All Forum Posts by: Corey Chonsky

I find it interesting that the author uses one of the worst examples of real estate investing to prove his point. For example, let’s use this half million dollar condo. See you can’t make money investing in real estate. A clear sign that he doesn’t know anything about investing in real estate. I was hoping for a comment section but no joy. 

@Jeff Brotherton, it looks like it should cash flow for you but I don't know if there's any HOA fees or owner paid utilities. The schools looked pretty good but like I said previously the property sat vacant when it was listed last fall from what I can tell. I would probably reduce the rent for analysis purposes since it was previously listed for less than $1100.

@Jeff Brotherton, what drove the cost above asking? What are you basing your potential rent on? From the information on Zillow, it was listed for rent back in October for $1075 and didn't rent. Do you know why it didn't rent? Is there some change in the area that you feel has driven rent prices up to almost $1200. Is there an HOA fee associated with the property? How do you plan on tackling the cost associated with the roof and A/C? Those things never last as long as you think. I spent over $30k in new roofs last year. So make sure you have a plan for what could be $8000-10000 worth of repairs.

@Ben Wallis, sounds like you guys have all of your bases covered. So I don’t see any reason why you couldn’t cast your Dave Ramsey book aside and refinance your property. Good luck!

@Christopher Stafford, @Brenden Mitchum made some really good points and you will have to take all of those items into account but if you end up renting your unit out to some oil field workers just make sure you are setting aside some additional funds for unit turnover. Additionally, I almost forgot that you said that you are using a VA loan so you will have to live in one side. With a VA loan and current rates, your monthly payment should be in the $1350-1400 with insurance and taxes added in. If you are renting out the other side for around $900, that means that you are living in your side for about $500, which is pretty good depending on your BAH. Do you plan on managing the other unit yourself? Not required but probably recommended since you are right next door and according to my parents PMs are not really taking on properties right now. However, since you appear to be in the Air Force just make sure you always account for PM fees since eventually you will have to probably have to move somewhere else and will need someone to manage the property for you.

@Brenden Mitchum, the thing with the Minot market is that you have to take into account the available tenants as well. A lot of the tenants up there are transient tenants associated with the oil fields. There are not as many oil field workers as there were a few years ago but these individuals will lead to a significant cost associated with unit turnover. My parents had some rentals up there for several years and ran into this problem every time their leases ended. 

@Christopher Stafford, I’ll start out with that I do not invest in Minot but I’m originally from there. Do you intend to occupy one side?

@Ben Wallis, I’m a big proponent of pulling equity out in order to continue to invest in real estate. So I would have no concerns in my situation; however, in your situation, I do not know what you use your rental money for outside of property expenses. So if you use any of that money for personal expenses that maybe a concern. Also, do you manage the property yourself? If so, take into account an additional 10% in case you choose to have a company manage it for you in the future. Additionally, how is the rent for the property compared to the market? What is your vacancy rate? What’s your cash reserves? These are some concerns that you may want to think about. 

@Michael Vu, I would move on from this deal if it was in my area. Based on the description, the property is around 100 yrs old and a lot of the issues that have been identified are not going away. You will have to deal with them at some point during the time that you own the property and you are not receiving rent that is worth the risk. Are the current rents at market rate or are they significantly below market?

@Jakobe, what are you basing your approximate valuation on? The property is 5 units so it’s valuation is based of the money it makes not comps. So you need to know what the local cap rate is to determine valuation. Also, are the expenses from the agent marketing data? It seems light for a property built in 1912 and owner paid utilities. Make sure you verify the expenses to include getting actual financial data from the owner from tax returns and bank statements to verify actual rent collected especially since they were “generous” with rent.