All Forum Posts by: Benjamin Sulka

Hey @Benjamin Sulka,

I think these numbers depends on a couple factors, such as your market, property type, and overall goals.

10% for future property management: If your goals are to get your properties under management as quick as possible, then it would be worth it to keep this the same. In my opinion, if you are going to be living in the same area as your rentals, I would not even factor property management in right now. Down the line if you start to have too many properties to self manage, increased rents/lower interest rates may allow you more room to do so. Also, there are a lot of great softwares out there that basically take care of what property managers do, so you could look into that instead.

10% vacancy: In my market, 5% vacancy is plenty, this is something that you will need to figure out for your particular market. A google search or talking with investors in your area would be best.

10% cap ex: I think 5-10% here is okay. It depends also the condition and age of the property. The older and broken down the building is, the more you want to put away.

5% for repairs: Again, this will depend on the property condition, but I also reserve 5% for repairs because I have an old house.

5% for lawn: If you plan to live in the area, I would just buy a used lawn mower for $100 and do it yourself. BUT, this is personal preference, if you are trying to make this a passive investment and don’t want to be cutting the lawn, then 5% is probably fine.

Hopefully this helps! Good luck!

Yes, you are too conservative. 

Even for a regular investment property. It is easy to prove every deal to be not good enough by just going a little higher in every category. 

For a house-hack you are definitely too conservative. Remember: the worst house hack in town still beats every single family financially.

I have been an investor for 15 years and my team works with a lot of house hackers in Milwaukee buying duplxes. Here is what I know: almost every client who bought a cheaper duplex for their first house hack will buy 100k higher for their second one. 

The biggest mistake I see is to worry too much about the cost of things like lawn mowing and water bill and the exact percentage for vacancies, but not being enough aware of the general condition of the property - resulting in 20k, 50k or more in capex a few years down the road.

My advice: look for a quality property that has all the big-ticket items already done. Newer windows, roof, kitchens, bathrooms, HVAC etc. And you want to be in a good location. Both condition and location will allow you to attract better tenants and better long-term financial performance. And since you live there, better quality of life. 

That is way more important than cash flow math. Your future self will thank you.

That does seem pretty steep and tough to do these days. I think a lot of people are going 2-5% these days. But it really is whatever makes you sleep at night. 

Could you self manage? That would knock out 15% which is a lot (PM and lawn care).

It’s not an exact science either. Over the last few years my repairs have made up about 3%, which I wouldn’t have known without living there. But my vacancy has been 0. Maybe instead what you could do is focus on building a big enough reserve while you are living there then lower those numbers a little bit when you move out. Like if 30k sitting in an account keeps you comfortable, get there as quick as you can then do smaller amounts? Just an idea. 

Emily- Welcome to the BP community! This is the best place for all things real estate related. This is what I recommend for you to get started in your real estate journey:

1. Start saving as much as you can. Depending how much you earn you can step up those savings by getting a side-hustle in any part of real estate....working for a top Real Estate office on weeknights and weekends, working for an RE Investor, working for a General Contractor and learning a few skills, etc. This way you can ramp up your savings AND learn some RE skills.

2. Read as many RE books as you can get your hands on. Here are a few I recommend: "Rich Dad, Poor Dad" by Roberto Kiyosaki; "Set for Life" by Scott Trench; "The Unofficial Guide to Real Estate Investing" by Spencer; "The BiggerPockets Ultimate Beginners Guide" found here on BP; "The Book on Rental Property Investing" by Brandon Tuner. This will give you a good starting point.

3. Buy a property as soon as you can. The earlier you start in your RE journey, the better off you will be in the future. Almost everyone here on BP will tell you that they wish they had started earlier, myself included.

4. House-hack, house-hack, house-hack. This will give you several benefits. The most obvious is that you will be able to offset your mortgage with renting out a few rooms and/or units. You will then have a few options with that rent money....you can put it into principal or you can start saving it to purchase yet another property. House hacking will also give you some personal "property management" experience. This will come in handy as you begin to scale.

5. Decide which game you want to play. Do you want to be a house flipper? BRRRR? Real Estate Agent? General Contractor? Buy and Hold? Do you want to LTR, MTR, or STR? Or maybe you want to do a combination of the above?

6. Attend meetups and meet as many people in RE as you can. Since you are just graduating college you may already realize that it's not what you know, but who you know (as a personal note, I had college friends that were barely passing their classes however they ended up with really good paying jobs due to "who they knew"). As they say, your network will be your net-worth.

7. Timing the market does not work. However, time in the market makes all the difference in the world!

I hope this helps and good luck on your real estate journey!

 Hey Benjamin,

For owner occupied, is it also 12 months that owner must live there? 

Thanks!

I'm officially a landlord. My first tenant moves in Monday. First month's rent and deposit have been paid.  Thank you for the guidance!!!