All Forum Posts by: Dylan B.

@Steve S.

If you are not wanting to acquire more properties, then ya sure pay them off, however you are using other peoples money to pay them off so I wouldn't use your own cash to help pay them off. 

I am more risky and would like to grow my portfolio and don't have a ton of cash on hand so I like to take HELOC's out of the properties that I do own in order to put down on more properties. My ROI is higher because of the leverage I am using.

The reason to me that it is smart to leverage rental properties, because you are using other people's money to pay them off (through the rent money). Let's say you had $100k that you wanted to invest, you could buy a $100k home all cash, however this puts a lot of risk on you because you have all your eggs in one basket plus your ROI is a lot lower vs the alternative. Let's say you are able to rent the place out for $1400 and after you pay your expenses, you cash flow $800. That's great however let's say you had the same $100k but you purchase 5 properties at 20% down ($20k down on each of the 5 $100k properties). You are able to rent them all at at the same $1400 however your expenses are more and you are only able to cash flow $250 on each, so multiply that by 5 properties... $1250 a month cash flow. That's a lot better than the $800 with the 1 property and you invested a total of $100k on each scenario.

It all comes down to what are your goals and what types of risk are you willing to take. 

You had it fixed within 24 hours, I see no problem with that. You need to tell the tenant that he needs to calm down and that the problem was addressed within a very reasonable time.  Also never take a check for deposit or rent. Money order, cash, or direct deposit is the only way to go. 

You make the most of your money when you buy, be very thorough in your analysis. 

@Eve Oliver  Your closing cost seem a little high for a $84,900 purchase but that's good to be conservative. One thing you will need to make sure on is that you could actually get 1200 for rent... 

Even though I don't use cap rate on SFH, your calculation on it is wrong. It would be annual net operating income/cost, 2549.76(monthly cash flow*12)/84,900 = 3%

Based on your numbers, I show a 12% COC, and 26% ROI (with principal pay down)

Full disclosure, I am not including Capex, mainly because I just sit aside money in the beginning and just set aside 10% for repairs every month.

Thank you all for the replies.  I guess I wasn't specific enough... I currently have a move out inspection form that I use.  I was looking to see what people charge, i.e. if the tenant doesn't clean the fridge and I have to have it cleaned out then I am going to charge $50 per say... 

@Nicholas Cook That would be awesome of you to share. I will have to reference the laws here. I am just looking for an example. 

Hello all, in podcast 36, Kevin Perk discusses a move out letter he gives his tenants of what they need to do in order of get their security deposit back with costs if they don't do what is required. 

Does anyone have examples of a similar letter?

Thanks!

@Eve Oliver if you are only getting 8%, I would not take the deal.  Do you mind sharing the numbers on the deal you are analyzing?

I typically invest in B (or greater) neighborhoods, its just a part of my strategy and risk tolerance. There are plenty of people that invest in worse neighborhoods and do very well... Its just a personal preference. 

@Eve Oliver I don't really use CAP rates for single family homes or duplexes, they are usually utilized when purchasing larger multifamily properties. I normally look for a 20% cash on cash however sometimes those are hard to find in my target market. Look at the cash flow.

This is a good video explaining cash flow.  https://www.youtube.com/watch?v=T_7vhsSBi7c

@Mark W Carpenter Welcome to the BP community!