All Forum Posts by: Cheryl P.

@Paul Miller welcome to BP and good luck with your investing.

@Audrey Y. you misunderstand, I am retired military I have lived in and traveled to many countries for both work and pleasure.  And I am fortunate enough to have a W-2 job that allows me to continue to travel now.  But when I stop working the W-2 I do not want to be reliant on my fixed military retirement, 401k and SSA income to continue the life or better that I have now.

And my grandmother passed at 94 and she was as sharp and fun loving as anyone her junior.  We always joked that she was widow to 4 husbands and had 11 kids...she wore them all out.

I carry her name as my middle name and I fully expect to carry on her tradition of being a sassy and still flirty woman well into my 9th decade on the planet.  I got longevity in my genes :)

Happy Investing

@Fellipe Novaes I am still a newbie at this also, but I do believe that you should know and understand your exit strategies (you should have multiple) for both short-term flips and longer term buy/holds before you purchase.  In my example above we have historical data that Indianapolis appreciation may not be significant and we also know that it has been a historically high renter market, so I will not factor appreciation into my numbers, my numbers need to make me a profit by producing solid cash flow over my projected holding period whether that is 3, 5 or 30 years and if I am monitoring my market over time as I should be, I'll know when I should implement my exit of selling at or above the current market value.   But at the time of purchase I want to know purchase price, repair costs, holding costs, rental income, annual expenses and annual cash flow. 

But I also want to know my ARV should I decide to sell instead of hold to build my cash reserves. Both my cash flow and ARV numbers need to make me money at the time I purchase. I do not know what will happened to the market in 1, 2 or 5+ years...but I can be reasonably sure what the market will be in the 6-7 weeks that it could take to finish rehabbing the property. I plan to market my properties for both sale/rental because for the stage my business is in, cash reserve building is king and my primary focus. But my local market is very pricey and I do not want to wait to get started.

The beauty of Indianapolis is it has the potential to give me both my cash flow properties and flips for reserve building that my local area just cannot do.  I could get 7 properties in Indianapolis for the price of one in my area.  That potential compound profit will give me needed funds and leverage to support one flip a quarter in my area that can give me a huge injection of cash reserves. 

As side note I do not plan to factor in appreciation in any of my deals because that to me is just guessing at what you "think" the market will be in 1, 5, 10, or 20 years and my name is not Ms. Cleo, I cannot see into the future.

As for purchase price of house versus repair costs, I do not think it matters if it is a low or high cost house. What matters is the ARV and your required profit margin, you need to know are you paying the right price for the house, the percentage spread could be exactly the same regardless of purchase price. If I want 30% profit from each flip, I need to purchase and estimate my repairs correctly to achieve that and I should have a solid handle on that at the closing table.

It's a goal.....This concludes the ramblings of a newbie.

Cheryl

@Account Closed, @Account Closed is making my point. Because the initial investment cost (price/repair) for the house is so low in Indy, you will start with positive cash flow and once the property is paid for generally in 5 to 10 years or sooner for cash purchases, leaving you with all cash flow minus your normal buy/hold annual expenses. 

I personally plan to have cash flow properties that I don't care if I ever sell as long as they are bring in annual positive cash flow.  I'm going to be an old lady one day IN A REALLY REALLY REALLY REALLY LONG TIME FROM NOW :) and I want cash flow from 50-100 or more properties funding my world travels.  If expenses increase to the point that it makes more sense to sell even at or just above the original acquisition cost....again who cares I still win for the years of positive cash flow I got out of it.  When it ceases to be positive cash flow you gotta get out, no matter where you purchase.

I am good with taking the risk with a $50K to $70K all in-house in Indy versus the $350 - $500K house here in NOVA. 

@David Hunt I was born in Indy and have many family members that still live there, I'll be investing there.  

Good luck with your investing.

@Account Closed consistent positive cash flow year after year and low vacancy rates for a 10, 15 or 20 year buy/hold that will be paid for by tenants.....I'll take that deal all day long.  

I was born in and still have family in Indianapolis and I will be purchasing cash flow properties there.

Cheryl

@Kyle Scholnick I am a newbie as well but what I have quickly learned is that DC/NOVA is not a cash flow market and I am heading out of State to get started.  I'll still do flips in NOVA because if you can find a distressed (vacant) property in the right area there is instant appreciation.  

I am more risk adverse so I would not count on long term appreciation with a negative cash flow property especially in DC/NOVA...there is always a ceiling on how high the appreciation can go when you are already starting out with average home costs for a basic house that needs heavy cosmetic rehab funding on top of the over $350K - $450K house in an Ok area of DC/NOVA.

I submitted a Freedom of Information Act (FOIA) request at the County Code Enforcement office and got a list of blighted (Vacant) and other code violation properties.  I pulled 5 vacant houses from the list so far and one vacant I found while driving to one of the one's on my list.  Market value ranges from $335K to $620K.  I have not seen the interiors and some have been vacant a long time, so I am estimating high rehab of $100K or more.   

I got the owner's names from county website, some I need to track down their current mailing address and they will be included in my first direct mail marketing campaign for both VA (flips) and IN (cash flow) market. I plan to do what I read here and make offers that are so low it would embarrass the most seasoned investor, what's the worst that could happen...they say no and I haven't lost a thing...but what if they say yes because they "hate" the money pit and they would pay me to take it...

I am accepting advise from all seasoned investors/contractors in the NOVA area willing to review to see if I am on the right track.  

I am trying to step out on faith even while my knees are shaking at what could be behind those vacant doors.

I went on a little rant, sorry about that....Good Luck and do your due diligence Kyle

@Tim Kelly, welcome to BP.  I am still relatively new at this also so the best advise I can give is to read everything you can on this site using key search words "multi-family", "rental", "cash flow" and "analyze rentals", etc. 

Check out the Analyze drop down menu above for other tools.

Below are some hopefully helpful links:

The Ultimate Beginners Guide

http://get.biggerpockets.com/beginner/

The Ultimate Guide to Analyzing Rental Properties

http://www.biggerpockets.com/renewsblog/2014/09/28...

Your Complete Guide to Analyzing a Property in Just 10 minutes

http://www.biggerpockets.com/renewsblog/2014/10/20...

Good luck,

Cheryl

@Jayrel Stephens welcome to BP.

@Paul Timmins gave you great material to get you started, I am reading J. Scott's book now and the podcasts are on play for my daily commute.  Looking forward to exchanging ideas and hearing about your successes.  

Good luck

Cheryl

@Account Closed Glad they are helpful....I am pushing myself out of the analysis paralysis stage. I have been trying to build my team and learning that some will not take you seriously until you have experience, so I hope to have a property lined up either in VA or IN before the end of July.