All Forum Posts by: Christopher Dru

@Christopher Dru it's often difficult for a new investor to estimate market rents. If a duplex is for sale 9 out of 10 times the rents have not been adjusted since forever. And online resources are often very low, our properties are in very nice condition and we routinely get $200-400 more than rentometer or zillow would suggest.

In Milwaukee rents are basically a dollar per square foot. Adjust a little up or down for location and condition. New construction apartments can hit $2, but in fairness they include public spaces like a gym or a coffee lounge.

You don't need to make all your money on your first deal. Buy the best deal you can and make sure you buy quality. Inflation will stick around for a while and continue to drive up both rents and probably also home prices. The most important thing is that you get a deal under your belt.

The alternative is waiting for better rates, which most certainly will come with much more competition and higher prices. A lot of buyers are on the sidelines now because of interest rates. As soon as they drop back down to below 5.99% people will want to take advantage and seize the moment. The demand is still there and supply even short with sellers holding on to their low rates. 

Looking back at almost 15 years of investing, I often bought deals that were not really a home run at the time. In hindsight it does not matter what my cashflow was at the time, but how big my portfolio is now.

@Christopher Dru- thanks for the post ...1) 30 yr fixed rates for PRIMARY SFR are around 7% right now - rates for a 2 unit duplex thats a rental are signficantly higher right now ...2) also worth noting - the points ( loan fee ) for many rental loans are very high right now so make sure to get an accurate picture of these plus all other costs and prepaids to plug into your calculations 3) rates are likely going to eventually drop but dont make any decsions based on hoping rates drop 4) private financing terms will likely be higher than traditional loans

...or, you could just not buy it in the first place.  Sometimes the best deal you make is the one you don't.

@Christopher Dru If I understand your post correctly, you would live in one side and the rent on the other side would cover all your expenses except $1-200/month. So basically it would be costly you only that amount out of pocket to purchase and live in the duplex. Doesn’t sound like a bad deal to me, especially if you could rent both sides out down the road and cash flow quite nicely. Am I reading this right ?

It's a basic fact of life: not every day can be the best day to find a deal. Properties were much more affordable in 2016 than they are in 2022. Mortgage rates were better in 2021 than they are in 2022. We had more inventory in 2019, but we had even more inventory in 2012.

Sometimes the market is bad for investors. You may need to look at different markets. You may need to wait it out to see what happens with real estate, mortgage rates, and our economy. Things change and you should adapt accordingly.

@Christopher Dru

In my opinion, I would not buy at negative cash flow. That is not a good investment. Things are not going up in value, they are actually going down or will be stagnate for a while.

As some others have said wait for the right property that will have positive cash flow. It’s not but a bad property that will only cause pain, frustration and regret.