All Forum Posts by: Richard Ball

@Linda Reynolds 

For the sake of time I am going to recommend that if you would like to find 2/1 duplexes around 70k that rents for 600-650 per month per unit in Port Huron that you look in the Holland Woods Middle School area. This is a B neighborhood and should offer you stability while almost getting you the 2% rule. 

The area you are asking about could go either way in the next 5-10 years. If you were in the area or if you have someone that really knows the market in the area you could take that gamble and it may pay off but just as easily it could leave you selling for half of what you purchased it for in 5 years.

Now my final disclosure, BEFORE YOU BUY ANYTHING in Port Huron you need to go read the new zoning rules that the local government has passed that no longer allows rentals in certain neighborhoods as well as the landlording regulations that require rental certificates and inspections.

I do want to let you know that when I started investing in Port Huron in '09 I had hoped to buy bad houses in the Hospital / College area, fix them up and rent them to stabilize that community. I have 3 SFH in that area and I do not regret it however I no longer invest in Port Huron due to the new zoning laws and I would not recommend anyone else invest in Port Huron. If you like St Clair County please take another look at Fort Gratiot, Kimball, St Clair or maybe even Marysville. Lately my bet has been on Fort Gratiot as that area is expanding with new businesses and housing.

BTW are you from Port Huron area? I am only asking because I have some relatives with your last name :D

Yay my market is up for discussion :) 

I will answer your question when I have more time tonight.

@Alex M. Long story short as long as you get the money and close within the time you have allowed in the contract you have nothing to fear. This is why we have contracts and why they are in writing. If the seller refuses to close based on the terms in the contract you can sue the seller and you will win. If you do not close in the time allowed you can almost guarantee that the seller will not extend the closing date and you will lose the money you have put in. I would recommend a backup plan. Look into other investments you may have, stocks, 401ks, mutual funds, home equity, etc.... just in case your colleague backs out. You will not get a second chance at this.

@Thomas Idzikowski should have added this to my post

hello,

were you able to find the hard money lender and property manager you were searching for? i am not aware of any hard money lenders but do have many other resources.

Obviously you are going to want to talk to a real estate attorney. I have not purchased a fannie mae/freddie mac house in a little while but there is something in the documentation that states the house must be owner occupied and can not be sold in...I believe 90 days (you are going to want to verify that). So 1. stop work if the house is livable. 2. move in. (it is now owner occupied) 3. enter into a contract and have the closing date after your 90 (or whatever day you verified) day move in (you have now met the minimum length requirement). Companies know nothing gets done over night so I do not think waiting another 80 days, probably less by the time they actually get around to drawing up the documentation, will make or break them. 

How about going the other way and also making your life a little easier with not having to renew leases? Do a month to month but put exclusionary months in there. I got this idea from snowbirds in my local real estate group and now use it. I create month to month leases that expire upon a 30 day notice but exclude the months November through February. Then state something like the earliest a 30 day notice can be given for a year is March 1st and the latest a 30 day notice can be given for a year is September 1st. If a notice is not given by September 1st of the year you are required to stay until the exclusionary months are up starting March 1st of the following year. I am writing this kind of fast so you'd want to make it easier to understand in the lease but I think you get my concept.

Go to the below link and plug as much in as possible. Figure a 10% vacancy rate in. If you don't know things like taxes and insurance you need to get those numbers.

http://www.biggerpockets.com/buy-and-hold-calculat...

So far prior posts are right we don't have enough detail to help you analyze the deal. Without knowing your market specifically and just using your high overview numbers of 40k purchase price and a rental rate of 975 I would definitely look into this further. You have clearly beat the 2% and 50% rules. 

Like some others have suggested I would highly recommend financing 80% of this deal if possible.

I am not sure if this is a real post or not. If you have thousands in the bank and you cash flow enough from 5 houses and 1/2 duplex to not have to work it seems to me you don't have to live in that city. Isn't the point of owning rental properties to afford you the time to do what you please when you please where you please? Get a property manager have them manage your properties, rent the half of the duplex your living in out and get in your car and drive. Where ever you end up have fun and be free.

@Brad Carrier that they are that they are. I am not sure exactly where you are at in your investing career or what exactly you are looking to get into but if you end up investing in St Clair County I would highly recommend the Port Huron Area Landlord Association. I believe they have around 300 or so members now. They meet once a month (2nd Thursday of each month) and they bring in local judges, accountants, and others that have a direct relationship with investing.