All Forum Posts by: Jay Dewberry

Hi Adam. Welcome to BP and congrats on the condo. I would love to have problems like a 200k+ appreciation and figuring out what to do with it. It sounds as though your leaning towards keeping your property in order to take advantage of the rental income. Like you've stated, the market has rebounded above that of the the 2008 housing market crash, which is an understandable concern. That being considered, I can definitely understand your hold position and would lean that way also. 

Have you considered a third option? Since you have the incredible market appreciation on the condo, would it be feasible to do a 1031 Exchange? This way you take advantage of that appreciation, and avoid the Capital Gains tax that would incur in selling. Doing so, perhaps you can obtain a larger property, perhaps a multi-family, that performs better with cashflow. That way you'll still have a buy/hold unit(s), still take advantage of the appreciation, still have passive income to go towards that SFH in the burbs, and perhaps NOT get caught in another housing bubble crash thus reversing that great appreciation. Just my two cents...either way good luck.

I've got to admit, this was a pretty enlightening video. thanks for sharing.

Hi Jose. I can understand from your post that this can be a frustrating incident.

Make sure to be careful of your language when speaking with an insurance adjuster. I say that because if you call something a flood, vs calling it water damage, those words can cost you a claim. Unfortunately, when it comes to the type of policy you have, wording can be the difference between being mostly covered for loss…or being denied for your entire claim. Example: I walked a property that had a roof leak that caused extensive damage. Because of the coverage listed on the Declaration Page, if the water hit the ground and came into the house…it wasn’t covered. But if the water hit the house itself and came it…it was. Go figure. But the language is very important when dealing with these companies. Many hire Public Adjusters or Attorneys to counter the deception…but warning, it could take many months to deliberate. Gauge your level of concern.

Also, when it comes to the door that floods every time it rains…again…be careful of wording to your adjuster. If you say…ahhh…that floods every time it rains, the adjuster can deduct for something called Deferred Maintenance. Believe it or not, you have an obligation to minimize current damage. Failure to do so, can, and many times, will, cost you.

Now…on to the primary question: Should you keep the property or sell? The short answer is…it depends. We need more numbers…especially for an older unit as you have. Submit as many figures as you have and perhaps the BP Family can have a go at it. Just thoughts…good luck sir.

Hi Yoni. I would have to agree with Jerad on this one. CapEx seems a little on the low side for 20 SFH's. Even though they are relatively modern homes, having a better cushion would prevent you from dipping into your cash-flow for any big ticket items in the future. Also, does the Total Cost for Project of $1,250,000 include rehab or is that just for acquisition? I didn't see the figures for this. Another question would be have you had a chance to pull the actual taxes on each property. I ask as the properties in Atlanta have County and City taxes, and depending on the area, they can add up to be pretty steep. Lastly, have you contacted some property managers, to get some rates? You may find that that number may go up as well. Just my initial thoughts good luck.

Hi Breon. Welcome to BP.

From what I’ve read, I don’t think a lender will disqualify you because you have six months’ rental investment history. On the contrary, I think it can be a plus, which shows you have some sort of investment history. I would DEFINITELY be on the lookout for deferred maintenance and other issues with a self-managed properties with no rent increases. It’s not that the owner has performed a bad job, it’s just that professional property managers tend to manage properties more efficiently. This can be the difference between a property operating at a loss or a gain. Also, can the water be “legally” individually metered? This can help in the long run. As far as a commercial loan, you may be able to obtain a commercial loan at…let’s say…6% for 25 years, which wouldn’t be too bad. If possible, please provide more numbers so we can, more effectively, analyze your deal. Just thoughts…Good luck sir. I hope it works out for you...and try to negotiate a lower purchase price as well. 

Hi Adam. Welcome to BP. From what I can ascertain, even as a fix/flip, a rental, or a wholesale, I think with the right numbers, you may have a deal. I analyzed this as a rental with 20% down and $25k in rehab, which yielded a 13% CoC ROI and a $373 Monthly Cashflow. Depending on the rehab costs, you may have a decent investment. I would love to have more info on the property…ie..taxes, Sales Comps, a more focused Rehab cost analysis, ect. to hone in better on the figures, but it looks promising.Good luck and keep us posted.

Hi @Lou Ruggieri. I have to agree with @Patrick Liska. I'm confused at your numbers as I'm coming up with 14,400/mo in income. which puts it at $172,800 per annual. If your total expenses are $24,273 per year, that leaves you with a NOI of $147,527 per year, which is fantastic! Even if the asking price is $685k, this is still a pretty great deal (IMHO). Have I misconstrued the figures you've provided? If not, run...don't walk..to this deal. Looks very promising!

Hi Autumn. Welcome to BP.

In my opinion, the only way to make this work as a fix/flip is to:

• A)Cut down on the 6-month rehab/holding costs
• B)Take a steep cut on your profit (down to $5k+)
• C)Prep unit as a rental…(what are market rents??)
• D)Take a steep cut to profit and wholesale the unit.

Either way, make sure the rehab budget is correct (consult some GC’s), because it can make or break your deal. Just some initial thoughts…good luck.

Hi Korey. Welcome to BP. I'm not very familiar with the Nashville market, but I do know numbers. If the numbers work for your particular market...invest! But it is all about the numbers and your particular investment goals. Some invest in SFH, some MFH, some invest in condos/townhomes, some land, and some mobile homes. There are many niches out the, but the common thing amongst all are THE NUMBERS. Does it make you money in the end? Perhaps speak with an investor friendly Realtor to see how the market is up there. Attend some REIA meetups in/near Nashville to network with other investors about the market. Speak to property management companies, or General Contractors, or wholesalers, ect to get a vibe on market trends. Just thoughts…hope your endeavors are a success. Keep us posted.

Unfortunately @Kat Wyninger, I just don't see a viable counter offer. Even if you counter with...let's say...a higher Purchase Price of $55000 at 5%, with a down payment of $5k, over 35 years, you're still not cash-flowing with rents at $350-$500. In my humble opinion, it just doesn't seem like a viable investment as a rental. Perhaps a fix/flip is better?? What is the ARV? Sales Comps in the area? Maybe wholesaling it would work? Just my thoughts.