All Forum Posts by: Joe P.

Jay, I don't want to get into a full-blown political discussion because I don't think this is the place, nor is it necessary.

But why do you think the media is trying to scare anyone? I recall a news story about how it might be affected, but where is the scare you mention?

https://www.nbcnews.com/politics/white-house/becau...

https://www.curbed.com/2019/1/7/18172058/governmen...

If news outlets have reported that the shutdown could affect payments...and I suppose it could, since January was handled in December but February payments would be handled in January, I suppose that could create issues both for landlords and tenants. Now, how impactful would that be? I don't know. But I don't think the reporting is incorrect.

Man, taking OPM to the next level, I see.

The capitalist in me says, go ahead, save every dollar you can, however you can.

The taxpayer in me thinks you're a jerk if you can afford your lifestyle and invest in properties.

I just bought a duplex in Gloucester City, NJ being sold "as-is" and got an inspection. Not surprisingly, a few things came up. I told the seller thanks but no thanks, I know your selling as-is but the costs have exceeded the profit margin. We negotiated a bit on price so we were both still relatively happy.

Make sure your inspector spends time on evaluating roofing, plumbing, electrical, etc. Think of your big ticket items and make sure those are the focus.  Make sure you check heating and cooling systems as well regardless of season, and have the inspector show you how those items work, e.g. if its a boiler. If something looks "old" don't be afraid to give a plumber or electrician $100 to look at something. Both boilers in the house I purchased are older than I thought, and probably need to be replaced in the next 5 years. They 'aint cheap, sadly.

@Jeff Beaman welcome to the forums.

Thought I would share my story, not unlike yours. I bought a 1/1.5 townhome in Philly in 2010, thinking the area would improve. Ended up moving out 4 years ago to buy our "forever home" with my wife and decided to rent out that property to get into real estate investment.

Every property is different, but consider you'll either need to manage this yourself or give it to a PM, and there is a time/money cost with that. You'll have to pay for CAPEX, maintenance, insurance, etc., and it sounds like the margins are razor thin. If you think this property can be a long-term investment property, whereby its value will continue to increase and you can gain significant equity/tax advantages from it, then by all means continue on that path.

Word to the wise (I hate when people say that), you need to be realistic about your expectations if you decide that path. I rented the home for 2.5 years and did everything wrong. I didn't screen well enough, I was too focused on "breaking even" instead of trying to properly manage and add-value, and I banked on significant equity increases which never came. I ended up selling that home, cashing out about 30k (10 years...30k equity, saddest thing ever), and flipping it into a cash-flow positive property.

Cash flow seems to be everyone's goal in this game, because if you have a positive cash flow you're still gaining equity (that someone else buys you), you are putting money in your pocket for fun or for the next property, and you still get the tax advantages for being a property owner (theoretically).

Basically, decide where you are at. A home is the most expensive purchase that you make and it can be your primary barrier to investing. If this house costs you money, and your next house costs you money, how could you possibly spin either of these into investment vehicles? If your salary goes primarily to pay two mortgages, how can you add another property under your belt if you aren't saving any money?

To me -- saving every penny, getting rid of unnecessary costs, paying down debt -- these are things to free you up to start investing, which I hope would be the primary goal of folks on this board. If you have a property costing you money, and you're going to buy another SFH that will cost you money, and you have a car payment, student loans, medical costs, et al -- you'll be back here in a few years saying "why can't I get off the ground?!" and the answer is right here.

As an Eagles fan, let me first say that the Giants are garbage and I wish you nothing but losses for the entirety of your career. :)

Just kidding, welcome aboard! Hope the Big Apple is treating you well. Are you investing near the team's facilities in NJ or elsewhere?

I actually called the police yesterday and tried to get a report for my own sake and to show that I personally would not do this, and would seek to find out what happened. If you check my story from the beginning, mom conveniently sped off before the police arrived. Officer said no victim, no crime.

