All Forum Posts by: Cristina S.

Based on answers and our own analysis , we're leaning 30 - with annual extra payments to reduce time to "paid off" as much as possible. 

With cash coming from our day jobs, we'd hope to pay even sooner than 15 if all goes well; but then again, by that time, we might want to add more properties.

Heck, we can't even seem to be able to find the first one, for now. 

Another one disappointed that no one responded on this thread. :-(

I was told "get in touch with some investors and wholesalers".

How does one do that? 

We're still doing MLS with agent currently - but then again, we don't have time for anything more "professional", as we're doing this on the side.

Thank you so much again to all those who were so kind to answer our question on the 15 vs. 30 year mortgage. 

We would like to ask one other question - this time regarding cash flow .

We've been searching for 2-3 months unsuccessfully, having lost a couple of properties to other buyers who managed to snatch them quicker. We are now trying to figure out whether we should change our strategy in any way. 

Our question is: what cash-flow level should we consider too low for North Atlanta area and - therefore skip the property?

Some background information:

- We are beginners, looking for a first-time rental. 

- Two busy professionals with full-time careers and children - NOT LOOKING to do this for living, at least for a while.

- Not spring chickens (mid 40's and early 50's respectively). 

- Upper limit budget for our first rental: 150,000

- We can put up to 60,000 cash down payment.

- We have been cautious with properties in areas that are clearly not so ..."A"...because we feel more comfortable investing in a place that looks like it would attract responsible, reliable, financially solvent tenants. This beginner-type apprehension has made us look mainly at 1 BR 1Bath condos (small) in nicer communities. Trouble with these is that they have high HOA-s which eat into our earnings.

- We've looked at some B properties too (townhouses included)...but whatever passes for B around here still doesn't feel really comfortable to us.  I've seen some B-s that made me say "I'd hate to see what a C looks like." Maybe it's an Atlanta thing, I don't know.

- When we run numbers carefully, including all expenses (which include a property management fee!), it looks like we will be lucky to make a 100-150 cash-flow with a 15 year mortgage, and 200-250 on a 30 year mortgage. Is that OK for a 50,000-60,000 investment?

This may appear rather small to other investors but we are trying to minimize risk. 

Our expenses include a property management fee because we are really busy with careers and children and we'd rather have help with our first rental. Once we see how this is going, and if it's going well, we may consider taking over the management later and increase the cash-flow. 

Given the above factors, what would be the threshold where you would say "your cash-flow is too low - don't get that property!".

Thank you so much!

Thank you all so much for your opinions - I greatly appreciate them!

We're looking to purchase our first rental (investor couple mid 40's, early 50's respectively). 

We plan on borrowing about 60,000-70,000. 

Is it better to do a 30 year mortgage with approx. 200+ cash-flow margin or a 15 year mortgage with 100 a month cashflow margin?

We are looking to keep this property (and hopefully a few more in the future) as part of our retirement income.

Thank you so much for any views.

Larry T and Micah,

Thank you so much for your answers. 

Larry, my husband says that he doesn't want to leverage ourselves to the hilt - this is why we want to put 50% down; so we can make the cash flow work with the HOA fees too.

He's  been cautious about houses at this price level or about getting in debt too much at this point. He wants to start slow to see how it works. If we leverage too much, the monthly expenses would be too high - my husband says. I do see your point though of putting too many eggs in one basket.

Not sure how we can do the trick of 80% ARV when we have so little time to chase deals. It's MLS and our agent or nothing. How could we get in touch with wholesalers and investors in the area? And why would they be willing to sell a unit to us for less than what they could get on MLS. Because we won't buy 10 doors either.

For condos, it is still possible to make some cash flow here but no, it won't be much. If we get 100-150, it will be good. We're doing it more for the equity/investment than cash flow. We are nowhere close to being able to build a life based on cash-flow. We're still relying on our employers for a living (sigh) - thank goodness these are flexible jobs with lots of work-from-home. 

If we had to do the cubicle thing 8 hours a day, I would go full-blown into RE, come what may. 

want to buy and hold for now.

Micah,

Is there anything that we could do to NOT miss these better opportunities when they show up? We are moving as far as we can but with two full-time jobs and kids, by the time we get in touch with the agent, she sets up visit, go see and figure out rents in the area to ensure numbers add up...someone snatches it.

I read some investors make offers site unseen - and then inspect the property and back out during the due diligence period if we see problems on inspection.

We haven;t done this and as beginners, feel rather uncomfortable with this "shoot first, ask questions later" strategy; but if this is what it takes to prevent yet another good opportunity from slipping thrugh our hands then I guess that's what we'll have to do.

Regarding the "Fair Housing" aspect, we don't intent so state anything or discriminate against anybody. But we are simply assuming that by buying a certain type of property in a certain type of neighborhood, we would be more likely to attract tenants with the type of lifestyle that we believe would be best for our property. I am sure that our insane society might find ways to read "evil intention" even into this innocent line of thinking, but oh well.

The chances for a family to want to live in a 1 BR 1 bath condo are lower than for a townhouse with several rooms or a single family house. Then again, if a future tenant with children would apply to live in such a place  and all is well, we will go with it. 

But we doubt many would.

My husband and I have been looking for our first rental - with an 150,000 upper limit.

We wanted to start small, no major risk. We'll put abut 50% down.

We're looking mainly at condos and townhouses as we are afraid that renters in a house a bit above 100,000 might present a higher risk, on average, than renters of condos and townhouses at the same price; plus the issues of kids, yard, roof, mess etc. We just kind of wanted to start by renting to a young, white-collar professional, no kids.

As we both have full-time careers and two children this is not something we want to do "for a living". We can't' drive around for money, approach owners, cold calling, chase deals under market value, etc. 

We are working with an agent and waiting to see what pops up on MLS.

We found 2-3 opportunities so far but not matter how fast we tried to move, by the time we made an offer, someone else had already snatched it. We are at a point where it's kind of like "Good God!". 

We are not even looking for the "deal of a lifetime" as we know we don't have the time and energy to hunt for major bargains under market value when there are professionals doing this for a living.

We just need to place some money in a real estate piece, using some leverage. 

But it looks like any unit in a decent neighborhood goes in a matter of hours, if not minutes.

What in the world?

This is the  North Atlanta area I am talking about. 

Any views and tips would be much appreciated.

Thank you so much.

Thank you, Erin. This is helpful!

Bill, we might actually call you if we can't figure it out on our own.

Thanks again!

Regarding the LLC - should we get a lawyer for this?

I started out thinking this would be as simple as applying for a business license online.  (Slap to forehead). 

Oh, goodness. I keep hearing this "no,no" on condos - everyone here seems to be against them; and yet my husband keeps saying that with a single family home we are infinitely more likely to run into problems and constant expenses, including roof, yard, kids messing up the place, etc.

I don't even know what to do anymore. 

If condos don't' work...how come that many are for rent?...