All Forum Posts by: Jesse Waters

Cash flow sounds reasonable, however, I don't like to buy places that I wouldn't want to live in, both the quality of the property & location.

My litmus test, this may sound cheap or cheesy, but I bring my wife to every property before I buy it and ask for her opinion.  If I am showing it to her then it has already passed my test for numbers, and I want a wife/mother's perspective.

Seems like a good deal.  My big question is does the property need any repairs & would is the quality of the neighborhood?  Is it in an area that appreciates or stays flat?  We have places locally that we can buy cheap and get great cash flow, but in 10 years the I could only sell a property for what I paid for it.

Good luck 

I get a chuckle when people call me a slum lord.  Don't worry about it.  Run your business well, take care of your units & tenants & don't worry about what other people say or think.  I really like my Sec. 8 tenants, they have been the ones with the least trouble & my longest term tenants.  Some times the rents are a little lower, but lower turn over more than makes up for it.

Darin,

Looked over your numbers and they seem pretty good.  We have fairly similar numbers, 10% vacancy is always our planning number.  One one of my properties it is more like 10 days in the last 4 years, other are higher, simply due to the make up of the property.  I have two 4-plex buildings side by side & the nicer one doesn't do as well as the other one.  

Personally I can't say if $100/door/month is good or bad, it depends on your market, price of the property etc.

Depending on your area you might hit a better vacancy rating, I read last week that the US average is 7%, but always plan on the safe side.  You might be able to save money if you self manage, or as in my case, my manager gives a discount from 10% to 8% once she started managing more than 5 units for me.  

Does this property need any repairs at closing? Can simple upgrades be made to raise rents? Are the rents below market? Can you make extra income on the property? Those are all things to think about that can increase your cash flow & CAP & ROI/COC after closing.

It seems like you have figured out what the property is doing now, you should figure out what the property can do with a little effort.

Sounds like your spread sheet is pretty good, don't forget taxes, insurance, accounting, and all those other little expenses.  Also, compare what the property can do vs what it is doing.  Find the cap rate you would be happy with & work the deal to get it to numbers that you are happy with.

JW

Calandra,

Welcome to BP.  I would have to agree with @Account Closed

I am also an introvert, so I understand where you are coming from.  I found the best place for me is in buy-n-hold rentals, especially since I am investing for long term cash flow.

Good luck.

JW

Welcome to BP, it is a great place to learn and ask questions.  Wholesaling can be hard work, but it can require the least up front money.  You will still have to put some up for marketing material.  

If you have done your homework on a property and its a good deal you should be able to assign it, even listing it here in the market place. 

Your other question deals with out's/ escapes/contingencies.  When ever I write a contract I always give my self a way out; is the contingencies part of the contract, ie partner approval, satisfactory inspection, etc.  If you get past those and still haven't found a buyer you can either ask to be let out of the contract by the buyer or pick it up your self.  I would make sure that you have some sort of financing lined up just in case you can't assign the contract & get stuck with it.

Good luck.

@Brian Gilstrap 

Welcome to BP & congrats on getting all your consumer debt taken care of. You are in a great position to get your REI career started, particularly since you have a background in the building trades. I have been investing for about 4 years, mostly with buy-n-hold rentals & tax liens. I have had decent success in SC, not the best market, but not the worst either. Feel free to ask questions, I'm always glad to share what I know, esp with my fellow SC REI's. I have been contemplating doing some work in the upstate since it seems to be growing faster that my area is.

Jesse

@Mike H. I would do the numbers again since I have been given bad numbers by other agents, not this one, in the past since that particular deal.  This agent is a very good friend of mine, one of my property managers and runs the group that I do tax liens with, so I trusted her and still do.  However, I felt that we got lucky and lucky isn't the business model that I want to use.  That was a non-painful lesson learned to my business partner and I.  Had her numbers been off we could have gotten burned, and it been a painful/expensive lesson.  Since then we have developed better methods of doing our numbers & verifying what our agents tell us.

Jason, Sounds like a great idea and a wonderful way of giving back.  Would everyone benefit from it, sure if they would read it.  But if only one or 2 in a hundred read it and apply the principles in the book then I think it would be worth it.  Even if you get no direct benefit back from it you are doing something good for them which in turn benefits everyone in society.  Better a free book than some of the other handouts people try and get.  I would say this is a very positive way of giving back.

Julian,

If you are going to be living in it for 3 years you should be able to get a little higher rent then vs now.  If you are already looking at getting positive cash flow if it was rented now then it sounds like a good deal.  After all we all need a place to live.  Are you putting any money down on the property?  I do like the sounds of 0% while getting positive cash flow, but I also like walking into a property and having some equity so that I could quickly sell if I had to, especially if there are market fluctuations or your situation changes.  This is part of establishing an exit strategy.  Strategy #1 is renting it out, if you put 0 down, the market is flat over the next 3 years and you want to sell you might not have enough equity to be in a strong position to sell, remember that you will be paying the 6% commission.  Just some food for thought.

Best of luck.

JW