All Forum Posts by: Craig Lessler

I would start by using the rental property calculators on Bigger Pockets.  You should be able to get a good handle on the rental value from comparable condo units which have rented in other developments nearby.  You should also put in an expense for property management equal to 8% of the rent even if you will be managing the property yourself as well as some expense for capital expenses and repairs even though this will be a new unit.  Once you plug in all the numbers in the Bigger Pockets rental property calculator, you can keep adjusting the purchase price to arrive at the price will yield $400 per month positive cash flow after all expenses.

I have a property manager in Gilbert whom I am using to manage 16 properties.  If you like, I can give you the name and number of the company.  They are reasonable.

If you are looking for a large tax shelter, you can invest in oil drilling projects.  You can an immediate tax deduction of approximately 85% of the money you invested in the first year.  However, it is too late to get a deduction for 2015.

Tat, your goal is very achievable.  However,  you need to be selective.  The numbers do not work in a majority of the deals.  One thing I did was I purchased a portfolio of 16 properties for $1.1M cash which will  be generating $90,000 to $100,000 per year cash flow (with hiring a property manager).  There are deals out there where you can purchase a portfolio of properties.  The location and quality of the property are crucial to achieving long term appreciation, retaining long term tenants and attracting quality tenants.  

If I can help you in anyway, please do not hesitate to contact me.

I wish you luck and I know you will succeed.

Th original contact price was $937,500 and the appraisal came in at $904,000.  The appraisal was thorough and based upon the comps and basically said the comps did not support the $937,500 price.

I agree.  An appraisal saved me $33,500 off the contract purchase pric of my primary residence which I bought with no financing contingency, but with an appraisal contingency.

The house was in a nice neighborhood where few homes go on the market.  After the contact wears executed and during the due diligence period, the appraisal came in at $33,500 less than he contract price.  I threatened to walk away from the deal if the price was not lowered to the appraised value.  Eventually, the seller agreed.

Has it not been for the appraisal, I would have overpaid for my dream home.

Very simply, I would look at the CAP rate on your property with your current rent and expenses with the property valued at $310,000. If your CAP rate is low, i.e. Under 7 %, then, I would sell the property and do a 1031 tax deferred exchange into another good quality income property with a higher CAP rate. However, you need to add in the cost of a property manager, vacancy and capital expenditures when you do your calculations. The goal is to have your equity work harder for you.

the property was on the MLS and was an estate sale. The the property is in North Phoenix near the 101.

Thanks.

I recently sold my interest in an out of state property (a syndication and did a 1031 exchange into 16 condominiums in Phoenix. The units were mismanaged, rented substantially below market, had a few vacant units, had significant deferred maintenance and were in need of cosmetic improvements. The units are in a desirable location, have a low and stable HOA fee and have rented easily following renovation.

I have already improved the vacant units and rented them, removed the problem tenants and am quickly bringing the other units up to par and closer to market rents.

Even with factoring in the cost of the property manager and allowing for a vacancy factor and a budget for repairs and future capital expenses, the property has a solid 8% CAP with the increased rents.

I am hoping to do another 1031 exchange in the not so distant future from another out of state property into a bulk purchase in the Phoenix valley.

Reading the BP posts and listening to the podcasts and webinars is giving me more inspiration.  The support that the BP members give each other is also encouraging.

jay,

Please feel free to ask me for advice.

Craig