All Forum Posts by: Adam P

@Guru Thapar I use lending club.  But I believe prosper is roughly the same offering.

@Jon Q. 

How do you deal with turnover managing from afar?  I managed a few condos from out of state, but they were in a doorman building, and I had friends in the city to show the property for me when turning over tenants.  

 How do you manage tenant turnover?

The seller's agent will typically happily show you the property. I don't have a license. Just a regular buyer off the MLS.

The list price doesn't matter too much.  I have offered over asking price before.  The numbers are based on rents and cash flow.  

I always look at the property first, MLS listings are not always accurate.

Look at the actual listing on redfin.  Near the top it says "Listing provided courtesy of" and the seller's agent name.  Then google the seller's agent name to find their phone number.  For generic names, you sometimes need to google their name and brokerage (both are on the listing).  

I am hopefully closing on a property next week I secured for 14% off the list price. I made the offer the first day it was on the MLS.

I don't finance 100%.  But my money can't be free either.  If a deal won't stand up financing 100%, then it is not worth buying. 

Almost all of my deals have been on the MLS. The trick I use to secure them is to not use a buyer's agent. I subscribe to redfin feeds, which at least in Chicago will email me new listings within about 15 minutes of them hitting the MLS. I contact the seller's agent for any deal that looks worthwhile, and ask to see the property that day. I then make an offer with the seller's agent acting as dual agent.

You can get incredible deals this way.  The seller's agent SHOULD always act in the seller's best interests.  But, with dual agency, the agent gets a bonus 3% commission if I am the buyer.  This makes my offers get presented in the best possible light, and more often than not, gotten accepted.  

The 50% rule is close to what I have experienced.  You probably want the mortgage only to be 50% or less than the rents, assuming you finance 100% of the property. 

Therefore to break even on a $219k property, financing 100% would mean a $1,060 P+I payment.  Therefore if you could rent it for $2120 or more, you could cash flow long term.  

I generally work backwards though, since rents are set by the market.  If rents are $1700 a month in an area, then I would want to find a place that cost $175k for purchase + rehab.  

I started my investing in Denver.  My first investment marginally cash flowed ($1300 rent on a $130k condo).  I knew I was speculating on the $225k condo, but in 2011, I figured I couldn't lose, and I financed 97% of it.  

Now I ONLY invest in cash flow properties.  After a few years as a landlord you will learn that costs just happen.  You can lower the risk of them happening too often through screening, but if you want to make money long term, you need to invest assuming maintenance expenses.  

Someone breaking their lease and leaving damage is not even the worst cost I had this year.  I had a $10k expense on an eviction.   At least when someone leaves, you get the unit back without the legal costs.  I am still making a profit this year after those expenses, as I am only investing in profitable properties now. 

Back when I marginally cash flowed, those types of incidents could have crippled my finances.

You will break even if you are lucky.  You may be cash flow negative if you get a bad tenant, or get unlucky with maintenance.   

Your deposit is $42k.  That is a nice chunk of money that you would want making a return for you.  If you just dumped it into peer to peer lending, without much effort you would make about $250 a month.  Doing nothing.  Real estate involves a lot of effort and potential stress, and there is no way this investment cashflows $250 a month within the next 5 years.  

 Real estate is my favorite investment class, and where I have made the most money.  But maintenance, and vacancy are real cost items.  

I just had a tenant cut and run mid-lease this month.  The apartment is trashed.  It will cost about $1,000 $1500 to get it back to rentable condition.  This time of year is a nightmare for leasing, so I am having trouble filling it.  I screened the tenants, and have middle income high credit score parents as co-signers.  However it may cost me more than it is worth to sue for damages.  

It sounds like you may be putting more money down to justify the investment.  But you should be making money on your deposit too.  I can make any terrible investment look decent by putting down a 60% deposit.   That doesn't make it a good investment, just means I am donating my deposit to convince myself I am cashflowing.

How much is the HOA?