All Forum Posts by: Andrew Johnson

Nate Julian Have you priced out the honey-dos and do you know how long it will take to accomplish them? I always have a hard time raising rents if I have good tenants. It takes a while to recap lost rent during the time it takes to get it rented and (in your case) attend to the honey-dos. If I was in your shoes I'd just let it marinate for a few months until you see who are the good vs. bad renters. However, that assumes that you don't need to raise rents to cover mortgage payments, expenses, etc.

Tony Velez There is a chance that there's a price ceiling for the neighborhood/area. If you over-improve a property you'll seldom see those return a higher appraisal. The property might sell quicker but not for much price differential. Still, if you think the value is much higher go through a refinance process and pay for an appraisal through the bank and see where you end up.

Sunny Alamgir I think there's good advice already in terms of the challenges. It's hard to predict what the property will hold. However, I think you can put together a plan around the target market, type of purchase, etc. I don't know how detailed it will be without a subject property but it would at least let your investor know what you are targeting and what you're not. You could include sample pro-formas or templates to let them know how you will be assessing a deal to see if it makes fiscal sense. But that's really about it.

Maxwell Lee You're in a good position. I think you might be best off ranking your properties based on how they perform, if they have upcoming cap-ex expenditures, etc. If there is one that's dead weight, a pain to manage, farther away from where you live, etc. take your gains there. It doesn't sound like you're desperate for the cash so don't sell a great performing asset just to try and time the market. Leverage could be an option but you need to look at origination costs, fees, etc. as a percentage of the loan amount. The last thing you want to do is pay $5K for a $50K loan (not saying it would cost that, just for the sake of round numbers).

Elliott Kim If there are 20 blind offers and a group showing them someone (or more than one) is bidding with emotion. Odds are their emotion will trump your focus on cap rate, ROI, etc. If you get emotional too then it's less about an investment at that point, more about buying a home. Neither option is wrong, just dicey when you mix the two.

Vishal P. Completely impractical when it comes to enforcement. I don't know how you could "prove" that wear and tear came from shoes instead of slippers if you did have the policy in place. No idea if it's legal but definitely impractical.

Phil LeNeveu Personally, I would narrow your choices down to two cities (ideally one) and then look at both options. Then there's nothing to stop you from flying out to the location and meeting with turnkey providers as well as an agent to show you other local properties that you have vetted. You can do it with four cities but it's more time consuming and expensive. When you focus on one market it's easier to get a grasp of neighborhoods and with real estate being a block-by-block business it's important to have that focus.

Bob E. I don't see too many tenant toting around appliances. One risk you'll have is depending on them to do the hookups, avoid leaks, make sure the vents are clean, etc. I would just put in place what you think is appropriate for the property.

Francis Rusnak One thing to think about (especially if it's a lower dollar flip) is that one "replace" instead of "repair" can make far more than a 10% impact in the repair budget. Think plumbing, electrical panels, HVAC, roof, etc. You won't get killed because of "more new carpet" but those other issues will cost you money and time. So if your repair budget goes over it also increases your carrying costs. However, your point is valid that if you have reserves in the bank you'll live to do another flip. But take a look at a lot of the posts here, people have saved $20K and are looking to do their first flip. With that budget, if things go wrong, you can end up upside down in a hurry. You'll never be able to dig out of a half completed renovation when it comes time to sell.

Daniel LaRocca Shop around to different lenders, some won't care about the LLC (because you'll sign a full recourse loan) and others will. Don't shy away from community banks as well as the standard lenders. Terms, fees, amortization schedules, etc. can all differ.