All Forum Posts by: Jason G.

Originally posted by @Anthony Jasmine:

I've been teaching myself on how to analyze properties a lot this last week, and I'm learning a lot. I've discovered that zillow has an amazing amount of resources to check data that allows you to make educated decisions on potential ROI. I was recently looking at homeunion.com, and I noticed that their pro-forma's are very hiked up. The first thing that I noticed was their 1 year forecast of appreciation is drastically higher than all other sources. Here's an example. The excel sheet shows zillows 1-year forecast made on 4/30 based on a ton of data, and here's home union. Same location and zip code. 8.31% to -1.1%

____

There seems to massive discrepancies, and I understand that they are going to make the pro-forma seem very optimistic, but it lowers my trust. I need to trust a company I'm going to invest my money into, and this unrealistic pro-forma makes me think that the rebab cost estimates are going to be much higher as well which is extremely worrisome given that I'm investing out of state. Any thoughts? 

Both are real companies, but always run your own numbers.

Personally I would keep saving money.

You aren't competing with long time investors or large investment groups. Drop that thought now. Secondly, this isn't a get rich quick scheme. REI takes decades, not years. Save money, buy, repeat. By the time you hit normal retirement age you will have a nice passive income stream. The faster you can accumulate money to spend on REI, the faster you can expand, and maybe retire. For many that means advancing in their day job, others it means taking on partners that have capital, to you it may mean something else.

Better Mortgage.  I believe that if you connect to them through BiggerPockets there is a 1k credit they apply.  Should be under member perks or some other similar section here on the site.  Be aware though that even though mortgage rates are very low now, they are likely going to be higher for investment properties vs owner occupied.  All my properties are between 4-5%.

I look at properties online every few days.  We were originally concerned with the duplex tenants after purchase because we wanted them to sign an updated lease simply reflecting that the lease was between us and them now vs the prior owner and the property management company was having such difficulty having that done from them.  But after that was completed they have been fine and I think our next purchase will probably be a multifamily.  And yes, our investment strategy became more refined based upon evaluating choices we've made with our current purchases. We spend practically no time on our current properties.  Our PM contacts us if a maintenance request order has been made by a tenant or if a periodic inspection was completed, but otherwise they are pretty much passive investments. 

Yes.  There are quite a few threads on Roofstock.  Do a search in the Bigger Pockets search bar.

The particular PM we used had a discount through using Roofstock and the discount was below Roofstock's estimated calculation. Because of the discount there wasn't an additional one given for more properties managed. If you create an LLC you will need a commercial loan and insurance vs buying in your own name and getting a lower rate conventional loan, insurance, and an umbrella. Some people transfer a property to an LLC after purchasing in their own name and getting a conventional mortgage, but that can trigger a due on sale clause and depending on how the LLC is run may or may not provide the protection needed. There are lots of threads on umbrella vs LLC that provide a lot of valuable insight.

Below are the raw number breakdowns for each of our five Georgia properties for 2019.

In total we grossed $72,865.78.

Specific property expenses totaled: $55,550.11

However, we also have a $2m umbrella policy which cost $1,182 annually and we utilized a HELOC for some of the purchases whose annual interest totaled $5,548.28. Factoring those costs in, since they are directly related to the investment portfolio, total expenses for the portfolio totaled: $62,280.39

In the end our net income was: $10,585.39

When looking at these numbers please note that I prepared this in the course of my preparations for my taxes and did not include principal paydown on any of the mortgages as an expense. But for purposes of full transparency and to allow you guys to calculate things out using whatever numbers you wish, the principal payments across all five properties were $1,069.41 (Lithonia) + $1,583.06 (Villa Rica) + $1,890.83 (Canton) + $2,175.15 (Dacula) $1,228.40 (Conyers) for a total of: $7,946.85.

So our total actual cash flow for the year was $2,638.54 or $219.88 a month. That comes out to around $43.98 per property per month. So ultimately, not an impressive year for cash flow. We had some maintenance and repairs that really ate into it.

The way we look at these properties is like having a pension plan for when we retire. We are in our late thirties right now. These are all long term buy and hold investments that will probably remain with us until we move on from this world, so once they are paid off we can really appreciate the cash flow and as we get close to retirement we may sell one or more to pay off the others. Hopefully they will continue to appreciate and we will be able to continue to steadily raise rents over time. Right now our goal is to pay off our primary residence and the HELOC, which should only take another few years but we've put picking up more properties on hold for the time being until that is done. The wife is currently between jobs and that made us realize the importance of not being over leveraged and having the primary residence mortgage and HELOC paid off would give us a lot of peace of mind.

Feel free to ask any questions you like. I will continue to respond on this thread and chronicle my real estate investing journey and around this time each year will continue to post our results.

Lithonia, GA SFH: Purchased in July 2017 for $81,000

Rent: $11,172.23
Property Management: $1,003.06
Maintenance & Repairs: $3,928.00
Interest: $2,986.95
Taxes: $2,060.42
Insurance: $689.52
Net: $504.28

Villa Rica, GA SFH: Purchased in October 2017 for $119,300

Rent: $12,023.55
Property Management: $1,455.38
Maintenance & Repairs: $2,300.00
Utilities: $520.10
Interest: $4,305.22
Taxes: $1,138.07
Insurance: $686.40
Net: $1,618.38

Canton, GA SFH: Purchased in October 2017 for $145,500

Rent: $15,600.00
Property Management: $1,846.00
Maintenance & Repairs: $0.00
Interest: $5,395.57
Taxes: $2,248.19
Insurance: $818.48
HOA: $1,350.00
Net: $3,941.76

Dacula, GA SFH: Purchased in April 2018 for $179,000

Rent: $16,920.00
Property Management: $1,501.70
Maintenance & Repairs: $175.00
Interest: $7,049.61
Taxes: $2,823.61
Insurance: $1,009.84
Net: $4,360.24

Conyers, GA Duplex: Purchased in December 2018 for $127,000

Rent: $17,150.00
Property Management: $1,802.50
Maintenance & Repairs: $835.00
Utilities: $42.63
Interest: $4,557.27
Taxes: $1,870.31
Insurance: $1,151.28
Net: $6,891.01

If you enter an emerging market at the right time you can benefit from a lower purchase price and then as time goes on to increased appreciation AND rent, where some markets see little appreciation or rental increases year after year. How you move forward should depend on what your long term goals are, strategy, and comfort level.  Just because another investor or company is doing it one way doesn't mean you have to adopt their position.  

I'm very happy with the properties.  Last year around this time on this thread I posted the numbers for each property owned for at least a full year.  As I prepare my documents for taxes I will do the same and do a side by side with the 2018 numbers so everyone can see for themselves the results, just laying out the numbers without any opinion mixed in.  So that should be up here probably sometime in February.