All Forum Posts by: Brandon Pearsons
Brandon Pearsons has started 26 posts and replied 73 times.
Post: Begining Investing...
- Investor
- Oroville, CA
- Posts 82
- Votes 1
Hi J Scott
Originally posted by J Scott:
Even if you can put 25% down to get break-even, that tells me the deal is thin enough that if the rental market drops (rents decrease, vacancies increase), you can quickly find yourself in a negative cash-flow situation.
I'm guessing the response to this will be, "But in California, it's nearly impossible to find cash-flowing rentals that meet this criteria!" I agree, which is why I moved from California when I started in REI.
Unless you have the resources to hold a negative cash-flow property LONG-TERM (remember, the resale market can flounder as well, and you could find a loss of equity that would force you to hold for 10+ years before you could resell), it's probably not worth the risk.
Just my $.02...
Thanks your information is very helpful, and yes that is pretty much what the market is like there, hard to be cash-flow positive. At least in this small semi-affluent city.
I have looked into out of state investing.I have actually met with a consultant that does that here in my city. I have read that is best to stay out of markets that that you are ally unfamiliar with.
It is unfathomable that you could be cash-flow positive with 100% financing. I did not think you can see get 100 financing. :idea:
I am 36 any want to get started in REI, I really do not want to move at the present time for that reason.. Got any sugguestions? I do not have any steady source of income, so I would like some sort of RE income, or something that is undervalued.
Thanks
Post: Begining Investing...
- Investor
- Oroville, CA
- Posts 82
- Votes 1
Thanks for the replies. I really do appreciated it.
Max I [When you say returns are 7% in rent, does that mean 7% of the gross rent? So if the property is worth $100,000, the gross annual rent is $7,000? Or the return is 7% after all the expenses? ]
You actually just made me see that I did not factory in the standard expenses when doing a cash deal
The Duplex is 170K, which rents for $1300 a month total.
So I was assuming that 170k would produce ($1300x12),
Vacancy rate 4% = $50
Misc expenses based on 1 year =$50
Insurance $150
Property Taxes $177
Water: $75
Garbage $50
-------------------------------------------------------------
$552 per month ($6624 annual expenses)
So the net income per year would only $5300, which is not very conservative ROI of 3% wooww.. That is pretty terrible.. The place just came on the market and there was a bazzlion realtors showing it. It is going to sell very quickly. I know it !
http://www.chicorealestate.net/477_e_6th_st_chico_ca_95928/mls-income-property/201021168
Honestly it needs some work too.. It needs washer and dryer hookup installed and washer and dryers as well as carpet.. I would say 10k of improvements to be safe.
Why the hell is there so much activity over this place???? Is it just because of the tax right offs or depreciation?
Its going to sell real fast.. It the lower end of income property..
[http://www.chicorealestate.net/chico-ca-income-property-mls/all/quick-list]
Post: Begining Investing...
- Investor
- Oroville, CA
- Posts 82
- Votes 1
In my city, RE did not get hit really hard like most areas. There are a lot of investors paying cash for the income properties.
Seems like most returns are about 7% in rent.
Even with a 25% down on a property, these properties are not really breakeven in cash flow.
I would rather purchase more properties than just one, but it is possible to dump all cash into one property which would return about 7%.
What do you all recommend? being cash flow breakeven or slightly negative or putting all funds into one Duplex,etc
Thanks