All Forum Posts by: Ari Bachrach

Okay, so maybe I've got my terms incorrect. I'm referring to things like appliances which are in the property like a fridge, stove, washer, dryer, etc. (Since the landlord insurance covers that with personal property insurance I just used that term). Would that count as business property then?

To answer your other question, in some cases it conveyed with the purchase, in some cases I was buying a rehab and put in new appliances.

A question on depreciation for residential investment properties. When calculating depreciation, the regular schedule is to depreciate the property over 27.5 years. Do I need to separate out personal property (appliances and the like) and depreciate them at a different rate? If so, how do I calculate their value? Do I need an assessment or is a general estimate good enough?

@Michael Plante Net is calculated above - it would be $1032/mo.

Full disclosure: I'm already under contract for this deal, but since it's my first deal I want to get some feedback even though I'm going to be going through with it regardless.

I'm buying 2 condos in the same complex as a package deal for 140K. They're both 1 bedroom and about 800 sqft. Hoa fee is $430/mo each. Taxes are $894/yr each. All utilities included in HOA fee. Zip code is 20877 if anyone wants to see what the area is like.

Unit #1:

Currently rented to a section 8 tenant for $1410/mo. The unit is in good shape and already passed section 8 inspection. No work needed.

Unit #2:

Needs some minor repairs - estimates cost is about $1000 to replace a bathroom vanity, hand a curtain, and fix the garbage disposal. The going market rate for renting a 1 bedroom in the area is about $1250, although I could also do section 8 again for $1410. 

I'm using a line of credit to buy them. The interest rate is the 30 day Libor + 2.5%, so that means my current interest rate is 3.75%, and I don't have to put anything down. I will probably want to refinance at least 80% of that into something fixed at some point to hedge against rates going up.

Monthly costs:

* debt service = $441 (141,000 *0.0375/12)

* insurance = 78 (quote from Geico)

* HOA: 860

* taxes: $149 (it's $894 each per year)

* repairs: $100 (I'm estimating a little less than with an SFR because with a condo I don't worry about the roof, the hot water heater, landscaping, etc.)

total: 1628

Monthly income: $2660 (1410+1250)

Net: 1032

Cap rate = 8.7% (1032*12/141000)

Things I didn't include: closing costs, vacancy. I figured my margins should be high enough to make up for those costs.

Since this is my first investment, I'd like feedback.

@Mindy Jensen - It's not for me, but it's certainly a good idea that might be right for someone.

Yes! You have to start somewhere. If you find a deal that is really a deal, you will find a home for it even if you have no cash buyers. Advertise on the BP forums, go to your local REI meetup with a flyer, post on Craigslist. If it's truly a deal, someone will take it quick. Also once you have something to show off, it should be a lot easier to build your cash buyers list.

@Matt K. No, not condos. Mostly townhome and SFR. They are all from the same realtor and using the same copy.

@Ned Carey @Owen Dashner That makes sense - I guess HUD wants to increase home ownership so they're prioritizing their mission ahead of getting every possible dollar, which makes sense. Thank you.

I've been perusing the local DC and Baltimore Craigslist for real estate and I see a whole lot of listing that include the following line:

> Owner Occupied Only!!! NO INVESTOR OR WHOLESALER 

Does anyone know what the story is here? Why would someone limit their range of potential buyers by excluding some of them when listing? Is this something they can really enforce? Is it just a scam to try and build a list of home buyers for a realtor? (I did notice that all the listing say "bank owned" and have no details specific to the properties like addresses, pictures of the inside, number of bedrooms, etc., which does make me a little suspicious).

I'm really a buy and hold person, but I'm looking to try and see if I can use some wholesaling techniques to get better deals off MLS than I can through MLS. I've done my research and know of a particular high rise condo complex I'd like to own property in. I had someone from freelancer.com go through the property records and find all the non-owner occupied units and get the owner's addresses. My plan is to send all the out-of-unit owners a letter to their home address offering to buy their unit. Since there are only three basic units, I already know what I think each model is worth. In the letter is it a good idea to say "I'm willing to pay up to $x for a 1 bedroom, $Y for a 2 bedroom, and $z for a 3 bedroom", or should I leave that off? My feeling is that if people see an offer they might take the letter more seriously. On the other hand if their unit is in terrible shape and I can't actually offer them all of $x I feel like I might have fixated them on a high price prematurely. What do people think? Is this likely to being in more leads or less?

Go to a local REI meetup and ask other wholesalers what they do. It's possible they all have real estate licenses. It's possible they just don't assign right to purchase as some others suggest, and it's possible they all have different lawyers who have given them different opinions. People in your state will know best.