All Forum Posts by: David Moore

@Laura Thorne

I have come across a potential huge way to way on evictions.  I have a resource that handles the eviction for a fraction of the cost of using an attorney.  

@Angela Jossy

I cannot believe no one else has posted a reply.  This is quite unusual for BP.  I see a couple red flags on this.  But first things first.

1) You see potential value adds.  That is a huge, awesome thing to find in  real estate deals.  I congratulate you on good analysis.

2) The utilities for this building are outrageous.  It is a small house, and should not be going through $484.00 in heat, electric, and water.  Something is very wrong.  I have a 2700 square foot house in Minnesota that bills much less than 1/2 of that.

Red Flags

1) This property has a lot of deferred maintenance.  The low rents are usually a sign that this is occurring.  

2) Three prong ungrounded outlets.  This is another indication that the previous owner was doing 'home brew' maintenance.  I've been working with my electrician for a couple years, and I know how to legally ground three prong outlets.  While it is not difficult to do, it would take time.

3)  Your trying to comp to 2 bedroom houses that are not duplexes.  Cannot do that.  Those are entire houses, and have a higher rent premium.  Your house has a tenant neighbor that the renter cannot be separated from.

4)  You assume you can subdivide your lot.  Check local zoning codes.  If this property is zoned as residential, SFDU only, then the duplex could be illegal.  If it is zoned for max of two units, you cannot build a second duplex.

5)  A $222.00 cash flow will be hindered by all the required cap ex maintenance.  You haven't factored in any ongoing maintenance, or maintenance you need to do just to bring this up to code.

6) It appears you haven't factored vacancy.  I would factor 5% of gross receipts for vacancy.

I would pass, and look for a better deal.  Your analysis and attention to detail is good.  Give yourself a pat on the back, and find a better one.  

@Megan Westerfield

Being excited about real estate can be a liability.  Try to make everything about the numbers.  Is it in your best interest to move in, or keep the tenants.  Consider that if you take one of the units, you lose some of the business depreciation.  So there can be a big tax hit in doing that.  There are a lot of other factors to consider.  Is the existing landlord charging market rents.  I use rentometer.  Just google it.  

Also, don't assume these tenants are sweethearts, even if they have a good payment history.  If they are paying way below market rent, and you make the needed correction to bring market rents, you could be dealing with a crabby tenant as your new neighbor.

Another consideration is size of unit.  Turnover in 1 bedroom units can be quite high. 

@Kelly Conrad

I know you've gotten a lot of feedback, so try and endure one more perspective.  I don't think November is an issue for finding tenants.  I also advise against going for tenants with lower credit scores, unless you are armed with the ability to ask for a double damage deposit.  

What is hurting you, I feel, is your first photo of your downstairs apartment.  It looks like a drab, gray sheet strung across a window.  The last photo is a picture  of a not good looking window.  

Also, we also design our units with the female in mind.  We make the kitchen and bathroom really shine.  Your photo in the bathroom of the shower only, omits that there is a tub.  If you are cramped taking the photo, it shows up in the photo. 

Have a friend who is a pro come in and take the photos.  They will have the ability to make the rooms look bigger.

Also, I have a property management company in town help find tenants.  I don't personally like to take apps and show the units.  So I pay someone else to do it.  I have a name and number for you if you are interested.  It will cost you one month rent, but they are really good at finding tenants.

Greetings all,

I wonder if anyone else has had time to absorb the impacts of the proposed tax changes in the bill introduced in Congress?  What are the tax impacts on investors?  Do you think it benefits us or does it hurt us? 

@Brian Neisig

I actually think you are right to be concerned about overpaying.   There are several things to consider.  Do you have a good team?  I have people sending me wholesale deals via email, and I have investor realtors sending me opportunities.   I research and buy slow.  Josh and Brandon say you should analyze 3 deals a day.  I don't do this enough, but I do analyze deals.  

Your experience with your townhome is not wasted.  You learned from it, and had the beads of sweat from being in a situation where your property was illiquid...you could not sell it.  

One other poster commented about the risk of overpaying on a 4 plex. Others have said go for cash flow. I go for cash flow. On MLS, you will now routinely see 4 plexes selling at 400K. But the four plex, how nice it looks, etc, is not the key. The key is, how much revenue does it generate. That is the basis for the right price. And how much revenue should it produce. That is the basis for calculating what your gain will be, regardless of the price you buy at.

On the block where our four plex is, there are six four plexes.  One charges $1100 in rent, mine charges $995.00, another charges $850.00, another $700.00 (he wants no turnover).  Finally, one building is for sale, started at $429K, now down to $399K.  He charges $875.00.  All 6 buildings are nearly identical.
Which of these buildings are worth the most, in your estimation? (BTW, mine and the $1100.00 are very similar in rehab and condition, and tenants pay gas, but the $399K one is in decent shape)

@Mark Forest

The info you get when you subscribe is more detailed, and you didn't include the address in your ad.  You got the general feedback.  When you subscribe, you get rents in your immediate neighborhood, for 12 months, 18 months, and 24 months.  I think you get a free preview period.  

@Mark Forest

The address is not posted, and the house is tiny.  No mention of a basement, and no fridge is just a bad look.  And your rent is too high.

Since there was no address, I took the address of another house on Moorish street, and put in your bedroom/bathroom, into www.rentometer.com.  I am a subscriber.  Average rents in that vicinity was $550.00, and those other two bedroom units are probably not tiny houses.  I saw one house that rented for $425.00, and a decent number renting at $500.00

Bottom line, cheap houses in C and D neighborhoods are not good investments, IMO.  At $500.00 to $550.00 a month, there is too little profit.  

@Scott S.

I have not been impressed with Guardian.  They manage another 4 plex on my block, and they haven't picked very good tenants, and they cut the rent fast on the building, that should be getting $120.00 more a month.  

@Deanna McCormick

I find navigating their site to be a pain.  Do you have to sign up to get access to stuff?