All Forum Posts by: Jaysen Medhurst

Pay the lawyer! If this deal can't withstand and extra $800 to make sure you're okay legally, it's no deal.

I'm assuming you've done the title search, etc. already?

@Brandon Beverly, check out Chris' post on hand-writing letters. He got a call from the sheriff, but also responses on 8 out of 12!

Hey Brandon, good to see some well allocated numbers on your part--really thinking it through.

I'm going to come at your question from a different angle: Is direct mail the best use of your money?

Probably not at this point. Reason being direct mail takes time to pay off. Months, sometimes years. $1500, $2000, $3000 every month. They can be great lead generators, but not instant ones. You'll do 1 mailing and then be out of money.

Making an assumption here, but I would guess you probably can spare more time than cash right now. Why not spend more of that time driving for dollars, honing in on the neighborhoods that fit your investment profile, and finding specific properties? Knock on the neighbor's doors and see what's up.

Then head over to city hall and pull the records. A list of 20 potential properties might show 10 with good equity and out-of-state or long-term owners. Then contact those 10 owners. Try hand-written letters (there's only 10). That will set you apart from everyone sending yellow letters.

Very low cost, but obviously takes time/effort. The learning will be invaluable.

Remember, most of the lists you buy are all public information. There's nothing "secret" in there. You're paying for the companies to search, collate, and organize the info.

Good luck! Oh, and 1 other thing: no need to set up your LLC right away, wait until you're actually circling some properties.

See what I'm saying about cash flow, Jon? If you refi you'll be at about:

$2300 (Mortgage) + $278 (Insur./HOA/Taxes)

    = $2578; you'd be losing $400/month at current rent

Could you raise the rent 20% just to break even? Is it worth it?

I'm not an expert on HELOCs or 1031s. Not sure if you have to pay off the HELOC if you refi.

Obviously, check with an accountant/tax attorney. If you're reporting the income on your taxes as rental/investment income, I think you're good to do a 1031.

Jon,

I don't think property 1 will cash flow if you refinance the maximum 80%. You don't mention that current 1st mortgage payment or how much it was for originally, but you'll have a monthly payment of around $2.3k/month on the refi.

That leaves you with $137k after paying off the HELOC, which can definitely get you into another investment property somewhere (probably not San Jose), but if you're losing money each month on property 1...

Why not sell property 1 outright and reinvest in a multi-family? More bang for the buck. Use a 1031 exchange and you won't pay any capitol gains.

If you give us better numbers, I and others would be happy to help you think through your options.

Hi Calvin, 

Want to make sure I understand what you meant above. You're figuring 15% of the rent will go to expenses and the properties with CF $328 and $993 respectively? 

If so, these are both probably money losers. Rule of thumb is 50% of rent goes towards expenses before debt service. Put up more detailed numbers for each property. Forum users love crunching through the numbers.

More broadly, if your goal is buy-and-hold so you can transition into RE full time in 6 years, you should be looking for cash flow first. Appreciation is gravy. Right now you want to buy right, get income and then turn that around into more properties.

Are these in the SF area? I'm in NYC, these are real hard places to get cash flow right now.

Hey Andy, a few pics of your house or even a drawing of the floorplan would be really helpful.

1st question: is the common wall in-line (not perpendicular to) the roof ridge? If so, it's most likely load bearing. Doesn't mean you can open it up, but you'll need an engineer and good contractor to make sure it's done right.

Mark, you might have better luck posing your request in the Flipping and Rehab category.

Aron, I would never choose electric over gas, especially in the NE where we get such cold winters. The bills will be outrageous. In a 4/2! I can't even imagine. Especially now when NG is trending cheaper and electricity higher.

I think you'll have a much harder time renting the units, tenants know it will cost them a lot more money. You won't be able to get top dollar for the property, because it's less desirable and more expensive to the tenant in utilities.

Lastly, imagine this nightmare scenario: a storm knocks out the power in the middle of winter. The property has no heat (think they'll resign when the lease is up), which is terrible and now you need to worry that all your pipes are going to start freezing/bursting and flooding your newly renovated property. GAH!

Hi John, can't you just put in the lease that oil and all delivery costs are the responsibility of the tenant? Then you don't have to worry about it. I would recommend putting in the lease that they have to do a contract, which includes yearly cleaning/maintenance, with a local oil company.