All Forum Posts by: Jason Allen

Townhomes typically have an HOA, which can be pricey and eat cash flow. For future investments, I'd suggest a small multi-family that cash flows. A good rule of thumb for cash flow is the 1% rule. In case you're not familiar, that means each month's rent should equal 1% of the purchase price. For instance, a property you purchase for 200k should produce 2k a month in revenue. There are plenty of deals like this available in the Columbus, Ohio market.

Single family home is what I have in mind for the next purchase. I'd prefer something local just because it is easier to manage if it's closer.

Do you manage them yourself?

0 Votes

Raleigh, North Carolina

There is cash flow for days in Columbus, Ohio.

3 Votes

2 Votes

Raleigh, North Carolina

You need to build your core 4 in any market you decide to invest in. Your core 4 consist of a real estate agent(deal finder), property manager, contractor, and lender. Ideally, you'd find a real estate agent who has a property manager, contactor, and lender readily available already.

1 Vote

Los Angeles County, California

Quote from @Josh Ricord:

Quote from @Jason Allen:

You know your market better than us. If you think you can fill it with your estimated rents, go for it. You might want to start with a small single family (like a 3 bed 1 bath) and fill the other rooms with your friends.

Preliminary advice - run the numbers, if it makes sense jump into it, but don't be afraid to shop.

You should use your real estate license for the down payment. I believe FHA allows 3.5% down? You automatically have 3 percent down as a commission.

@Jason Allen

Thanks for reaching out sir! I am currently shooting for a 3 Bed, 2 Bath with good bones and some leeway to transform it cosmetically/update. I will definitely be placing heightened emphasis on running my numbers accurately and realistically. Also, good point on the commission I didn't think of that! If possible, sourcing and working the deal myself may eliminate some of those hard cash requirements on the front end. Thanks again for stopping by and dropping some nuggets of knowledge!

You got it! Bets of luck!

1 Vote

You should use your real estate license for the down payment. I believe FHA allows 3.5% down? You automatically have 3 percent down as a commission.

1 Vote

Quote from @Rob Titus:

@Deborah Pyburn @Jason Allen Oh ok gotcha! So, essentially I can have contractors do work for me on my flips without them being involved with my single member LLC?

Correct.

1 Vote

You can pay them out of your LLC account. A contractor should be 1099. Typically, an employee is w-2.

4 Votes

Quote from @Mike K.:

Quote from @Jason Allen:

Quote from @Mike K.:

Quote from @Jason Allen:

Quote from @Mike K.:

Quote from @Jason Allen:

Sounds like a legit plan. From what I can tell, it looks like most of the properties go for about 70% of market value at auction. Ideally, you'd want to be all in at 70% ARV(including repairs).

Been looking at a few of the properties listed on the Sheriff's Sale Auction List. Seems like the market value they are using might be low based on the minimum bids listed.

I was looking at a property with a min bid of $35,000. Looking at the comps the property is worth about $100K in decent condition. Not sure how they got to the min bid.

I'm guessing the appraisers for the auction have some sort idea on the condition of the property? Zillow is not always the best indicator of market value.

I suspect they may be purposely setting the appraised value low to make sure there is enough of a discount so they sell at the auction. A lot of risk buying a property without inspecting the interior. By the way, I'm an appraiser. I'm not using the Z-Value.

I'll find out more about how the appraisals are done for the sheriff's auctions. It is also possible to purchase the properties before or after the auction up until the court confirms the foreclosure. This is the property owner's right of redemption, and it typically last no more than 90 days.

Jason, how do find the pre-foreclosure properties? Seems like with the high home prices and higher interest rates right not that finding a property at a discount to market value may be THE KEY to RE Investing. I think I'm gonna try the sheriff's auctions. As an appraiser I can get a more accurate market value than the Z-Estimate and I'm comfortable researching County Records. Does the lender get the homeowner out of the house before it goes to auction typically?

No, the lender does not get the homeowner out. You typically don't even get the keys to the property, just title.

0 Votes

Columbus, Ohio

Quote from @Nicholas L.:

@Jason Allen

that's just PITI though... what about everything else?

I would grant that self managing can be a huge advantage... but OOS investors can't self manage. so your example doesn't cash flow. $4K rent minus $400 for management = $3600. Repairs, vacancy, capex any shared utilities, groundskeeping, PITI, etc. = $0 cash flow.

and again. I'm not saying it's not a great deal. It's probably a great deal! It's just not cash flowing unless you self manage.

Thanks for telling me about my market! I have a rental 3 blocks away, but you obviously know so much more than me! Can I pay you for legal advice? Or a consulting fee?

0 Votes

All Forum Posts by: Jason Allen

Jason Allen has started 3 posts and replied 189 times.

Post: After the fact - New Investment

Post: Cash Flowing Rental Properties

Post: After the fact - New Investment

Post: Is it all about the money?

Post: First Post College Investment- FHA 203K House Hack

Post: First Post College Investment- FHA 203K House Hack

Post: Beginner LLC question

Post: Beginner LLC question

Post: BRRRR using Sheriff Sale purchases and HELOC

Post: If you had $300k liquid how would you start RIGHT NOW?