All Forum Posts by: Andrew S.

i definitely think you need CapEx budget. While items such as you roof are likely ok for now, 10 years is where other things like appliances, water heater and even HVAC really start to kick in and may have to be replaced. Also, you may need exterior paint (often deferred longer than it should be). Also I don't see property management included. You'll have significant negative cashflow and I don't see Holly Springs as a huge appreciation play, so I'd way : walk

This is one of those situations where it comes down to your risk tolerance.  I'm quite sure a number of people deal with such properties all the time, are comfortable with them and make good money.  Im also sure a number of people lose money too...  It would not be for me - as I see it (and I agree with @David Krulac ) the flood insurance premiums are virtually guaranteed to go nowhere but up.  And there doesn't seem to be an upper limit as to where they can go, either.  So for me, I'd walk - especially because your numbers already seem tight and this will almost certainly affect appreciation (just the uncertainty of future reclassifications will - even if you actually manage to get it changed to X now).

I know it hurts to walk away when you already poured good money into the deal (I've done it myself with an underground oil tank situation), but that may be the cheaper solution in the long run - or at least the solution that lets you sleep better at night.

It's amazing what some people's definition of cash flow is.  Yes, this could be completely bogus.  But it could also be that he takes in 1300 a month in rent and he calls that cash flow.  Maybe he owns the property outright (and doesn't count the value of his money). ignores taxes, insurance, etc.  

I certainly haven't seen any properties with a verified and consistent cash flow (by MY definition of cash flow) of $1300 a month, sell for 129K.

Ask for a LOT of detail! 

Ask for a commercial umbrella insurance policy.  I ran into this also (at State Farm),  but they offer a commercial policy (well, that's what they call it - not sure that's a general term), so I transferred it.  It's a bit more expensive but not prohibitive. 

@Joe D. 

If it's really trending in the wrong direction, I would pull out all the stops and get it sold ASAP (including eating a Realtor commission, and discounting the price upfront).  You'll only compound the problem by waiting.

@Aly W. --  great response.  One question (and sorry to sidetrack the original question): why do you refer to these charges as "additional rent"?  It doesn't seem like the charges have anything to do with rent - they are reimbursement for damages.  I'm asking because I'm in an argument with my PM at the moment who also calls these charges "rent" and thereby applies his 8.5% management override on it.  Obviously, I have a problem with that.  

@Nat C. 

 I would reconsider your request to tenants not to flush toilet paper.  It may be accepted practice in Asia, but I bet in the homeland, you'll (probably needlessly) get complaints and non-compliance.  In fact, I think you'll be better off focusing just on the disposable wipes - people may accept that.  The toilet paper IS designed to disintegrate quickly and is unlikely to cause a problem in my opinion.

OK, enough potty talk, I guess...  :-)

I'm with @Michaela G. 

and @Account Closed 

Personally, I don't see this as a bigger deal than a speeding ticket. 

@Katharine Chartrand 

I was wondering why you can't fathom an all-electric house?  Around here, that's pretty normal (we also have fairly mild winters).  In fact, the majority of my rentals are all-electric.  Electricity is far cheaper than propane in most places and for heating it's actually very efficient. 

@Pete T. 

 - I think he is trying to yank the chain....

@Joe D. 

 - what makes you think this neighborhood is on the decline?  You say it's an award winning school district - that usually stabilizes the area.  Anyway, with those numbers and especially if it really is in decline, I'd try to sell as quickly as possible and ran as far as you can.  You'll lose significant money every month renting it and it will get worse and worse.  Hanging in there and shoveling money into it only makes sense (sometimes) when there is a significant chance of appreciation.