All Forum Posts by: Jeffrey Holst

I agree Hixson, and red bank are great I also like East ridge and the highway 58 corridor heading toward Harrison but not all the way to it.

I respectfully disagree on Chattanooga first there are still plenty of deals to be had and second there are some solid property managers in town that can handle out of state investors.  If you buy a bunch of properties then yes a local partner makes good sense.  

Regarding schools like all towns this size some are good and some are bad. 

Welcome.  I love Chattanooga.  I have bought 4 duplexes and a 12 unit locally in the last 12 months the market has a bunch if opportunities.  I started investing in and around Detroit  been living here since 2010 and only recently began serious investing locally.

I could be up for coffee always great to meet people investing locally.  

@Alex Hogle @Shane Thompson  Buy something that cash flows well put 20-30% down and let it run itself.  I know that sounds too easy to be a real answer but with 50k give or take you buy a 150K property thats basically turnkey.  Just look at a lot of deals,dont rush it and when you find something you like throw the deal up on BP and ask people what they think.  In the mean time hold the cash and try to meet as many people as you can that are doing the investing type that you want to do. 

This is more about what you can convince your investor to value your time at.  You should cut the best deal you can.  Its a sales job.  I go to investors and tell them what I am offering on a particular deal and because I have done that before I probably get a better deal than other people such as yourself who is just starting out.  50/50 would be great but I think it might be hard to find someone who would agree to give up that much unless you have already locked up a great deal that is sure to give then a great return.

Sorry I cant be more specific but this question is hard to answer with out knowing the deal and your relationship with your potential partner. I think you need to push for as much as you can but you also need to propose loose terms and be ready to negotiate.  It might be that you need a lower % but get paid some hourly rate for your time, or it might be that you get a higher % and pay some preferred interest to the investor.  

I have done deals where it was 50/50, 2/3,1/3,1/3,2/3 and also deals where the investor got 8% on his/her money and i got 75% or more of the profits after the preferred rate was paid but in all cases I tried to get as much as I could while still offering the money person a deal that gave them a really good return.  

Be flexible and creative and most importantly find a great deal so there's lots of money to split up

Hey @Ray Realdine see its your first post,  welcome aboard.  Ill take a crack at answering for you.

A couple things to consider, as a general rule on a flip you want to try to hit 70% of the after repaired value when you add price and rehab so in this case if we assume its worth 135K the most a flipper would pay would be 135,000*.7=94500 minus any repair costs which in this case is 12K so a flipper would only pay 94500-12000=$82,500 for the property which is less than the 92K you are looking at.  Now this doesn't mean its a bad deal but it does mean that you wont be able to easily flip out of the property for a big profit and on a first deal having a back plan is important.  It does however appear that you would have some equity built in since you are putting 20% down about 18K and also I assume paying to fix it up which means you would owe 74K on a 135K house when its all said and done which is pretty sweet for a first deal.

All that being said lets look at the rental info (again I am assuming your numbers are correct-so make sure they are before buying it)

Rent = 1400*12= $16800/yr

Expenses

So for expenses what I do is assume 10% vacancy and 8% management fees you may manage it yourself and save that but you should plan on it in case at some point you dont want to manage it any longer plus you need to get paid for your time.  18% of 16800 is $3024 per year, typically I assume 5 to 10% for maintenance but since you are budgeting renovations I think the 5% is probably good which is another$840/year so that leave us with this

Expenses = $3024+840+$3000 (taxes) + $1200 (insurance)= $8064/year

Which leaves you with $8736 with which to pay your mortgage ($728/month) assuming you have a 30 year amortization schedule at 5% your payment would be just under $400 per month leaving you about $328 cashflow per month 

For a total return of $328*12= $3936 per year on an investment of 18K (down payment)+12K (reno) = 30K

3936/30,000= a very healthy 13.12% cash on cash return and you will also be paying it down over time so I would say if you like the area and are comfortable with the numbers go for it its a pretty solid deal!

Good luck and let me know how it goes.

Welcome,  @Luis Vasquez best is pretty subjective.  We use Appfolio and like it, it does what we need it to do. 

Just checking in,  Hope all of you are keeping to your new goals.  I am just finishing up episode 32 on the podcast and I went to look at a property for my Roth today.