All Forum Posts by: Jimmy NA

Ok, here it is:

My offer is 173k with 13K back at closing.

Total Purchase Price $173,000
Seller Concession $13,000 (roof repairs and closing costs/fees)

Downpayment (15%) $25950
Debt Service: $1330 per month
Finance $147,000 x 9%= $1330

Gross Rents: $2775
$400 (15% vacancy/rent loss)
Effective Rent: $2370
Expenses $1100 (water, insurance, taxes, trash, grounds, misc.)

Do I buy or pass?

I don't know if anyone has reviewed the book here, but all serious investors must read "1 Minute to Rental Property Riches" by Michael Rossi . This book delievers the truth about rental property purchasing and ownership. Mr. Rossi does away with all the rosy portraits of "making big bucks fast" in real estate. The author tells the reader what the inexperienced investor doesn't want to hear: rentals are work, and its tough work. Though the ideas presented by the author may not be new to the industry, few heed them. Rossi drives home the approach that rental properties must be purchased at a discount. This is a must. The numbers must be scrutinized closely and expenses will run, without fail, higher than must anticipate. Rossi drills in the 45-50% rule for expenses. Expenses will run you 45-50% of Gross Rents, this can not be avoided. He buttresses his ideas with real life experience. Rossi is the anti-guru Guru. He buries the great-rich-quick BS pushed by so many "gurus" selling books, tapes and seminars nowadays will his first-hand accounts. Slow and steady (and with attentiveness to the numbers) wins the race, says Rossi. Though he does not explicitly say it, I think Rossi would agree that new and experienced investors can not get caught up with the excitement of buying without first looking vigilantly at the true costs of running a rental property. It is a business, says Rossi, and with all businesses one must carefully consider true costs and true returns. What the book does not address throughly, and I wish it did, is how to find the properties that will operate as successful "mini businesses." So, toss your rose-colored eye glasses, buy this book and read it twice. I give it a (9).

I guess the answer is make an offer that makes sense to me. I just wonder if there are many, many more REOs to follow as all these ARMs adjust and more owners start losing properties.

I have been eyeing a bank owned single family for awhile. It was was on with one REO broker for several months. Than re-listed (didnt sell with first broker) for a lower price. Realistically, how low will the bank go to sell this home? Can you assume they will go a certian % lower to sell it? I would be an owner/occupant. Its on for 139K. I noticed it sold in 2003 for 126, 900. Does that mean the banks bottom is somewhere near 126k?

Should a landlord do repairs and maintenance himself (or herself)? I have read opinions, and spoken to landlords whom feel strongly either way. Some say, "you must do repairs yourself and save money". The opponents say, "its not worth your time and energy." If I have another job that pays more per hour than it costs to do the repairs/maintenance than why would I forgo hiring someone else to handle the work? MikeOH, in your book you have a a strong opinion in favor of the former. Anyone care to respond?

I have been looking at a couple buildings lately that I am interested in purchasing. The buildings pass my expense/income standards (and the price is right) but I am worried about the quility of the tenants. I have no definate way of knowing if the tenants that are already renting there are paying or behind on rent. I could ask the owner, "are the tenants paying?, of course he will say "yes." How do you approach this problem?

Ohioealtor,
I have been looking at a couple buildings lately that I am interested in purchasing. The buildings pass my expense/income standards but I am worried about the quility of the tenants. I have no definate way of knowing if they tenants that are already renting there are paying or behind on rent. How do you approach this problem?

Are you even familar with the real estate business? I know many, many landlords have been sued for a variety of reasons.

MikeOH said: " evictions, legal costs, damage, lawsuits, and many more of the expenses, but they do exist; do occur with regularity; and they are significant "

MIKEOH,
I appreciate you becasue you're not afraid to tell people the uncomfortable, cold, hard truths. But....How do I assign a $ figure for these things when I make an offer? If I want to net $100 per unit per month, shouldn't I really shoot for $125 b/c of these other expenses? Or should I look at these expenses all long term as losses for the income I make over 5, 10 yrs...What I am saying is, I know specific expenses for insurance, taxes, trash removal they have definate, concrete numbers but how do I put a number on these expenses listed above?

What if there is 30% equity BUT after careful consideration of ALL expenses it losses money each month? That is what is so enticing to me. I can get the (2) buildings together for X but there are worth 25-30% more if I sell them separately.
So, I guess I am gambling on turning them over and not the income they produce (or fail to produce).