace and the other has a furnace that is 15 years old but works just fine.

Generally when doing deal analysis it seems people will account for estimated rehab to make a unit rentable, and they will estimate an amount for monthly or yearly maintenance and capital expenditures either as a percentage of rent or some estimated dollar amount. Using this method both houses would look the same on paper even though the one with the new furnace is obviously better.

Here’s my thoughts on ways to account for these.

1. Ignore it. It seems many people do. I suppose this kind of makes sense if you’re planning to own the property for a long time because even though you’d have to replace the items sooner, after replacing them you then wouldn't have to replace them for a longer period of time. So it would at least mostly wash out in the long run.

2. Count it as part of the rehab cost to get the unit rentable. If the furnace is 15 years old and you expect a furnace to last 20 years, then include the cost of 75% of a furnace in your rehab costs even though you won’t actually be spending it now.

3. Use a discounted cash flow model. This would take the future timing of the expense into account. Or on a similar note, do the same method as number 2 but discount the 75% cost by 5 years. I don’t think most people get this sophisticated in their deal analysis though.

4. Increase the estimated capital expense/maintenance expenses. Of course then the question is, by how much? Some arbitrary amount? To pay for the cost of a new furnace in 5 years? By that logic if it was older than its life expectancy you have to raise it enough to pay for a whole furnace every month or year which obviously doesn’t make sense.

So, do you account for this when you’re looking at a deal, and if so, how?

There are schools that offer degrees in Real Estate. I double majored in real estate and finance myself. This webpage has a list of them. http://student.icsc.org/student/resources_undergrad.php

Hmm, @Austin Davis and @Lonnie Pickard didn't work for me in the last post. Makes me feel silly since I just explained how to make it work.

Welcome @Austin Davis ! The way the @ name thing works is you need type @?. Then a list of people that have posted on the thread will appear that you can pick from.

@Lonnie Pickard is that the one on Meetup.com? I was thinking of going to that.

$300 per month wouldn't be bad assuming the return on investment is also good. Some people think real estate will be too much hassle so aren't interested unless they think they can get a massive payday, which sounds like what your friend is thinking. Buying a larger property in a nice area with the expectation of appreciation could achieve better returns, or could backfire if the appreciation doesn't happen.

@Glenn McCrorey Mind if I ask which credit union you're using that allows 15% down?

@Jaden Ghylin