All Forum Posts by: Andre Lokasari

Austin,

I have not used their service per say, but a friend of mine tried their product.  You might want to try to see if it is the one for you...

http://www.camerasecuritydirect.com/cedar-rapids-iowa-cctv-security-cameras/

Kenneth,

One of the biggest hurdles for most people is the fact that some of them were still trying to bounce back from the 2009 economic crisis where people got their credit scores destroyed. This way, it is very hard for them to get mortgage with low interest rate. Other than just issue of eligibility, there is also issue of having the money to do down payment. Most Bank requires LTV of at least 20% for conventional mortgage. Another option is to get 3.5% or less interest with FHA loan, but minimum credit score requirement I think is about 500 on that. Plus, borrower has to pay annual premium every year depending on the amount of equity they have on the loan (More equity, less premium).

But, then again, there is the benefit of the flexibility of renting as well.

Some of them don't have a steady job, in between jobs, etc.  Owning a house is less preferred for these people with these kinds of situation.  Thus, short term housing solution a.k.a renting is better for them.

These are the two major reasons.  

In general, not specific to Midwest, more detailed broken down reasons why people choose to rent could also be found in the study/survey done by the Federal Reserve Bank of New York on consumer expectation below:

http://libertystreeteconomics.newyorkfed.org/2014/09/why-arent-more-renters-becoming-homeowners.html#.VBANIcKSzwD 

I agree with @David Faulkner here:

"Agreed ... if Levin thinks that $200/mo ($700*28%) is too conservative for CapEx, Vacancy, and Upkeep then he is in for quite a surprise, as is the OP I suspect. When the roof goes bad, the roofer is not going to ask you first how much the place rents for before he gives you the roof bid, so why on Earth would you use that to estimate the expense?!? It makes 0% sense to do it that way."

Fortunately, he has pretty low annual tax for about 800 per year.

But, suppose you account all of the big items and average them out down to the per month accrual, I think $200 seems like a good number to have for capex. The thing with Capex is that if everything is newly rehabbed, you can build that reserve fund overtime at a slower pace. It is not like everything would break down all at the same time tomorrow (Well, hopefully not... unless there is an earthquake or something like that). But, if the assumption is that you buy and hold the property perpetually, even if the foundation is new, perhaps about 100 years from now, you will have to replace it. This is not very practical since you would not live that long anyway (well, some people do.... but I digress). so, capex is both art and science in my opinion and is a bit tricky to estimate.

It all depends on the condition of the big items: roof, foundation, windows, furnace, water heater, etc.

Also, the more properties you have, the more you can cross subsidize from the income of all of your different properties.  If one roof breaks down on one of your 5 properties, you can have the fund you set aside from all of your 5 properties to help fix that one roof that breaks down.  In a sense, once you have so many properties, your portfolio acts like a multi-family.  In a multifamily, the budgeting of the capex is slightly different because of this very same reason.  The capex cost is spread out through out all of the units.

Hello Melissa & others,

It has been quite a while since your last post on this topic. But, I would like to hear from you to see whether you have made any investment in the mentioned neighborhood and what your experience has been like. I am also a new investor and agree with the sentiment on this post that older neighborhood tends to cashflow better. @Andrew D., I don't mind older neighborhood (though granted, some houses look abandoned and dirty looking) as long as it is not a war zone area (E.g. neighborhood with a lot of crime rates, drugs, property crime, etc.). Crimes tend to drive good tenant away, and yeah, you would have more vacancy and maintenance problem on the long run. People tend to generalize and jump into conclusion that cheaper property always mean one located in the war zone area, but I think sometimes it could also mean hidden potential working class older neighborhood as well.

I would like to know how is your experience so far on this crime subject with the Wellington neighborhood?