@Tom Arnold most people won't even sniff at a 4% COCR and the fact that these are just estimates, meaning it could be so much worse, tells me it's a NO.

The chances of you getting a multi-family mortgage at 4.875 are pretty low. I closed in August on a property and I got 5.625%. The current rates for a typical home buyer just don't apply for multifamily.

I'm glad your self managing but ultimately a lot of people here strive for true passive income -- that is to say you manage the PM and they manage this and a string of your eventual properties. At 4% cash flow with probably very little room to increase rents (more bedrooms means more exponential growth, efficiencies just don't provide it), you'll never be able to offload this property to a PM.

Now, that's not to say this property CAN'T be purchased. How long has it been on the market? Is the seller motivated to dump this? I might consider it at a steep discount, but it depends on how desperate the seller is.

If they are not, don't fret. It sounds like you're working with a realtor and they are working with a team of realtors. Ask him/her to work within their networks for the true deals. Properties that are maybe not yet on market, and might be cheaper to get before hitting the open market -- those are the ones you want. My NJ realtor texts me every once in awhile with something that is pre-market or just on that she knows is within my wheelhouse. And they're always from people in her network. Utilize those relationships and the deals will eventually come in. On MLS and full price is not a deal -- you need to make money on the deal at the onset and ongoing.

I appreciate everyone's input. Lots of different views but one of the main things is to let it cool down and then reach out to the eldest son, which I will do later in the week.

A few folks have asked how I can be so sure a sub didn't take it. It's a valid point. How can she be so sure a sub took it? Also a valid point.

I don't think there is anything more we can do. Ultimately I want them to feel safe in the house and that they can trust me or anyone who comes into the house. But I also have a business to run; if you're standing in a store next to an empty shelf and the owner comes up and accuses you of stealing whatever was on that shelf, but has no proof...are you just going to give them money because you were accused?

My plan is to check in with them later this week and establish better visit protocols for me and for any folks coming in to do work. I will want the adult son there at all times anyone is in the property, and I will try and be there for all work that a sub will do. But it has to be some combination of me or him at all times.

@Tom Arnold welcome, and good luck!

As someone who like @Brian H. is a newbie but loves crunching numbers, what have you factored in for all of the other expenses of this property?

@Anthony Wick is a cash flow guy and I would agree. Depreciation, future equity, etc....those are nice to have but not my strategy. I want my asset to put cash in my pocket every month.

So I think you need to further find/extrapolate the following expenses, and dump it into a spreadsheet. The 1% rule is helpful, but only a guideline. If you hit the 1% rule and your mortgage, taxes, insurance, capex, maintenance, etc. is only $300 a year, then it's a slamdunk! But that never works out like that...so find out what these are and put pen to paper:

• Income - call it $2350 per month
• Expenses
  • Mortgage? $202,500 @ 5.5 will be $1,150 per month
  • Taxes?
  • Insurance?
  • Flood insurance/hurricane insurance?
  • Property management or self manage?
  • CAPEX (I use 10% of gross rent)
  • Maintenance (I use 8% of gross rent)
  • Vacancy (I use 8% of gross rent)
  • Any common electric, gas, sewer, or water account?
  • Garbage / Fire / Police dues?
  • License / inspections / business dues?

And if you don't think any of this applies...you're wrong or you need to confirm you're right. Get to the bottom of every red cent you need to spend. All check conditions of the big ticket items -- the roof is the biggest right now, but also check heating systems, appliances, plumbing, electrical, structure, etc. 

@Troy Hebert sounds like you've done your due diligence, that's great. I'm a tiny fish in a big pond, but my estimations are that people don't put enough aside for maintenance and CAPEX in general. $32,000 R/M seems...low...spread across 10 different properties of that size. $3,200 a year average per property? And you are employing someone too, I assume you'll be paying for that.

Again, I think you have it locked up, I might just be missing it. My aim is to be the squeaky ultra conservative wheel. :)