All Forum Posts by: Jeffrey M.

@Matt Gilroy 

>> get on the buyers list for the local wholesalers

How does one do that? Is there an easy point of contact or do I need to start making individual contacts with wholesalers?

Thanks for the feedback everyone. Yeah, I should probably graduate from the MLS but I'm still a newbie and the wholesaler subject isn't something I fully grasp yet (at least how to find them) but working on it.

@Wayne, I was using ballpark numbers and I was using varying ranges for rental income which is why it probably seems confusing. All things being equal and if my rental estimate was correct it probably would have cash flowed in the positive but I didn't have confidence in that number and my estimate for rental income varied by +- 200 so that's why my numbers seem a little fuzzy above. I should have spelled that out in more detail but I didn't want to get into those weeds here. Suffice to say if I gave you print outs of all the calculators I ran which varied on rental income by +- 200 and the various selling prices, you'd see why I targeted the $185K number as "safe" top end. Heck if I could have gotten the top end of the rental income (i.e on the upper end such +$200 on the average rent in that area) I could have made $195K work but I didn't feel confident enough that I could and if it went the other way (e.g. -$100-200 under average) I was definitely losing money. Hope that helps.

Well, after going gang busters on BP podcasts, working the BP calculators, working thru and finally getting the financing worked out, finding a good property, making an offer then a counteroffer, we got outbid and the last counter was $5K above the owners original counter. That was not going to happen, it was too close to not cash flowing and maybe going into the negative. So consider this my open retrospective and any advice going forward I am very happy to entertain. I'll add some more detail below for perspective.

The SF home was in a good neighborhood which has rough patches but is basically improving. The owner did a decent job inside and was 95% ready to move in for rental purposes. We budgeted about $500 on a new bathroom door, some molding repair, some painting. We budgeted another $2K on a new fence and some sweat equity for landscaping.

Asking was $199K house was listed for >30 days, maybe 40 days at this point. My calculations were to make >$200 I had to get no higher than 185K so I offered $177,900 as the opening offer and asked for a single condition in the sale: please remove the hot tub.

Owner came back with 190, after thinking hard and talking with both the realtor and my wife we came back with a generous $186,900 offer and withdrew the hot request (I figured I could give it away). Another offer came in right around the same time and the seller came back with something like: "another offer came in but because your buyer is a strong buyer we will sell the home for $195K".

Did I just dodge an attempted bidding war tactic setup by the seller's realtor? 

My wife seems to think that I made a mistake. She's mentioned we made a mistake 2x and I told her I don't see what I could have done. In my mind I need to stick to the numbers and use the math. She says it was a perfect rental for us. I think we would have overpaid and it would have been a $50 month loser (or more at 195K).

I'm also wondering if I tipped my hand to the wrong person. I mentioned this on here but I can't see anyone REI minded making the deal work at 190-194K unless they're paying cash or has a <3.25% interest rate loan. My thoughts are that I lost to a homeowner that really wants to live there, which if so, I can't really feel bad about. I'd live three if I was 30 and single!

I'm also thinking about changing realtors. The one we're using is great but he/she is a good seller's realtor in my mind and wasn't really forthcoming in good ideas about the whole process, what a good rent might be (still a bit of a puzzle in my mind), etc. so I'm looking for a realtor that might be more BP minded and have experience with REI from my perspective and have good ideas and be willing to share them somewhat as a mentor.

Thanks for any advice. I plan to keep looking but the wind has definitely left the sails a little. Just trying to rally mentally on this setback.

Thank you Micheal, that was helpful!

>> Providing professional lawn service as a perk and adding it into the rental price.

Build it into the rent price and hype it, gotcha. Interesting idea!

I'm thinking of a drought resistant landscape using Spokane's "SpokaneScape" model. Drought resistant and low maintenance, hopefully, with a just a patch of lawn for the kiddos.

