All Forum Posts by: Joe Edwards-Hoff

I guess the reason I questioned the 50% rule for different priced properties is because I assume that the cost of a new roof or foundation on a 800 sqft, 1 bed, $500 a month home would not be much different than a 4 bed 2 bath that brings in $1400. So the way I figure, for SFRs, the cost of upkeep and long term major repairs would be cheaper (relatively) on a larger/more expensive place. And as mentioned earlier, I bet you'd get better tenants in the higher renting places.

This is all speculation though. I have only 1 rental, and it is not a good model by any means.

So, would I be correct to assume that as you purchase more expensive properties (per door) that the rule of 50% would lower slightly? For instance, Jon used the example of a $300 rental that you need $150 for expenses via the 50% rule. That makes sense to me. So, if I have a 4b2b house that brings in 1400, will I still need the full 50% ($700), or would 40-45% maybe be more realistic in that range?

I might do some playing around with numbers, figure out a vacancy rate, tax and insurance rate, and then try amatorizing the costs of roof, foundation, etc and see what it comes to.

So,

I've been doing some research on tax liens. Reading the 16% solution seems like a must from what all the threads say. Anyway, tell me if I am on the right track... I've come to believe that I could get 18+% interest on the money I invest in tax liens. Provided I buy in the right states/counties. So, if I were hoping just to get good interest rates, and not end up with a bunch of properties, what would I be looking for? Also, if I did end up with a property, I assuming that the reason I'd want to do a title search first would be to make sure didn't end up with an upsidedown mortgage? What else could happen? As long as I don't plan on holding the properties, I just need to make sure that there isn't a bunch of debt coming with it...

And just so I understand better. Tax deeds? Is that just like buying the possibility of getting the property, but maybe losing your money? Liens seem to make more sense to me.

The ABC deal is just three options for financing a deal. As I understand, by giving the seller a few options it helps with negotiating. But either way it goes is still advantageous to us.

Example-

A- Seller finances, or holds the note, and we get a 0 down option. This would also have the highest sale price on the property.

C- We find financing elsewhere, but we also require a lower selling price

B- Somewhere between A and C. Maybe we got 70% financing and then have the seller hold a note for the other 30%.

Idea being, we give them options, but each on works well for us.

So if a "good deal" did come around, would it be a good idea to try to come up with an ABC offer and then put an addendum on the contract that gives you an out, so that I can have time to look it over more? (Both ideas I got from some Robart Allen material)

This was, if I did find a good deal, I'd be able to lock it up before the competition.

Anyone have thoughts on this. I work part time maintenance at a 104 unit apartment complex right now. I used to do rental restoration work a few summers back. I am currently an unemployed shop teacher. (Like high school auto and wood shop). There are no jobs in my area and I have no desire to move. I've been learning a ton about RE investing and want to get into the biz, but I also need a decent income right now and I want to learn. I just saw a statistic online (no clue how reliable) that said that my town has like 6500 home and like 4000 are rentals. It's a college town. I did some googling and could not find any advertising for property management in my area.

Would it be a potentially good income?
Would it be a way to possibly learn the ins and outs?
Maybe even find owners who want out?

Thanks Jon, you've been quick to get me good answers on a few questions now. I value your experience.

I agree my question was "where can I find good deals?" Though I have done enough reading and audiobook listening to have an idea of the different options out there, I was confirming that I wasn't missing anything. But i think you nailed it.

If positive cash flow is the desire, will it basically be a matter of hunting until the right place comes along? Basically keep hunting and running numbers until something adds up right.

I'm only a couple weeks into researching real estate. Well, I actually own a home and rent it, but that is besides the point. I'm just trying recover an unwise past investment. Hopefully my current refinancing goes through and I won't be paying the difference anymore. (Renting to good friends though, and I still have use of the premesis and my 1k sqft shop.)

Anyway, I got started listing to Rich Dad Poor Dad, and other things they do. I am almost done with 16 hours of Bob Allen lectures. I've heard good and bad about both, but what's important is that I got inspired by these audiobooks and now I am doing my down to earth research.

It seems like both Bob and Bob (Kiyosaki and Allen) quoted that if the yearly gross rent was 10% of the purchase price, it was a good deal. At one point someone even mentioned monthly being 1%. Now, on here I am seeing 2% for monthly, and then 50% (40-50) being the expenses. That is obviously a different picture than what they paint. Which I'm sure, sadly, a few people on here probably learned the hard way.

So, if we use those realistic numbers, you really need to have a good LTV ratio if you want positive cashflow. And that is what I currently think I want.

So what options does that leave you with? I guess the main purpose of this post was to figure out what I would need to be looking for if I wanted positive cash flow. Preforeclosures? Maybe REOs. Maybe get lucky with a FSBO. If there are any other avenues for acquiring properties with a LTV I could profit off of, please let me know.

Big bonus is that I can get those things readily off the internet and listen while at work...

Thanks for all the replies guys. I've just started scratching the surface of researching. I've listened to audiobooks from everyone from Rich Dad stuff to Robert Allen. The more I hear from different people the better. I'm happy I found the forum because I feel now I am getting some down to earth advice. Not just sugar coated theories.

I think my town has a lot of potential. Higher rents, but also higher housing costs. I'll keep reading and researching. Maybe I'll be able to get into a foreclosure or something...