All Forum Posts by: Chris Ramos

Howdy

Good Question.

I like to use a mortgage broker because they can typically shop around and get you the best terms. Although at different times some local banks and or credit unions will be offering great terms themselves. You could always do both, but you don't want to have to many people pull your credit as that starts to have a negative affect on it. So the short answer would be a mortgage broker, especially one that you can meet face to face instead of an online broker. Then you can ask questions and kick around strategies, this is especially helpful if your credit is borderline.

Please feel free to contact me with any more specific questions.

Hope this helps.

Howdy

Send me a private message letting me know what types of jobs you would be interested in.

I live in Utah but do most of my work in Metro Detroit, I buy quite a few rental properties there every month and work with a lot of contractors, title companies and property management companies.

Once I know what your interested in then I could try to point you in the right direction if your interests match up.

Howdy

Good Question

I deal with a lot of property managers and it is the Norm for them to mark up repairs anywhere from 10% to 20%. I can accept 10% but I don't deal with anyone that charges 20% anymore.

Property management companies have slim margins and there is time involved for overseeing repairs.  The justification from the property managers is that even with their mark ups you should be paying less through them than you would if you found your own contractor/ repairman, because of the property manager's relationship with the contractor. This on going relationship should allow the PM to get a discount on the repairs which should keep your over all cost the same as if you did it on your own.  On large repairs like a roof replacement I would still want to get a bid of my own.

It comes down to trust, if you don't have that trust with your PM then you might shop for another PM. Also the advantage of the PM scheduling the work is that hopefully it's done in a timely professional manner. 

8% is definitely on the low side of the spectrum when it comes to PM's and I would imagine that they will mark up everything they do for you. Your PM should have a set amount for mark ups for every service they provide and it should be part of your management agreement.

Hope this helps.

Please feel free to contact me with any other specific questions you might have.

@Eric Platte What city is it in? Oakland county has more reasonable taxes than Wayne county. You'll want to see if it's 100% homestead, that's applicable if occupying the home and when it's 100% homestead taxes tend to be a bit cheaper, but when you buy it you'll sign a homestead exemption form that will eventually eliminate the homestead exemption. In Detroit (Wayne County) taxes are all over the map. You can PM me the city and purchase price and I can give you a quick opinion.

Howdy

Good question. @Eric Platte.

Figure out the total amount to fund the deal this includes closing costs, commissions etc. That's your basis.  

Then Figure out your gross annual rent and then subtract all of your expenses from that. Lump your expenses into annual expenses. Examples - Taxes, Insurance, Management fees, annual city certification fee, Lead base paint Certificate if your in Detroit, any utilities that you pay for the tenant (hopefully Zero). Include a vacancy and repair rate, which is typically 5% to 10% (of the annual gross rent) for both. After you subtract all of your expenses from the gross rents you'll have your net return. Divide that by your basis and you'll get your ROI. To get your monthly cash flow just divide the Net Rents by 12.

Remember there are variable expenses such as vacancy rates, repair rates and management fees so when someone tells you an ROI make sure your comparing apples to apples meaning create a formula you're comfortable with and then run all of your prospective properties through your equation. You'll start to see patterns and know when it's a good deal. The tougher part is knowing if it's in a good area when buying out of town.

I hope this helps, if you have any other specific questions or ones about Metro Detroit and it's suburbs feel free to ask, I buy all over in that area and I'm sure I could help you avoid stepping in some of the same piles that I have. Good Luck.

Howdy

Good Question.

I'm thinking you might need to do a Quiet Title. Sometimes this can be avoided if a title company can get Comfortable insuring the property without going through the whole process. My suggestion is that you close the property at a title company you are comfortable with. Make sure you get a Warranty Deed. If there is Quiet title action that needs to take place then the seller can either have his attorney handle that and send the appropriate documents to your title company or the seller can hire your title company to do this.

You should probably check with your title company to see if they offer the service of Quiet Title Action. If not then find another title company, when I need to do this I go to one of First American Title's branches that is familiar with the county that the property is located in. Did I mention that you want to make sure you get a Warranty Deed. That's pretty key.  I hope this helps you get started. If you have any other specific questions feel free to let me know. Good Luck.

