All Forum Posts by: John Chapman

Here's my take.  I would never use Zillow to estimate a property value, particularly if there are few sales around you.  It's just too unpredictable.  

Now here's the one exception in which I look to Zillow as a secondary source, and that's for rents. Zillow, Hot Pads, and all the others are the primary way that I market my SFR rentals, and every time I list a rental there is a "Zestimate" rent next to it in the advertisement. I've come to believe (anecdotally) that this Zestimate sets an anchor of sorts for most tenants, and you cannot be too far in terms of asking rent without significantly reducing your pool of tenants. Just an observation.

Did you mean to specify "Mexican" general contractors?  Seems like an odd request. 

I've been surprised how the higher quality laminate floors hold up.  (12 mm ones really hold up well)

For my money, I would go with Trafficmaster Allure.  Yes, I realize it's not laminate, but at least in my market you can get away with it, even at higher price points.  It looks great, lasts for years, and is water proof.  Plus, it's easy to replace.    

David, it sounds like you need to meet conventional financing requirements for reserves.  These are not particularly onerous, and, quite frankly, are probably a good rule of thumb to follow.  If you've got only $2000 in reserves right now, that's a little scary and you should not be buying another property. ($2000 wouldn't even cover a new HVAC system.)   I realize you're young and excited, but requiring reserves is not only a prudent lending practice but also a prudent investing practice.

All right, I'm going to offer an opinion on an issue that no one seems to be addressing, which is the number of "home improvement" projects you've identified that look to be done incorrectly and/or in violation of code.  I shy away from these types of home unless there is a massive amount of meat on the bones.  It's one thing to take on a neglected home, where you can at least roughly know what you're getting into.  It's quite another to get into a home where inexperienced people have been mucking with it quite extensively on larger ticket items.  I promise that you are going to have more the "unforeseen" issues than is typical and your repair estimates are probably too low.

@Jennifer Deanundefined I see what the issue is.  I was assuming a total rent of $3000/month ($1800 and $1200 as stated in the original post), and you're basing your statement of $1400/month on $3600/month total ($1800 for each side).  That's an extra $600/month I was not accounting for.  I could quibble with your assumptions (I do think you're a little light on certain expenses), but that's simply a matter of opinion and you guys are certainly much closer $1400/month than what I originally  thought.  I should be clear, I think you did a good job.  (I know I did much, much worse on my first deal.)

Yeah, I'm sorry but I have to agree with @Thomas S., your cash flow cannot be correct. Setting aside the HELOC, your first mortgage appears to be around$1200. ($250K, at 4%, 30 year amortization is around) In order to have $1400 cash flow that means your property taxes, insurance, repairs, cap ex, vacancy, etc have to be $400. That's just not going to happen. Not saying it's a bad deal, but it's not going to generate that type of cash flow.

I think that's an intensely personal question that depends on your individual circumstances and long term goals.  I would share a little more about what you are trying to accomplish so people can give you more informed advice.

For electric, I am unaware of any basis for the landlord to get stuck with an unpaid tenant bill.  For water and trash, almost every city with which I've ever dealt has never sought to put utilities on the landldord for an unpaid bill.  (The only exception I'm aware of is the City of Blue Mound, which has a weird, private water system.)  Moreover, I've never heard of a utility putting a lien on a property for an unpaid tenant bill.  

You need to take care of the fleas if she hasn't even moved in yet.  That's just basic landlording.

Her monthly rent is irrelevant, in my opinion.  If the rent is too low to justify a $250 pest control treatment, then that's probably an indication that the house is not going to make a good rental.  

Not trying to  be mean or anything.