All Forum Posts by: Greg Moss

@Ronny Tiburcio

One thing you have to do in order to run accurate numbers is to find Fair market rent in the area for the other tenant and then add in a fair vacancy factor (5-8%). You cant run rental numbers on the fact of no rental income because then no one would buy a rental property ever.If you are worried about finding a tenant you can always increase your vacancy % or lower rent to under FMV, and if you are still worried about not getting a tenant in Brooklyn at under Fair market value then it is probably not a good idea to invest in this house. Find the fair rent then take into consideration everything you have plus Maintenance and capex usually 5% each of the total month rent. This should give you a more accurate number if it is worth buying or not to fit into your budget.

Greg 

@Kevin Myhre Looking forward to joining the group!

@Shane Humes

I would not say that Cash down kills CASH/CASH returns, but makes it all relative to the market you are buying in. For instance if you are looking at homes in memphis TN or in Birmingham AL or Cleveland OH and you are paying 50-70k for a home then investors are going to be looking for 20-25% C/C returns, due to higher risks which i wont get into here. If you are investing in areas where homes are going for 150-200k Investors might be looking for a 8-14% Return. On a 200k property with cash down of 55k (50 down payment and 5k closing if you cashflow 500 a month your looking at 10.9% returns. In nicer areas you cant expect super high cash on cash with conventional mortgages especially with 25% down on rental properties. But to put 55k down and cash flow at 500 a month and building equity in a home year over year is pretty good returns.

Now those are all basic numbers on a buy and hold, your intentions and time frame might be different but that is just same Raw info on it. you may be looking to flip or get those 25% cash on cash that all depends on the individual investor !

Happy to answer any other questions

Greg 

@Zach Bagby

I am not a CPA so I would speak to an accountant on actual numbers but you will be able to deduct the interest on your mortgage up to 1 million on a mortgage (if married, 500,000 if filing separately). Also should be able to deduct some of the property taxes. I would run this by your accountant on the two properties and he should be able to tell you a rough estimate on how much deductions you would get annually on the two different properties. That will tell you if it is a big difference and can help you decide which property might be better 

Greg 

@Zach Bagby

To answer your question on tax deductions, yes owning more home would give you a higher deduction, you are allowed up to 1 million dollar home for bigger deductions after that it is all the same, so a 750,000 versus a 350,000 would give you higher deductions on your taxes.

Drew,

I would definitely increase the maintenance and cap ex both to 10% for another 55 each a month, still will have cash flow of 271 a month and is still great cash on cash return 

Greg

Blake,

All depends on what your motivation is with this property. From a strict buy and hold for passive rental income i think it is a pass strictly based off these numbers:

your rental income is 1850

Your listed expenses are 888

if you finance this for around 148-150K mortgage going to be paying around 800 a month

thats 1,688 leaving you with 162/m cash flow without a property manager(assuming you do the work yourself)

**Maybe look to move the utilities onto the renters to increase margins **

CASH on Cash is about 4.8% to manage this yourself are razor thin numbers. 

With 40,000 down assuming 35k and 5k closing thats a good amount of money to be hoping for less then 2k a year in passive income (assuming rental market stays the same and does not increase to the 2350/month)

this changes on financing and your idea with the property, just my opinion

Greg 

Filipe,

Makes perfect sense, but the only reason why I was agreeing on keeping the W2 job is that you mentioned a goal of 1 million of RE by 30, and I was just saying that compounding your cashflow now while you're young in terms of passive rental income on top of your W2 income is huge. If you have 40-50K In gross passive rental income on top of your W2 income you would be able to get to that next property quicker in terms of any financing.

But everyone is different and being financially free at your age and not having to work a 9-5 on an income that works for you is all that matters!

I look forward to my passive income growing in 2018

Greg 

Filipe,

Thats awesome how early on you were able to get a few properties under your belt. I am currently looking for my first one now. I understand the motivation to get rid of your W2 job to have the freedom to do what you love. I would also recommend trying to hold on to one for the next 3-5 years. This will only increase your cash flow and speed up the process of being able to buy more properties. 

I am looking to close on my first multi-family before the end of the year 

Keep up the good work

Greg