All Forum Posts by: Tim Miller

Thanks Charles I assume there is a learning curve here but I also assume knowing business I have an advantage

Update:

We put in an offer on the house, $50k with seller paying $2k towards closing....another offer came in the same day and they offered more money BUT were going FHA (we offered conventional) ... they accepted our offer.

Agent says its because of lack of railing for outside steps and a few minor issues that would delay a FHA closing.

So now the mortgage is gonna be $304 including PITI and we think we can rent it for $750-800 per month and it will include a washer/dryer in the rental. We got a 1-year home warranty on the deal. Closing mid-april!

There are circumstances you can take money out such as education, hardship and purchasing a house (not sure if investments count). There are still fees but not as high....I would just really consider what the time value of money effects will have.

@Andy Collins thanks for your questions. Yes I believe its why its been on the market as long as it has. Resale does not bother me as I plan to keep this one long-term. Also, rehab consists of removing a few items at no cost and the trees at a small cost

@Liam Goble thank you for pointing out a few details that remind me of some items I left out of my initial post....I have already received qualification with my lender of choice and they have agreed to lend the money with 20% down for a conventional loan... Property taxes are about $500 a year for this property. All utilities will be the responsibility of my tenant and i will request alerts for non-payment from the utility companies... We are requesting the seller pay the closing costs... This property has been on the market a considerable amount of time....The location is called east brainerd

@Jon Lafferty please be careful when borrowing against your personal freedom (retirement). Just like a drivers license, retirement is a privilege and not a right. Being in a fiduciary role for a multi-million dollar 401k portfolio and seeing the kinds of returns folks have made since the recession ended are truly astounding. (YES it ended but politics have artificially kept it going)

My advice, don't raid the toy box because eventually you will want to play.

All I can see is ROI of under 6%, FLIP!

I have been considering finding my first property to rent long term (buy and hold).

I haven't spent long looking, however, I feel like I found a deal that fits just about every need I was wanting. My fear is that I am jumping the gun and lunging at the first good deal that appears....Also its odd to me that I could find something that fits my criteria so quickly, most people I have spoken to say that it could take months of searching to really find what you need....My second fear is that I just happened to stumble upon "my deal" of this year perhaps and if I don't act then i will regret it when I cannot find a comparable deal later....

Here are the details:

Chattanooga, TN - Decent market

The home is located in a popular and growing residential part of town, easy access to grocery (2 within 5 miles). Good schools and low crime rates. The home is located directly off of one of the most driven roads in the city and is passed by thousands of cars per day (which I look at as good for finding a renter as a sign in the yard should cover my "marketing" costs). I also see this as a negative due to the fact that it can be kind of noisy during rush hour.

The home was built in 1960 on a quarter acre. limited grass on the property but lots of trees that need some major cuts IMMEDIATELY, limbs just above power lines...If I bought this home I would have to have the tree cutting service already lined up and working the moment I signed the papers which I am ok with so that doesn't bother me.

The details that match my desired list - based upon what knowledge I have gained from bigger pockets.com so far...

2 bedroom - less people to mess up the place, 1 bathroom - less repair costs, under 1,000 sq ft - not too big and not too small, good location, priced right - listed at right about $60,000 realtor thinks I could get it for $49,000, comes with all major appliances with exception of washer/dryer, tile kitchen, granite countertops, small outside enclosed/locked storage area for tools I can keep on site (separate keys), and a small little back porch with a nice view of the woods (property behind house is a few acres and no home right on top of it).

The tax value for the property is $70,000 with $25,000 going to the land - the remainder to the building. I don't know how to find Capitalization rates for the area...Suggestions?

The financial data: (being an accountant this matters the most).

Purchase price at $49,000 with 20% down conventional loan

Mortgage of $39,200 - estimated monthly outflow for debt-service $325

Realtor thinks I can get about $750 (more if I go section 8)

50% rule - $4,500 expenses

Gross income - $9,000

Expenses - $4,500

Debt Service (not including tax & insurance included in 50% rule) - $2,400 ($200/month)

NOI: $2,100 annual / $175 monthly or 4.3% capitalization

Cash on Cash ROI: 21.4% ($9,800 down).

Please analyze my financial data and situation and let me know if I am missing a major plot hole here because to me its a no-brainer.....

Thanks for your help =)

@Ali Boone im pretty sure Becky's shoes in Cleveland still goes by the same name. My wife like to buy her shoes there.

@Bryan L. I am very opposed to taking a HELOC or any lines against my primary residence. Anything that could potentially, at any level, endanger my primary I am against 100% and wont consider. However, thank you for your comment and advice.

@Faith Chesney if we didnt have a child now I would consider doing just that. Now that we have a son and our two dogs I just dont want to chance inviting potential "scum tenants" into our personal living quarters.

@Kevin Polite it really is too soon to tell how much the market has been affected by the VW plant (as far as I can tell). I think we will have a better picture in 5 or 10 years. The real issue in Chattanooga is gaining traction. We gain one major economic boost and lose a major player (Krystal).

@Bethany T. we really like the Belvoir neighborhood association I think its maybe a few square blocks in Brainerd. Typically this would not be my ideal location however it truly is a diamond in the rough...part of town.

Hello BP.

I have been a member for a very short while but plan on getting engaged to the platform as a useful resource. I live just outside of Chattanooga TN in a rural area called McDonald (e i e i o).

I have no current rental properties, however, I like many others have great plans for my future (and the future of my wife and 5 month old son). Our home was purchased using the help of a contractor friend as a tornado damaged single family. We now stand two years later with approximately $45k in equity that could be realized quite quickly.

I have a degree in accounting and work in the private sector analyzing accounts and business activities on a daily basis. This has given me a large amount of business knowledge in a short period of time. I have managed payroll, payables, receivables and financial statement activities. Needless to say I am researching furiously the various ratios, cap rates, and terminology of this investment opportunity.

My long term investment strategy is simple, bread and butter single family homes in desirable neighborhoods purchased at 10% or greater beneath their values and rent them long term. My game plan consists of requiring 4 paid for properties with all profits going toward future investments. The only issue with this plan is it will take an estimated 17 years to complete the downpayments and full-payments on these 4 properties......my estimate....So unrealistically I want to get into more delicate options such as multi-family but do so cautiously....I am researching and waiting until I can cash flow my first down payment.

My question to whomever would like to respond: We plan to sell our single family home due to the fact that we would like to move closer into the city and we can either roll our equity into our next home by reducing the costs or roll this equity into possibly 2-3 down payments for single family homes and using a VA loan for our next home to avoid PMI (the devil itself).

Comments and questions welcomed =)