All Forum Posts by: Account Closed

So far the rehab book is good.  I'm going on vacation next week, so I'll finish it up then.

I use Mark Kohler for my CPA and lawyer.  I tried to use separate attorneys for the two functions previously and it was a disaster...their recommendations weren't lined up with each other.  

A good GC is tough to find; most are super busy.  I've been GCing my own projects; so I'm not much help on that.

For ongoing capital cost, there's a lot of debate on that one.  You can search for the 50% rule to find out what a lot of people are saying about it.  I don't think this particular rule applies to how I invest and to our market in Seattle.  When I purchase a long term buy and hold; I generally do a lot of the major capital improvements up front; so that means I won't have a lot of capital expenses over the next 15-20 years.  I've been trying to adjust my analysis spreadsheet to account for the actual useful life left on each major capital expense so I can accurately predict these expected costs.  I plan on 3-5% for annual repairs and 5-15% for my capital reserve account.  Again, it depends on the property.   I'm finishing up a property this week and was a full remodel...baring a freak incident there shouldn't be any capital expenses for at least 7 years with most 15-20 years out.

Most people use an 8% vacancy rate (which is 1 month).  Rehab cost is tough as each property is different.  I'm actually reading J Scott's book on estimating rehab costs right now to improve me estimating skills.  I'm generally withing 10-20% on my initial estimates, but I want to get better at it.  

For capital expense, that depends; are you talking initial capital or ongoing? For initial capital and assuming you are looking at SFR or small MF (2-4 units) and don't own more than 4 or 10 properties; you'd be looking at traditional financing. Around here banks charge about 0.5 to 1 percent more for non-owner occupied freddie/fannie loans. So plan on 4.5-5% (but start talking to banks to confirm). You will need at least 20% down if you go that route.

You may want to look at the calculators on this site.  I believe they have all of this stuff baked in (I use my own excel spreadsheet).  

Grace - welcome to the forum!  It's a sellers market right now and April and May will be super crazy here in the Seattle area.  Keep looking; there may be some potential properties...you can look further out as well.  Maybe the Everett area.  It's super important to be analyzing 1-5 deals a week when you are new so that you begin to A) understand what it takes for cash flow and B) get to know your target market better.  It may seem like a fruitless effort, but you will be better prepped when an opportunity comes along after you have a hundred or so deals analyzed.

Hang in there...there will be some more 'investor' opportunities in towards the fall as school starts and sellers who didn't sell in the summer months get desperate...although not sure how many that will be this year.

- John

I just did two significant (i.e. BRRR) cash-out commercial/portfolio loans with Red Canoe Credit Union. They will go up to 80% LTV. They were great to work with. I'm in the process of doing a couple more right now. Let me know if you want a contact.

John

Richard - welcome to Bigger Pockets!  Not sure how much starting capital you have, but I think too many people discount the Seattle area as a place to invest in.   There are lots of places in the surrounding area that have lower cost houses with low vacancy rates.  

I've currently stuck to just the city of Seattle, and while it's more expensive; I've taken my time finding the right properties (i.e. priced right) and have had good success.  The fact that Seattle has just a high growth in employment has made rental housing in high demand...even the high end rental housing is hot.  I just rented a SF in Seattle for $3475 a month.  

Anyway, I have found value in investing locally as it has help me get more comfortable being a rental property owner.  I used to drive by my first investment property 2-3 times a week to 'check' on it...now I only drive by my properties occasionally to make sure my property manager is keeping things straight.  

Best of luck!  

John