All Forum Posts by: Jay Neaves

Thanks everyone.

Will Barnard - I guess learning the science behind it is what I'm hoping to do, but I am really struggle to find sold comps in the first place for some properties particularly within a 3 month, half mile criteria.

Michael Quarles - thank you! I wondered if perhaps I was just looking in the wrong places. Access to the MLS would definitely make life easier for me to start working these deals through!

I'm new to the RE business but one thing I've found is I'm having difficulty finding reliable comps.

Where do you run your comps? Are Zillow and Trulia worth bothering with?
What criteria do you use? Distance, when it was sold etc?

My problem seems to be I can't find true comps. Lets say I am looking at a 3 bed 1 bath, I might find 4 sold in the last year, and 2 of them will be 2 bed or 4 bed or they're over a mile away. I don't think they're really reliable enough to do the math.

Any advice would be great!
TIA

Personally, I'm with Rick Kartchner and Arthur Garcia, sinking $300k into one deal is hugely risky - it's an issue of vacancy. In my market, bigger, higher rent properties don't rent as quickly (long vacancy) and don't tend to attract long term tenants. People who can afford rents of $1700 - $1800 often have the means to buy and so they're often renting short term.

Live where you want to live, buy where the numbers make sense.

If you're willing to buy outside of your area and can put a solid team in, there are some hot markets where $300K could go a long way. If not, I would diversify and buy the 3 rentals, so if you do have vacancy to worry about, it's not all your money.

I'm actually considering buying a trailer as my first deal and selling a lovely manufactured home!

I think it's a personal choice but you have to take on board the pros and cons of each. Out of state is more of a challenge and you need to have a strong team on the ground in the area. Finding the right team you can rely on and trust is the issue. That said, I've heard it said many times that you invest where the numbers stake up. That might not be in your local area.

To be honest, I haven't looked too far into it at this point because I wanted to see if consensus of opinion was that it's too much for a newbie to get into. So I'd need to look deep before I leap and I can't give answers to some of the points you guys have raised right now.

What I do know is that it needs work and that the reason it's at 100% occupancy is the rent is stupidly low. My guess on the minimal diligence I've done, is that it's run down and the guy is keeping rents low to keep occupancy up. My plan would be to rehab the apartments to a decent standard off the bat and then do a big overhaul on them over time.

I think it's probably too bigger steak for my appetite off the bat, but it's definitely an interesting prospect. I know that most apartments in that area are $300 a month more than this guy is charging right now.

These are the details I have...

SP. $269,000 (probably get it for 250k)
9 Units 4 x 1 bed and 5 x 2 bed
100% occupancy (maintained for 12 months)
Scheduled Gross Income 62,100
Effective Gross Income 55,027

The question I have is whether or not a 9 unit building is a bright idea for someone new to the game. I don't want to delve too deeply into the thing if it's not a wise move for someone completely new to the game to take on an apartment building.

First of all, welcome to BP.

I want to say that I am not an expert...I'm a newbie too so my "advice" may not be spot on, but here is my take on it from a very basic standpoint.

If $4700 is the total rental income and $4200 is straight back out, you could end up in trouble with this deal. You have to factor in vacancy, repairs, etc. so on a really basic level the numbers don't make sense.

Thanks a bunch Tom A., I've been checking in with the websites for a couple of these and I'm looking forward to engaging fully when we move. I'm looking forward to getting involved in the Michigan REI community and possibly putting some ideas and deals together.

Tom A.

Thank you so much for taking the time to reply so comprehensively. Please don't apologize for a long reply that's exactly what I need at this stage so I can learn where I'm going wrong! I knew there had to be something I was missing on this one because I've been watching it for a while (because I actually quite like it for my wife and I to live in) and I couldn't see where the "problem" was.

The lesson I've learned is that I need to be better at identifying better comps, but that's something I'll be able to do better once I'm back in MI and to be honest I didn't work as hard on finding the comps as I would have if I was going to be getting into the house!

Given your reply I guess there may still be some money in the deal (unless as you mentioned inspection shows something) but probably not much and because it's not a good prospect to flip and I don't see it being a strong rental area. Not a great investment opportunity but a good learning tool for me!

Again, that's a lot Tom for giving some insight on this one!