All Forum Posts by: Conn G.

@Dhwani Shah Listing out the expenses & income would be helpful, like @Jaron Walling stated. Taxes in the Cinti area are pretty high compared to other counties/states. I always evaluate the property taxes to be assessed as the purchase price value. Hamilton County has a tool to calculate this but a quick tool is using a ratio between current assessment and new assessment (Current Taxes/New Taxes = Current Value of Property/New Value of Property)

I'm not familiar with this area, but a good way to find PM for the area is to look at Zillow, FB marketplace, craigslist, etc for rental listings and calling the company that is listing it. This will give you direct contact to someone that is already managing that area and knows the in's & out's. Plus, you can act like a potential rental to see how they run their business.

Sounds like a good deal. The most important thing to consider is what are your exit-strategies? 2-3 years from now, who  will fund this deal? Will the economy be strong enough for banks to lend out their money? 

Another option is doing master lease options for that 2-3 year span. This allows you to take over the property & it's cash flow while have an option to back out if financing is not available after that 2-3 yr span.

You're best bet is too talk to a local realtor and ask for some recent comps in the area. Most of the time, they will give you this information for free because it incentives you to do business with them. However, don't be afraid to talk to multiple realtors because sometimes they can have different judgements on the property. 

Welcome aboard @Calvin Schmeling ,

I think you are on the right track. Your greatest investment is yourself. So constantly educating yourself is a great start. A good technical book is "What every real estate investor needs to know about cash flow" by Frank Gallinelli. I remember reading this about your age and I learned a great deal. I even formulate my own spreadsheet base on his template that he provides.

Don't be afraid to pick up any type of real estate book. Another good one is about apartments and commercial space, which is "Crushing it in apartments and commercial real estate" by Brian Murray.

Once you educate yourself, take consistent action.

Hi @Alexander Glantz,

I was in a similar situation beginning of 2021. Ultimately, the landlord and I came to the agreement that if I were to find a renter so that there would be zero turnover, I could get out of the lease without paying in full. Finding a renter was a great experience for me because of the various showings and communications on finding the right tenant (landlord had final approval of the tenant selection). I would recommend this strategy.  

That's for you to decide and calculate. You could have negative cash flow on the property which would erase any type of positive gains. Use the BP rental property calculator to see if it is what you are looking for. I would run two scenarios: one with you living in it and the other for when you're not living in it. That way you can see if it's a good long term investment

Make sure you check permits on the building to see if the work was inspected and approved. A good rule of thumb of taking over non-conforming buildings is not to open of the walls because that is where the real issue (costs) starts.

The only downside of the FHA loan is the PMI (Private Mortgage Insurance). It's an additional cost that last for the loan period. However, FHA loans are very powerful in real estate investing. With a 3.5% down payment at an 30 yr fixed amortization, you can recoup about 50% of your money back with principle paydown. When you are purchasing a 3-4 unit with the FHA loan, it would have to pass the self-sufficiency test. For example, if you were to purchase a 4-unit, 75% of the gross income of the property must be larger than the principle, interest, taxes, and insurance.

@John Hamilton

I took the route of living on the east side due to the amenities, work proximity, higher class tenants, etc. I was able to utilize the FHA loan to have low cash invested while living in an area that I want to live in.

Like @Mitch Huffman posted, there are different tradeoffs when selecting the neighborhood you want to live in. Best of luck!