All Forum Posts by: Dale Carlson

i have a triplex in Boone, it has worked out well for me, because it is still close to Ames and Des Moines, so i get renters that are professionals.  We had all 3 units rented within 2 weeks of finishing work.  However, the downside for me was that i paid cash, rehabbed, rented, then i tried to refinance.  There were literally no comparisons in Boone to get an accurate appraisal.  So my refinance fell through with the bank.  I was of course going to use that money to go buy another one, but now i am kind of stuck.  i did end up getting a "loan" for it, but it was with a family member on a 10 year loan.  the numbers on the deal still look fantastic, in fact i am netting 100% cash on cash return now.  But there are some downsides in the really rural small towns - lower rents, no appreciation.  I like towns like Nevada, Story City, Perry, Newton, etc that are close to larger metros to keep people employed, but are rural so that the prices are low.  

I feel your pain.  i really do.  my mother in law called me a slum lord when I shared my real estate vision.  Which i absolutely despised.  she even made a comment that i was going to lose all our money and they would have to pay for my kids college education.  You are absolutely correct that you do NOT need anyone's validation to pursue your dream. 

I am 47 and at the point in my life that if i dont try it, then it isnt going to happen.  I would now prefer to fail spectacularly than not try at all.  

To counter your father's own question "Why doesnt everyone just own a McDonald's?"   They certainly make money.  

Fear is why everyone doesnt do it.  I think there are definitely risks involved in lower end rentals, but as you said they have to be accounted for.  And you can put safeguards in place to ensure payment or minimize risks.  I actually think that if you are careful about who you place, you can actually get people who are likely to be long term renters.  

I wanted to thank all the posters and feedback to discussions that i have absorbed over the past 18 months.  i would not have ventured into this without this website and the communities discussions (and what a mistake that would have been!)  It's been one year since i made my first purchase, and I have gone from $0 passive income to a projected $2400 this year.

My first purchase was a year ago - a triplex that is cashflowing about $300/mo (i partnered with my sister).  My next purchase was a package deal of two duplexes that are cash flowing at $1000/mo.  I saved all of that money, and just recently purchased another duplex on 2/28.  The lower is rented, and the upper needed a little work, but it projects to cash flow about $700.  The rehab of the upper took about 12 days, and i added some photos (mostly cosmetic improvements).  My wife wanted no part of the real estate investing world, so i bought her a bulk vending business that nets about $400/mo.  (not bad for one day of work per month).  $2400/mo passive income and that doesnt include the hard money loan that I loaned to someone for a rehab (i havent been paid back yet, so I am not counting it, but that would be another $800/mo)

My goal is to repeat the last year 3 more times, and that should get me pretty close to my financial independence number.  

It has been nerve racking to jump into this, but my only regret has been that i should have done this when i was 27, not 47.  

From just a cost stand point, you can install Vinyl Plank Flooring for $1.59/sqf and it will last 10 plus years (i think the warranty is 20 years) , at least.  If you redo the wood floors, how long before you need to redo them again?  If the answer is less than 10 years, then i say Vinyl.  They will hold up longer, and look newer in the long run.  Dont use up the last sanding on those floors just to be ruined by tenants in 5 years. 

BUT, it also depends on the competition and your market.  If your market is super high end with people who can truly tell the difference between hardwood and vinyl, then you may want to stay competitive and go wood.  

i have NOT used Cali, but i have used Allure Vinyl Plank Flooring from Home Depot.  I cant say enough about it.  $1.59/sft, durable, looks like a million bucks, and cleans up well.  They are not glued down, so removal is easy.  You should not need an underlayment, unless it goes on a concrete floor.  

That is barely a 1% rule, IF you can get it for $840,000.  Is that the best rent to price ratio that you can get in Virginia?  

You might be able to look at turnkey rental properties in Memphis or other areas, and cash flow better.  If you have $80,000 for down payments, you could start a little smaller, but still get decent cash flow, and not bite off such a huge piece (especially if its your first deal).  

yea...i definitely had a hard time estimating what the ARV was going to be. Again a small town with little to no comps makes it tough. I was hoping that the "business" side of the appraisal would help me out. I thought when they saw that it made $833/month, i would get the benefit of the doubt on the appraisal. But it didnt happen. Actually the $833 was their number (my calculations are more around $790/month.

I shouldnt really complain, i actually dont even have $42,000 into it. My sister and I bought it together, and she paid the $35,000 price from a home equity loan. Then we split the $7000 and our time to fix it up. So if i am being 100% upfront, i really only have $3500 cash into the deal. I was trying to gloss over the initial output, because i wanted to focus on the refinance part of it. But yea, its hard to complain about 100% COC return.

I sell paper....almost like "The Office"

Well the 1st appraisal was at my expense, already.  I think the problem is the lack of comps.  Its a small town.  There are a few things that are funky about the appraisal, but not enough that i can bring it up to the dollar amount that i would need.  There just isnt a direct comp to point to and say "mine should be valued like this one".   Not sure how to proceed on this one.  I guess that is the down side of investing in a small town and getting a good cash flow.  

just a little background.  I have a nice triplex that NETS $833/month (and yes, that is after ALL expenses, capex, etc).  I have a total of $42,000 cash into it.  I have only owned it for 6 months.  I bought it empty, lightly rehabbed, got renters, and was trying to refinance.  That is where i got stuck.

The appraisal came in at $38,000.  I was hoping it would come in much higher to get my money back and buy a duplex that i have had my eye on.  

Do i have any other options?  or do i just have to save up a down payment and buy using a conventional mortgage?