Hi folks, 

This topic of expected amenities came up last night's BP webinar as a question to consider for a REI. So, I just wanted to get a gauge for what people here think are "smart" amenities for a typical good SFR rental here in Spokane. It probably depends on neighborhood but let's just say we're talking South Hill Comstock or Perry or Audubon or Shadle (which seem to be all fairly nice areas). The goal is to have good people and long term renters.

So, wWould it be best to have a fridge included, as well as a washer and dryer? Or should (or is it typical here for) the tenant (to) provide their own appliances?

In addition for SFR is a sprinkler system a smart buy to protect lawn/landscaping investment or is that a luxury item and something prone to maintenance hassles and $? I know I am messing with my personal system annually.

Thanks for any input.

>> You could inquire about buying down to a lower rate to make it cash flow, but then you will be more out of pocket up front.

Yeah, I think that's sort of what I am doing: I talked to two local well known banks here and I can lay down 20% cash + 80% in "cash out refi" money (@ 3.8% IR) for a purchase price of ~$190K. When I cash flow that out the rental property calc with ~ 3.8% IR I can get a cash on cash return of 3.8% and $134 per month. Everything I've read here says this is not a good deal from a cash flow perspective. It also fails in the 50% rule. This will be my first REI and it won't need much work and what it needs I can do personally. It is also likely to appreciate over the next 20-30 years as the neighborhood is pretty sound. I haven't really wrapped my head around BRRRR yet, esp. the refinance part so I'm leaning buy and hold.

Hi there, I see this is an old post but its of interest to me because I am interested in a SFR to purchase as a REI/rental. There is a hot tub already there. Its wired up, but empty so I don't even know if it works or not. My thought was that I don't want the liability and maintenance headaches (even if the owner paid for maintenance) and I thought I would ask the owner to remove it as part of the sale. I also could try and move it to my own primary residence and use it personally but its probably a day of gathering friends to move it to the truck and haul it to my place. I used to own one and I know how pumps fail and the water needs to be kept topped off with chemicals.

Question: are my instincts correct, or is there some sort of benefit to leaving the hot tub in the rental unit with clear terms about the renter self-maintaining the hot tub? In other words is this a major selling point for a rental or not enough to warrant keeping it. My realtor said the lease could be worded specifically to clearly state the renter would self-maintain the hot tub.

Thanks for your input.

Update: I see that this post sort of confirms my thoughts: https://www.biggerpockets.com/forums/52/topics/67039-remove-the-hot-tub-or-rent-with-it so I think I'll punt the hot tub to CL.

Hi folks, newbie here so apologies is this is in the dumb question category. :)

I'm looking at an interesting SFR here in Spokane as a potential second home as a REI property. I have been doing some research about the property and I noticed on the Spokane County Assessors site that the current owner has been a little lax in paying property taxes in the past few years. Several line items list late fees assessed in 2017 and 2018 and the current amount owed exceeds the amount due for 2019 so if I am reading things correct, the homeowner is probably behind in property taxes by about $1000, give or take, with another payment due in 6 weeks.

How would this work if I were to close on this SFR? Would this create a tax lien situation or does the homeowner usually pay the taxes in full by or at closing for the deal to happen?

Hi folks, I am running numbers on a SFR here in Spokane using the tools here on BP. To make the property "cash flow" positively I really need a loan with IR of <4.25% and obviously the lower the better. I have good credit >780 and own a home on the south hill outright, mortgage free.

So far the best I could do so far with a conventional 30 year fixed loan (for a 2nd home/investment property) was 4.375% with a west-side lender out of Renton. Everyone else seems to be high 4's or low 5's.

At 4.375% my calculators tell me that I could get positive cash flow but cash on cash ROI is 2-4%. This makes me wary on making an offer.

I was told to investigate HELOC but lenders are telling me interest rates will be higher than above so that doesn't sound feasible.

I am now investigating "cash-out refi" on the primary rez. I was wondering what others know of this option and what advice you might have or what the downsides there are? Am I leaving out other options?

Thanks for any thoughts and input.

Super! I'm out of town for the next next one (of course) but I have it in my calendar for October.