All Forum Posts by: Michael Win

I Just started to invest in property a year ago in Austin.  Bought 6 duplexes and a Condo.  The condo was the first buy (never again from a cashflow standpoint).  The 6 duplexes Cashflowed immediately.  Its possible in Austin even with the values going up b/c the interest rates are so low.  I am in a unique position b/c my job is super stable (medical) and I earn in the top 1% income.  I can handle neg cash flow easily but it still is disconcerting/stressful to plow work money into rentals.  Seems very counter intuitive to me.

Fast forward to about 1 year and this is what I have learned from the Austin Market.  BTW, the best way IMO to learn is to jump in.  You will make mistakes but unless you jump in, you will never know what mistakes you are making.  

I am a numbers guy and crunched the numbers in detail but you still can't predict the future.

1. My Condo barely cash flowed b/c I used a property management co. No repairs in the past year. With the HOA fees, I break even but do put about 200/mo into principal so I consider this about a $200 cash flow property on a 30% down/50K investment. Doesn't seem that good to me but it has appreciated. Hopefully I can sell this next year and make 30-40K on the property after costs. Not bad but I think I was lucky to get it so cheap

2. My 6 duplexes.  Again, 30% down.  With the low interest rates and property manager costs, at best case scenario,   One side paid for all carrying costs/fixed costs for each duplex.  So at best case, I would make about 4.5k/mo initially.  Well guess what.   The rains came, repairs came, updates needed to be done, deferred maintenance done, make ready done.   After the 1st year, I will prob break even but 3 unites have been updated.   This is in light of raising rent from an avg of 750/mo to 850/mo.   So big learning experience is to have a good initial cash flow margin b/c the unexpected will happen.  

If I had an unstable job, did not make alot of $$$, or needed cash flow; It would have been very stressful.  Updating unit costs me 8-12K which is not a big deal for me but for someone expecting cash flow, its hard to find this kind of money.

But looking at the long term investment (which is all I care about), these properties have been fantastic.  Sure I made very little cash flow in the past year, but rent has gone up 13% with increases in only the units that had vacancies (3) and they were rented within 2 wks.  In 2 yrs, All leases will expire and be raised to market which will put my avg rent at 1k/mo or a 33% increase in rent.  This is when Cash flow will skyrocket b/c the fixed costs will not change much.  Also, in Austin's rental investment market, investment properties will track rental income.  So I project that not only my rent increase 33%, but the property value will increase about 33%.  Given that I put only 30% down, my return on capital would be about 100%.

Hi all,

I have 7 rental properties, high income professional (4-500K/yr), have a 1 mil+ personal residence, 1mil+ liquid/IRA net worth. 41 YO.

My properties are under my name and will not put them under an LLC. I currently have a 1 mil umbrella but my insurance agent thinks I should be at 3-4 mil.

Is 1 Mil enough or should I bring it up to 3-4 mil.  The cost would be an extra $750/yr

 Thanks.  I am from Austin and so is the property.  I will definitely talk to my CPA about the holding period and what I can buy.  I am tight on cash right now to buy something pricy.

I Prefer to buy in Austin as I live here but not adverse to going into the Dallas/SA/Houston Market.  I rather not go any farther out just in case I need to drop by the property.

I lost out on a Property outside of Austin in one of the above cities 1 month ago and part of the reason is I could not bid higher than asking b/c I was concerned of making the down payment.  I have some regret about this.  500K, 16 doors, all rented for 9k/mo.  I did the numbers and for 100K down, I would cash flow about 30K/yr

I just purchased a duplex 3 months ago.  Bought for 169K, Loan left of 110K.  I would like to sell the duplex for 210K.  I am sure I can get this price as a duplex down the street in worse condition/lower rents just closed for right at 210K.

I want to do a 1031 and put the 100k down payment into a 4-500K property (financed) which should get me 2-3X better cash flow.

The numbers makes sense.  Sure risk is more, but I am not risk adverse.  Does this seem like a good strategy or should I just continue to collect my $900/duplex as cash flow?

This topic has very little to do concerning how complicated or highly trained a contractor is.  It could be a painter, locksmith, etc.

The contractor was nice enough to diagnose over the phone for free.  When does this ever happen anymore?  There is just way too much liability with our litigious society.  If this contractor was wrong, OP would probably have sued him for giving him the wrong diagnosis over the phone.

But to make it even worse, he comes and puts an unwarranted review.  I guess it serves him right for trying to be nice and give good/free advice over the phone.  I am sure this is the last time he will do this again and rightfully so.

I apologize and rightly should have had my post removed.

1. Asking a person for free advice, getting the correct advice and then doing it yourself is alittle shady IMO esp when the contractor was in good faith believing that he would get the job.  Otherwise, why would anyone give free advice just to have someone do it themselves?  If this was the case, these contractors would be quickly out of business.  Its not the Best Buy for contractors.

2. Getting the correct advice, and then writing a bad review just because you did not agree is just bad Karma.  I am sure if the roles were switched,  OP would not like having bad reviews from ignorant people

Can someone explain how someone can put down 5% on an investment property with a 5% 30 year term.

The only way I can get close to a 30 yr 5% term is with 30% down.  

BTW,

I am up for any interesting opportunities.   I am not looking for a mentor, business partner, shady deals, etc....

Hi BP,

I am just starting out and already have 7 properties bought through MLS. I am looking at other avenues to see if there are better deals out there. Are there any active meetings with good attendance in the Austin Area? I believe there is some up north but I am just curious if there is a good turnout.

Thanks

Im down the road in Austin and started about 1 yr ago.  My goal is to retire in 10 yrs.

Bought 6 duplexes, 1 condo.  I project my Free cash Flow to be about $50k this yr.  

I will then use the 50K to down on another SFH/duplex next yr. I hope to have these homes generate all future buys. So in about 5 yrs, i should have about 100k free cash flow.

Then i will go to 2 homes a year.  

Hopefully in 10 yrs I will have about 20 Rentals.  

I hope in the next 3 yrs when my duplex value goes up ( I think the value has gone up atleast 50K already), I could sell one duplex.  take the equity (about 120K), and buy 2 more homes with it via a 1031.

Initially its slow, but soon start to snowball.