Originally posted by @Heshel Mangel:
Originally posted by @Jason G.:
We closed on our first duplex last week. The duplex was through Roofstock and located in Conyers, GA. So this makes our fifth Atlanta Market rental and fourth through Roofstock. The process went extremely smooth, but because we've done it several times already there are no surprises. The lender we've been using for this and the last GA property has been a pleasure to work with and they are very investor friendly with no odd overlays. We purchased for 127k w/ 25% down and the total rents are $1,400.
We had our first tenant leave, a couple of months early, but a new tenant is moving in so we only lost two months total in rent. The turnover required new carpeting and painting as well as a few other items. In total it came out to approximately 6k which really killed the numbers for the year. On a second property the tenant gave notice to non-renew, so hopefully we can fill that vacancy soon, though having a vacancy in winter isn't ideal.
Currently we have six conventional mortgage slots taken, so we are hoping to add a new property each year for the next four years and then our primary should be paid off giving us another slot. Looking at options after that it seems that the safest course of action would be just to pay one property off and buy another and keep repeating. Our goal is to have net annual cash flow of between 200-300k by the time we are 50, which gives us fourteen years to make this happen.
Congratulations!
I am amazed that you found a property on Roofstock that's rents for more than 1% purchase price.
Did the numbers you spent during vacancy fall in line with what Roofstock estimated you'd need to spend based on their inspections and underwriting process?
Do you have any desire to scale faster than what conventional mortgages will allow? Do your rates get worse with each loan?
In general, how accurate have you found Roofstock numbers to be now that you can compare with actual costs.
I've found Roofstock's numbers aren't always accurate, but they are using assumptions that they've come up with to analyze the properties. An investor always needs to do their own calculations. The rates have gone up with each loan. I don't want to get caught with my pants down, so I do not want to scale faster. There is another post right now on BP titled "25 units at 24 years old - What I've learned" where an investor has 25 units leveraged with 10 year commercial loans with 2,500 in reserves for each unit and some units cash flow at $50. I do not want to be in that situation. That sounds all wonderful, hey look at me, I have 25 units and then the market takes a down turn and guess, what, hey look at me, I have zero units. I'd rather deal with 30 year loans with no balloon payments and lower interest rates and then if I pay one property off, sure dead equity, but expenses drop significantly and cash flow shoots up significantly and as more and more units get paid off I will likely be able to ride out a horrible storm if one hits. My girlfriend and I have pretty good paying 9-5 jobs, so even though this whole concept of paying one off and buying one seems daunting, it actually isn't that bad. Once our primary is paid off in a few years we should be able to set aside between 85-100k a year solely from our 9-5 jobs just for either future purchases or pay downs, all the while rolling over the cash flow from the properties into more purchases. So things should move pretty quickly after a certain point from snowballing.
