All Forum Posts by: Jason E. Smith

@Jeff Kehl I'll add another graph which shows details about quadrants of the graph along with the y and x axis variables you were asking about.  Hope that helps better explain.  

Sean, another factor playing into lack of inventory is where you're at in the market cycle right now.  You and most of the rest of the US are in, or just coming out of, the hyper supply phase.  You're market is mostly over priced, people paying $300k+ for $3,000 a month in rents.  If you know the math those properties won't cash flow.  Funds used in those purchases will eventually run dry, completion and supply will exceed consumption and the market will correct.  Just be sure you're ready to buy when it does.  Work on making connections for off market deals and learn the math of holding a property long term.  

Hey Patrick,

Welcome to BP.  I think from a long term wealth perspective you are making an intelligent move.  In the short term I would be extremely  cautious about putting money into any "deals" today as the market across the US is flooded with non-cash flow properties and incorrectly represented "turn key" properties.  I will tell you from experience a 1% deal, $500k purchase price and $5k per month gross rents, will not cash flow.  I recommend listening to the real estate guys podcasts and The Wealth Formula podcast by Buck Joffrey.  Buck is a surgeon who was burnt and bamboozled in his first multi family purchase so he set out to become financially educated and now shares his learnings in a podcast.  And find a mentor, someone who's been successful in real estate investing over a 30 year track record so you know they've lived through several real estate market cycles and have succeeded and persevered over those cycles.  Feel free to message me any time.  I will be investing in your area soon as Houston is leading the multi family market cycle into the recession quadrant.  Best of luck and have fun!  

I'm an investor in your area and would be more than happy to answer questions. Send me a message and we can chat. 

the 10% for repair is common but I've found it's a conflict of interest. The more you pay for a repair the more revenue the PM generates. I had a PM in Charlotte that was charging me a lot for repairs. The straw that broke the camels back was when they tried to charge me >$10k for a foundation repair that I eventually had completed and passed all inspection last for $2,200. Most the fees you've said are normal I'd just keep an eye on maintenance charges since your PM will be gaining revenue at your expense. 

Hey Dan,

You can run all the numbers you want but I've learned it's hard to forecast everything. Even the best home inspector will not find a small leak behind a wall. My advice is just be sure to have funds on hand, liquid or credit card, to handle capital expenditures such as roof, HVAC, mold remediation, etc. A quick way to get a good feeling if a a property will cash flow is just divide your gross rents by 2 and if your debt service is less than you will have cash flow when averaged over 20-30 years. In your case, 3 units * $650 per unit would be $1,950 gross rents. Less $975 a month for operating expenses (vacancy, maintenance, taxes, insurance and CapEx). So your NOI would be $975 per month. If you financed $119,000.00 at 5.5% over 30 years your monthly payment would be $675.67. So $975 minus $675.67 and I'd estimate your cash flow to be sixty seven cents under three hundred dollars per month. And you will definitely learn a lot once you own your first property. Best of Luck! PM me if you need anymore help! Cheers!

Congratulations Brent!!  

Mark, not sure what turn key providers you've investigated but the ones I checked into really underestimated long term holding expenses. I was lucky if I could get them to agree to 5% maintenance and 5% vacancy. But as soon as I tried to negotiate a CapEx expenses they'd stop returning phone calls. One in particular I was looking into was trying to sell a house for one of their investors which they had sold to this investor several years ago and managed since day 1. In the comments they bragged about the condition of the property and even said it had a new roof put on last year. Reading between the lines I'm sure the original investor never considered the cost of a new roof in cash flow calculations because the turn key provider didn't so my gut said they realized there was no cash flow after such a large expense. As the real estate guys would say do the numbers and the numbers will tell you what to do. Best of luck!

Makes me think of the real estate guys radio show, live where you want to live and invest where you want to invest.  Best of luck Susan!  

Welcome to BP and welcome to Greensboro NC Tyler!  What flavor buy and hold are you looking for?  single family, multi family, commercial, office, storage?