All Forum Posts by: Bobby Shell
Bobby Shell has started 18 posts and replied 152 times.
Post: Cash on Cash Return of Investment
- Investor
- Fort Collins, CO
- Posts 165
- Votes 127
@Rory Samuels
Been googling all day myself. 10-12% is good. 8-10% is also okay.
It’s not the only metric you should care about. Look at cash flow.
The rental we are acquiring right now is the below.
179k
25% down
1500 rent monthly (300 hoa yearly)
Cash flow after insurance, taxes, prop mgr, and termite bond (updating yearly) is $217 bring conservative. High end could be $334 assuming we get a higher rent.
This home already has a new roof installed yesterday, new AC installed last year, brand new carpet, and comes with a 2 year old washer, drier, and fridge.
We have about a 6% cap rate, 8% cash on cash return and our mortgage rate is 4.49%
I am very happy with this because it’s out of state for me, but a couple miles from family. I will use asa vacation home and rent when not in state!
I hope this helps. Just assume worst case and if you can handle the numbers that’s great. Hopefully worse case does not happen and you get a heck of a deal!! Best of luck
Post: My first flip project!!!
- Investor
- Fort Collins, CO
- Posts 165
- Votes 127
@Crystal Musser thanks for the transparency.
How long did the flip take in time from the day it closed to rehab completion to the sale? I am assuming you listed the home. Were you the selling agent as well?
Post: Hold or sell? Bay Area townhome
- Investor
- Fort Collins, CO
- Posts 165
- Votes 127
@Huimin Zhang a local agent should be able to tell you what a healthy buyer or sellers market is.
For example (x) months inventory is good. Let’s say 6 months. It’s balanced for buyers and sellers.
9 months inventory means it’s a buyers market
2 months inventory means a sellers market.
Does that make sense?
Typically the inventory drives the market. If you can find this out it may help in your decision making. You may be able to list it for 1.35 and push the limits and get a cash off of 1.3? Who knows. It doesn’t hurt to try. I have heard of crazy scenarios like this actually work( I can’t believe it honestly)
Post: What is your lamest complaint from a tenant?
- Investor
- Fort Collins, CO
- Posts 165
- Votes 127
@Shane Short lol, Lordy. Just vape or use a volcano ya stoners!! Lol
Post: Just got my 1st rental property - should I set up an LLC?
- Investor
- Fort Collins, CO
- Posts 165
- Votes 127
@Michael Baum. Talk to your tax guy. I have talked to many many investors and tax people and they say just get umbrella insurance. Your LLC doesn't protect ****. It just makes tax time more expensive. LLC is only important if you have another partner. This sets clear guidelines of what gets what. (Day you bought with a girlfriend or buddy)
Umbrella insurance protects you in great ways. Talk to your tax guy/gal and consult an attorney and I am confident they will reaffirm what I shared above
Post: What is going on with this market?
- Investor
- Fort Collins, CO
- Posts 165
- Votes 127
@Mary Flores I agree Mary. The house we are closing on this month we got before it hit the market and we are seeing about a 5.5-6% cap rate and a 7-8% cash on cash return in the first two years. (The first years taxes are lower for this property is why I have them listed as a sliding scale)
I am looking In pace Florida, outside Pensacola Florida. The rental market is great and there are very few rentals available and they are renting fast. The schools are great in this area, lots of hospital jobs, military bases near, and navy federal credit union banking jobs.
Pace high school is also a breeding ground for baseball players and the best school in this area of Florida. Solid market I have never heard ANYONE mention. I grew up here so it caught my eye.
The home we got was 179k, had a brand new roof installed, new carpet, new AC, and granite installed.
It took 3-4 months to find but we were patient and we ended up finding this deal that cash flows $215 a month
Post: Paying down 3 single family loans. Tips...
- Investor
- Fort Collins, CO
- Posts 165
- Votes 127
Originally posted by @Don Pope:
@Bobby Shell your on the right track. Everyone here is giving you great advise! We may never see a 3.6% interest rate again, that's just cheap money.
If your after long term investments then there are other more secure ways of making a 7 to 10%+ on your money for example like buying A paper notes ( mortgage Notes) than a saving account or stock market. Again just one example of putting your money to work, and yes if you need the money you can simply sell the note.
If you after Cash Flow with your rental by simply paying down the mortgage will not reduce the mortgage payment the only way to achieve that is to refi those properties probably at a higher interest rate which is paying the bank more. That doesn't sound like that is what smart money would do.
If your wanting to Leverage your money, play Monopoly, Hold these properties for a few years until the equity and your down payment matches that down payment needed for a bigger investment you know single family home exchange for a duplex or quad, then hold these for a few more years improve your position on them and then once your equity matches that of an even bigger investment exchange them into a 20 unit etc.. rinse and repeat. You can see if you do this to each one of your current rental properties. Little Green Houses can build wealth rapidly. Eventually you will have enough to put 20% down on a 5 mill apartment complex, your $1 mil investment and the banks $4 mill loan that's the magic leveraging.
Hey Don! Good to hear from you again. thanks for your tips here as well. Since we last spoke we are getting a single family vacation/second home closed back home. (closing on the 28th of May) and once that is rented out going to start pursuing other deals and opportunities.
Cheers!
Post: Paying down 3 single family loans. Tips...
- Investor
- Fort Collins, CO
- Posts 165
- Votes 127
Originally posted by @Robert Rodriguez:
I see a lot of people saying put the money in an ETF instead of paying down the low interest rates. I'm going to reveal my noobness but if you do that .... Is there an easy way to pull that money out once it's big enough for a down payment on an investment property? Would you have to calculate fees for cashing out of the stock and getting the rental? Would their be taxes to pay on that money? Or is everyone saying invest it in an ETF and just leave it there without saving up for another rental?
Yes it is easy to pull out, I believe if pulled out before 1 year you pay 40% cap gains taxes, if after a year you pay 20% taxes. (dbl check this yourself)
Many times index funds and ETF's gain 7-8% a year VS. sitting it in the bank. So even if you gain 7-8% and pay 40% in taxes, you still leave with about 3.5-5% in gains or so
Post: Paying down 3 single family loans. Tips...
- Investor
- Fort Collins, CO
- Posts 165
- Votes 127
Originally posted by @Kirk Marin:
@Bobby Shell Pay down your primary mortgage if it is a 30 yr mortgage and you are in the first 10 years of the loan. Also, you probably can’t claim that interest expense as a tax deduction any more. The equity on your personal residence is more accessible via Heloc than investment property. Then, the interest would be tax deductible if used to purchase more property.
I am only two years into my home. Are you saying that after 10 years the primary residences interest can no longer be tax deducted? If so, thanks for that power tip.
Post: Paying down 3 single family loans. Tips...
- Investor
- Fort Collins, CO
- Posts 165
- Votes 127
@Patrick Soukup hey Patrick thanks for the reply! I am in Foco as well :)
We have the ability to pay down and save yes sir.
I sent a connect invite. Would love to say hello at a local meetup sometime or grab a coffee.