Howdy

I think the question about managing the property has been answered well. Here's my thoughts concerning the areas your looking in. I started out in old Magna (as far west as you can go) and in Glendale. These are two of harder areas to deal with in Salt Lake County. That being said, in general SL County doesn't really have bad areas when compared to the rest of the nation. I have now had rentals in most cities on the west side and my experiences have been Great, Horrible and everything in between. Most of the outcomes with the tenants were predetermined by me. Meaning when I did a good job screening my tenants I usually had good outcomes, when I started out in the business and didn't really know how to screen I ended up with some pretty negative outcomes. Right now Salt Lake County is a seller's market just like the majority of the nation. It's hard to get a very high ROI. Since you're looking for a rental I'd almost say wait and let the market go through a correction and then be ready to take action when it does. But if you have an investor who's okay with a small return then go for it.

If you were looking to owner occupy a home you were going to stay in for a long time then it wouldn't matter as much if you bought high and had to endure some low's because eventually the market would work it's way back up. Fix and flips right now are a decent route to make money if you can buy right. They are easy to sell, just hard to find at the right price. Fix and flips are short term situations so you would most likely be able to exit before the correction got to steep. 

Last note - West Valley City is very strict about the upkeep of the property and yards. I have rentals on 3600w and 6400w so they get noticed by the city A Lot.  I hope this helps. If you have any specific questions please feel free to ask. Good Luck.

Howdy 
Good Question.  My answer won't put you in business immediately but it will help you build a foundation to start from. Get your real estate license. You can do it from your computer at your own pace, there are many online courses that are available. It's not hard and if you stay disciplined then you'll be done before you know it. Once you have your license then you'll have access to your immediate and surrounding areas at your fingertips. You won't need to ask someone to do cma's or comparable market analysis, you'll be able to use your new tools to be able to quickly analyze deals and more importantly you'll be able to analyze areas which will help you find a workable are near you, then you can put your focus on that specific area. Either way your busy and doing real estate on the side is going to take time, you can wing it or start investing in yourself which will pay off huge in the long run. The access that a real estate license gives you will help you indefinitely. Plus it get's you into the real estate world and you never know where that path will lead you. You'll find that these tools and the knowledge you'll gain will become a huge time saver. Personally I can make sure the numbers work on a  subject property from my computer, I can even get a pretty good feel for repair costs from the photos. Obviously I still need to go see the property to firm up my thoughts on the area and repair costs, but I can cut my list down by 90% before I even get in the car, big time saver. Hope this helps. If you have any specific questions please let me know. Good Luck.

@Account Closed 

Your Net Annual Rents is your annual cash flow. Take the grand total and divide it by 12 and you get your monthly cash flow. You can use the ROI formula to analyze deals for an apple to apple comparison. You can then do the Cash on Cash return if your getting financing and this will help you do an apple to apple comparison of each loan scenario you might be looking at. Good Luck.

Howdy

Good Question.

And really everyone has their own variation, but I like to be conservative and include as much as possible in expenses. 

Okay let's do the all cash purchase ROI.

First add up your rental income and come up with your gross annual rents. Then you start subtracting. Subtract any Management fees, Taxes, Insurance, City certification fees, Utilities if Owner (you) are paying any, Lawn maintenance, Snow removal, Vacancy rate I like to go with around 8% (of annual gross rents) which about equals one months rent, Repair rate - once again I like the 8 ish percent which equals one months rent. After subtracting all of that from the gross annual rents your left with your Net annual rents. Divide that by the purchase price and you get your ROI.

If you finance any of the purchase then you can figure out your Cash On Cash return by putting your mortgage payment into the subtraction column and instead of dividing your Net annual rents by the purchase price you divide it by the actual cash you have in the deal and then you'll have your cash on cash return. Leverage. Hope this helps. If you have any other specific questions feel free to send them.  Good Luck

If anyone see's something I'm missing please feel free