All Forum Posts by: Dan Tsunekawa

Hi @David Fitch @JR Hinds it's been about a year now. How are things going with Elite Invest? I am looking at buying something with them.

Thanks for sharing.

Welcome to the site. Best of luck to you.

I have also been wondering how common small multi family units are in KC. and whether they are still ‘nice’ neighborhoods. For instance in chicago it is normal to live in a duplex and you can still get very good B class tenants. I’m wondering if the same is possible in KC. Can i find small multis that rent between 900-1100 per unit? Is anyone doing this? I suspect they cost a bit more than $100k.

Hi Eric. Welcome. A good simple start is to start looking on Trulia and Zillow. While they aren't good for price estimates, they do show you recent sales. So you can look at what a 3/2 is going for and what it generally rents for. Besides that you can find some local property management or real estate brokers to chat with. A good 30-60 minute conversation will tell you lots and lots about an area.

Thank you all for your thoughts and comments. Yes I agree my capex knowledge and numbers are adolescent at best. It's been hard for me to find good numbers, but I will try harder and refer to Ben Leybovich ’s article. I agree with James Wise e about not really caring about cashflow. My goal is to acquire quickly and let the tenants pay for the purchase. After I hit my number (20 properties) my focus will change from acquisition to pay off. I plan focusing my w2 income as well as my measly cashflow to paying off one property at a time. Thanks for the tip about debt to income too. I will need to keep that in mind as I scale. Along with all of these other great tips.

Hey BP I wanted to get some opinions on the dangers of over leveraging a property. I am formulating a strategy to acquire a number of properties in the near future using 1 or 2 REPUTABLE turnkey companies(please hold comments on turnkey model, another discussion for another day). I am planning on using conventional 80/20 conventional financing AND using a Heloc against my current home for the down payment + closing costs. I am hoping to buy maybe 5-10 properties in this fashion. If it works i’d like to get another line of credit and keep it going. My end game goal is 20 properties.

Some Facts

• I have a steady job in software that i am not looking to replace or supplement.
• I currently own 2 cash-flowing properties
• I do not need any cash flow today to live on. Any cash returns are put to work expanding my portfolio
• These properties are to set myself up for retirement (I’m 28)
• My heloc terms include P&I on a 30yr schedule. It is not interest only
• Turnkey properties are generally bought close to market value, so no "built-in" equity 
• I am setting aside about $30,000 cash annually for investing

I am in acquisition mode right now, looking for ways to build my portfolio using as little cash as possible. Even tho i am setting aside cash for investing, i am looking to use that for reserves, and stock piling it in for when the market turns back down. I know there are risks associated with being over leveraged. Below i have laid out the ones i can think of and how i am planning on mitigating them.

Up-Keep

• Only use vetted turnkey companies that do solid rehabs
• Save 5% gross rents for maintenance
• Save for capex even tho so many companies tell you it’s not necessary (WHY?! No wait, don’t answer that, i’ll start another thread)

Vacancy

• Buy in markets with strong fundamentals (pop growth, job growth, job diversity)

• Buy in good quality B class neighborhoods that would maintain renters even in a downturn
• Save 5% gross rents for vacancy
• Save for inevitable lease up fees

Rent Prices Drop

• My numbers predict i could stay in the black even with a 10% drop in rental prices (see example below)

Other

• At time of purchase i set aside 6 months of gross rent in cash, for reserves

Sample Property

This is a sample property is actually more like a higher c class, but i you could move the numbers up higher and see the same thing with a B class SFR

Purchase Price: $60,000

Closing costs: $4,000

Rent $900

Vacancy ~ $45(5%)

Maintenance ~ $45(5%)

Capex ~ $125

Op expenses(tax, insurance, lease up, mgmt) ~ $162

NOI ~ $522

Mortgage: $261

Heloc: $68(at current rate) - $160(at highest rate)

Cash flow: $193(at current rate) - $101(at highest rate)

I'm a little scared to ask this, but better burned on BP then in real life, so here we go.

What am i missing or what did i not think of?

I just closed a little over a month ago on a property with USREEB. All good things to say so far. Inventory seems to be getting tighter in KC and the returns seem a little low to me right now in the B neighborhoods. Feel free to ping me if you'd like to chat more.

I have a rental that failed a hud inspection. It needs some minor repairs,

1. broken light switch

2. torn flooring in the laundry room

Is there a property management company or handyman that comes highly recommended in north county SD?

Thank you

I was thinking about how much snow we got last season and this season. Is there any concern that prices might be a bit bloated this year? I was thinking of waiting for another drought year to see what happens to home values.

Thank you all! Great info.