All Forum Posts by: Greg E.

Just noticed the age of this post. Hope you didn't buy it. lol

Sioux City is a dying dump. Never buy anything there. I've often wondered how often out of state investors get suckered into buying stuff there. The numbers look good on paper, but the reality is a nightmare. The illegal immigrants working at the slaughter houses along with bad local policy have turned the city into a cesspool full of ghettos and crime. I wouldn't bet a dollar on the future of that town and given how much commercial property and multifamily at high cap rates is always for sale there I would say most the locals agree with me. 

cash flow does not equal rents - PITI. Your missing vacancy,capex,maintenance and management cost.

 The Platinum Card was just recently raised from 450 to 550 this year. 

Best cash back card out there if your spending over 12k a year

http://www.alliantcreditunion.org/bank/visa-signat...

I spend right around 6 figures annually in the operation of my business and I love it. High CL (I got 15k right off the bat),Cash back rewards are amazing. I don't understand how they can even offer so much cash back. Typically CC companies only charge 2.3% in my experience with square and the likes. Best of all is they offer dirt low interest rates to go with it all. Like you I pay mine off every month,but it's a nice perk!

Along with the card you will automatically get a high yield savings account (about 1.11% right now). Great place to put emergency savings you need liquid and 100% guaranteed safe while still mitigating against inflation's erosive effects.

I can't see ever using a different Credit Card again.

10% management fees are standard on SFH. Then I add another 5% for 2 reasons

1.Property managers are not going to shop for the best price on work done and sometimes they even get kick backs for directing work to certain companies.

2.They typically charge 1/2 to 1 full months rent to place a tenant. This needs to be accounted for. 

Leaving management costs out of your calculations is not prudent IMO. Time is an extremely valuable resource. You must include property management costs for 2 reasons.

1.We all have some way we generate income that pays us for our time and talents. We have real opportunity costs when we devote time to the management of our investments. To subsidize an investment with valuable time is unacceptable and will prove an impossible model to maintain as you scale the size of your real estate portfolio. The investment must compensate one appropriately for their time or at least well enough to buy a competent managers time.

2.It comes down to working on your business vs in your business. If you have not factored management costs (either your time or someone else's) into the costs of running your business you are not going to reach financial freedom, but rather take a roundabout path to financial slavery. You won't be able to move away, You won't be able to take vacations and you will not reach financial freedom.

EX. A friend of mine owns 12 properties. He never factored the management costs into his analysis when he was buying them. He thought like you that he was going to manage the properties himself and the cost was irrelevant. He's in his 70's now and he has to do all the maintenance on these properties and deal with tenants because he can't afford to pay anyone to do it for him. He's sick of it, but he never factored in management costs so he has no choice.

Capex @ 10% assumes your starting with a new property. During your remodel you may not have touched the foundation or the roof. It's day will come and it will be a sad day if you can't afford it. When I analyze a property I judge life left in items and then I prorate it out of my purchase price.

By making the tenant responsible for repairs your just going to get poor work done that will likely cost more to fix later. When they move out they can easily leave far more damage than their deposit will provide for.

I admit I lean hard to the conservative side, but it's a fair bit easier to figure out what to do with too much money than to figure out how to survive with too little.

Are you sure any such units even exist in the area? I'm not too far away from you and I travel through your area as well as all over Nebraska and South Dakota very frequently. I rarely see built to Purpose multi-family in the smaller communities around here. I do see converted older Victorian homes repurposed into multi-family quite often. I'm not quite sure how I feel about those opportunities just yet. 

If you do know of units in the area the first thing I would do is look up their inspection history if your area requires registration and inspection for rentals. 

This is an example of what it looks like in my town. 

http://www.vermillion.us/vertical/Sites/%7B8BD61E4...

Reading the inspection reports you can find out who owns/manages the property and their current address or at least the business address. Out of state owners can be great leads especially if they are managing the property as well that can be a difficult situation many will welcome relief from. A large list of violations can give you an idea of the owners financial position and how willing they might be to sell. 

 I think your being overly optimistic to say the least. I would run my calculations as such. I tend to err on the conservative side though.

You beat me to it. Well said.

If you have a 91k loan on a 30 yr fixed loan @ 5% interest your going to be paying 500 per month in debt service. Follow the 50% rule and your going to be spending 650 per month on everything else. Your total costs on this property are now up to 1150. You rent it for 1300 and you cash flow 150 bucks a month. How do you get 400-500 a month in net cash flow on that deal?