All Forum Posts by: Account Closed

@Chris Rendall Thank you for your post, I appreciate all the great feedback. Before reading this, I would have guessed the answers you got, more or less, I'm glad I was mostly correct.

I wanted to reinforce a point, that I think was the reason for your original post. You probably had a little tickle in your moral compass which gave you pause, which is why you reached out.

My wife is an accountant, when we look for every possible tax break it doesn't feel like theft, we feel accomplished to find a place for more savings and lose zero sleep over it. BUT we aren't alleging either that we have 38 children, that we're both half Native American, or that one of us served in a war that ended before either of us were born. That's fraud. Yeah, the person may never get caught...but still.

Perhaps that doesn't bother some, but it bothers me.

RE to me is about doing it right, and finding the greatest accomplishment in doing it right. I'm glad the advice was the same, I wouldn't feel okay unless the property was insured as a rental at least, and I'd probably have the LLC be the name. If I leave 20 bucks on the table, I'll sleep like a baby and dream up the next big deal while others are getting audited or sued. I want to know if one of my rentals has a massive even that I'm covered, that's worth the going rate on the proper insurance to me.

Best of luck!

Whoa, yeah, yuck. That's a lot of money out and only pennies in profit. I agree with the above, Cash on Cash and CAP need to be at least double, if not triple.

Thanks for posting though, you should probably look at this one a little closer before proceeding.

Hokay, at first glance the monthly cash flow is lower than I'd like. An 8% CAP also bores me a little, but I took a look anyway. So this is a duplex, you're listing $1200 as rent, so I assume that's both sides. I see they're both occupied, so I assume that's what your current tenants are paying.

Rentometer shows a different story, that you're on the low end on rent. Good for you for calculating conservatively, better for you if your current tenants are under paying. This potentially gives you room to grow. Depending on how you can increase the value.

This whole forum is filled with threads on the headaches of inheriting tenants that are underpaying and then trying to move them to a more profitable number. It's a pain, the last thing you want is to force a vacancy at the same time not wanting to leave money on the table.

I say this is a solid find. Lost of room for more profit. If you moved then rent up from $600 per side towards $700 per side that very quickly gets you near a 20% CAP, which is excellent.

As a matter of interest, if you take out your property management costs, and manage your self, you're at 19% CAP without raising rent. Plus you might have an easier time with your tenants rent being raised if you're the one explaining it as opposed to some stranger. Not sure if this property is close to you in proximity.

Good luck.

@Julie Williams You're not ready, yet.

Yet.

It seems like a mountain, but you need to fix your debt and credit first. Look to Dave Ramsey, Suze Orman, whomever. Follow their advice to the letter.

Rental investment will not make your life better if you're chucking it all to bebt. The amount you're probably paying in interest alone would fun several rentals I'm sure.

Money won't fix your problems, a change in behavior will. Ergo Ramsey, Orman, whomever.

Don't give up. As someone who has repaired their credit, not once (post-Army), not twice (pre-first wife), but three times (pre-second and current wife).....****Oh, I'm the idiot who has to learn lessons multiple times.....Trust me when I say it takes one step at a time, and you can do it.

GOOD LUCK!

No, I agree completely. If you are your only form of quality control, then you're an idiot. With that said, my spreadsheets have been tested, and the math adds up.

****By tested I mean, I get a number from the spread sheet, put an offer in on a house, and then the loan adviser tells me what my payments will be...including P&I, Insurance, and Taxes...if my numbers don't hit to the penny...I MADE A MISTAKE AND NEED TO FIND OUT WHY.

There's an arrogance to running your own numbers, you have to KNOW you are right, and then obsessively crunch to find out why you're not.

I look at my spreadsheets every day and ask how I F'd this up. Then I run BP /calc to confirm. 

You're right, and yes, if this is important you'll learn...and yes, doubt your home made, barn jacked spreadsheets.

Hi, thanks for posting.

BIG THUMBS DOWN.

Negative cash flow, 5% CAP...Cash on Cash...

Nope, but you knew that already, that's why you posted.

Take emotion out of it, WALK>

I bet he does. Tell him you'll talk to him after he urinates into a cup you bought at CVS.

There are incentives for solar in places, a new roof....no, probably not. But much like Trumps wall that Mexico will pay for, its easy to say if you install solar you'll get a tax break equal to the cost of a new roof. Even if you were a CPA, you'd still say "Thanks, Obama."

Crap like that.

Hi Elizabeth. I will add too that the math is critical, and it's not hard. But also, I will add that you need to be able to calculate QUICKLY and accurately.

I haven't taken a math class in 20 years so I will tell you how I did it. It was all driven by necessity. Before I could afford BP Pro, I made my own spreadsheets in Microsoft Excel. At the time my MS Excel skill level was 0-1. I'm about a 4 now.

So I said, how do I calculate my mortgage payment given a cost of a house. So I opened Excel and had no idea what to do, so I went to YouTube....there IS A WHOLE PART OF THE INTERNET DEDICATED TO YOUTUBE VIDEOS ON MICROSOFT EXCEL. 

I'll tell you that video alone taught me so much about how interest was calculated, stuff I didn't even know. This led to me learning how much of my payments were interest and principle.

So I had my spreadsheet, with it's one formula...then I wanted to adjust the down payment to see how that scaled my payment. I went to YouTube again, and figured out how to make a cell where I typed in a percent and that automatically changed the end.

It literally started there. Then I needed to calculate how much profit I would make based on a given rent. Another formula, another trip to YouTube. Then I realized I wasn't accounting for Property Taxes, needed to learn that, insurance, needed to learn that....and the even dreaded CAPEX, VACANCY, REPAIRS, PM dance we all love.

All of those needed sliding percentages, so I can see to the top and bottom end FAST.

I just have to reinforce what everyone is saying. If this is important you have to teach yourself this, it can't be skipped. If you don't get the math, you'll never know if you're being ripped off. You'll never learn from your mistakes.

Below is a screenshot of one of my spreadsheets. Green is an editable cell, yellow is locked because it's a formula.

@Suinglio Espejo I just made what I needed myself. My Microsoft Excel skill level was maybe 0-1 out of ten. First I did a formula to calculate monthly mortgage payments given the loan amount and interest rate. Thank you YouTube. Then I needed to know my monthly charges with annual expenses like Property Tax and Insurance, thank you YouTube.

My first sheet started with like six things, and not it has about 50. You can learn everything you need to on YouTube, you just have to know what to ask.

@Chris Trefry Plan for vacancy, capex and repairs. Take that out of any profit forecast monthly. I usually set to 7% vacancy, 5% capex and 5% repairs. It’s important to note that this is for Atlanta and I generally know what I’m looking at for the life of the roof, hoax etc.