All Forum Posts by: Dan Call

@Ken Connors, thanks for joining in. Glad to see some others in my area. 

welcome to BP Ken. I just sent you a PM

@Adam Dassie,

If you are a single guy with just a few sea bags, the moving costs may not affect you that much.  (Maybe first and last months rent somewhere, additional travel expenses that you haven't accounted for)

Call up any of the property managers in your area as soon as possible. They can vary greatly based on the services they provide. It is possible that you could be looking at paying around 10% of the rent collected as a fee for a PM. In your case, that could be $125/mth or better. Also, look around to see what the local vacancy rates are in your area. Put that into your math, use that rate in your math, don't assume yours will be any better. What happens to your cashflow if the property sits vacant for 2 months of the year? Although you may not think you will have CAPEX in the near future, you need to plan for it. Go to this link:

https://www.biggerpockets.com/renewsblog/2015/10/1...

It provides an excellent break down on what you can expect over a good deal of time. It will help you set aside enough money to cover your expenses when they do (and they will), come up. The lesson to learn here is to make sure you are setting this aside for this property. You may have decent cashflow for a whole year or two and then get hit with holding costs and CAPEX that you have not planed for. You do not want these events to cause you to have to reach into your own pockets or a credit card, if you don't have to. What happens when you have to re-paint and replace carpet after having 1 tenant in there for just 6-8 months?

What type of loan are you moving into?  How many beds/baths?

Short sales can be tricky to navigate.  I am sure that there are other solutions to this.  (Renting it out by the room to multiple individuals in order to bring in more)  I have seen this work in several areas and can provide you with some other ideas, if you'd like.

Thanks,

Dan

@Adam Dassie, Welcome to BP.

I am assuming that you are getting the "Rent Potential" from the rental of the other homes in your area.  

Using only the numbers that you provided: (please help me to see where you think this would cash flow $100/month)

1200 - 745 = $455

Keep in mind that at this point, you haven't even added in CAPEX, Property manager, vacancy, legal fees, evictions.....etc.

Not to mention, the costs that you will incur associated with a PCS move.  New house, rental (first and last months rent), change in BAH, cost of living...etc.  I am only bringing this up to help show you the real costs associated with holding on to a property that may end up losing money.  I have seen too many military members bleed cash for years hoping that appreciation will bail them out.

Look at this calculator: https://www.biggerpockets.com/buy-and-hold-calcula...  

It will help you identify the other costs associated with a rental and be able to re-work the numbers.

As far as the VA loan goes, I am not sure that you are risking losing the benefits (although I am no expert on the matter). I short sold my primary residence one time for a loss of $136K and was still able to use a VA loan on my next home purchase.

If you decide to sell, look into other ways to soften the $15K blow at closing, work with your realtor on commissions and maybe ask for help with the closing costs from the buyer.  

If you are going to rent it out, don't for get the costs associated with your new re-fi. (to a loan that is not VA backed) What will your new rate be and how will that change your numbers.

Let me know how this thing is going, I will help with whatever I can.

Thanks,

Dan

@Clayton Swansen,  The choice is yours my friend.  There are a great many paths that you can follow.  The first piece of advice that I would offer up is to really get an understanding of what your exact goals are, and then be specific about defining your investing strategy.  (though it will surely change overtime)  Once you have done that, I would suggest that you geek-out on learning your market.

Although history shows that RE will appreciate over time, speculating and counting on appreciation can be a dangerous strategy. (Especially, if you are only talking about 1 property in 1 area)  Again, define your area and know it cold.

You posted:

"I need a turnkey on this one, or nearly so, as I just don't have time or money for major renovations right meow. This means I likely won't be buying a killer deal, but I will still be paying a low-ish mortgage."

If you are not looking for a killer deal, then why waste your money. There are a ton of great deals out there, if you are going to be in this for the long haul, hit pause on dropping $15K on something your not sure about, and further your education. (which you are clearly doing by being on this site). Additionally, you stated that you read Rich Dad Poor Dad, ask yourself if you think it is the best strategy to buy a primary residence, at market value ("not a killer deal"), live in it for a few years and then hope that you will be able to rent it out for more than your mortgage (and still cover CAPEX, taxes, insurance, property management, vacancy, legal fees, evictions.....etc)

Also, keep in mind that you can buy up to a 4 plex with a VA loan (as long as you occupy one of the units for a few years). Given that you said you don't have the time or money to fix one up, perhaps you can pick up a 4-plex in rent ready condition, (at a killer deal) with $0 down, and save the $15K to cover CAPEX until you can build up the cash reserves to cover it. (Just a thought)

Let me know if there is anything that I can do to add value to your investment goals and plans.

Best of luck,

Dan

@Matthew Rembish,  Awesome.  Great job!

@Stan R., Welcome to BP. I currently live in Northern VA, but I grew up in Fowlerville, MI. I have a great deal of contacts in that area that are electricians, plumbers, HVAC, general contractors...etc

I also invest in the Livingston county area and I am looking more in the small to midsize multi-unit space.

Please let me know if there is anyway that I can add value to you and your investing endeavors.

R/

Dan

@Roger Lin, Manages a local group that I have heard a lot of good things about. Capital REI

I didn't make it to the meeting this week, but I keep hearing that it is an awesome group.  

Let me know if there is anyway that I can add value to you and your endeavors.

R/

Dan

@Alex D. , I agree with @Brent Coombs.  If you are negative each month, sell it.  I have seen many other military guys do this with a primary residence when they PCS.  

Don't count on appreciation in the next few years to cover your month to month losses. Not to mention that you will be losing about $250/mth in BAH by transferring from Honolulu to NoVA (I did the math based on E-6 w/dependents) I have seen too many guys just rent it out to other military guys, knowing that they will have the income to cover the rent and banking on a friendship to pay their mortgage.  This doesn't usually work out as you end up losing friends, time, and money all together.

One more thought: Can you rent out individual rooms and cover all of your expenses, to include a PM?  I don't know any of the local laws, size of your condo, or condo restrictions, but it might work to put in to put in multiple individuals.  Just a thought.

My brother used to invest in your area and still has some contacts out there.  Send me a PM if you'd like some contact info.

There are a lot of helpful investors out here in NoVA.  Take advantage and get involved when you get here.

Let me know if there is anything that I can do for you.

R/

Dan

@Ben McMahon, PM sent