All Forum Posts by: John Clark
John Clark has started 5 posts and replied 1535 times.
Post: Did I Get a Good or Bad Deal?
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Quote from @Jaxon Ludtke:
Quote from @John Clark:
Quote from @Jaxon Ludtke:
Cash Flow: -$30/month. Yes, negative. Location: Utah Valley, UT. Hot growing market. Avg Appreciation over last 10 yrs in my area: ~8% annually Equity paydown over next 5 yrs based on amortization schedule: ~27k
Bought home for 400k, appraised at 485k.
FHA loan, 30 yr, 5.875% int rate, MIP is $175/mo.
Strategy: Date the rate for 4-6 yrs, pray int rates drop to 4-5%, re finance into conventional with LTV less than 80% due to existing equity, take off PMI/MIP, have a lower int rate, and cash flow ~$200-250/mo.
Good deal? Bad deal? Bad strategy? Feedback.
second, $85k (if true) is a cushion on your cash flow deficit, if true.
third, what are your alternative investments?
fourth, if you have to hope that fundamentals change (e.g., interest rates), it’s a bad investment.
1. my mortgage payment (P&I), MIP, T&I, equal to $2759. Operating expenses (including gas, utilities, internet, etc.) is ~$600/mo. Total ~3359/mo. My renters are diligent with cutting grass, watering plants, etc. They're good friends of mine so they respect my property and do regular maintenance. I pull in $3330 from rent from all of them.
2. Not sure how to respond, I’m not lying about purchasing the home for 400k and it appraising at 485k…
3. Not much, but I have a good job that provides me at least 6 figures during the summer (I’m one of those annoying door to door salesman…) I have hardly any expenses in my life at all other than car insurance, and phone bill. I get essentially free food from my work (we get a free meal a day, I just eat big), and hardly drive anywhere besides work. Expenses are very low, I’m a penny pincher.
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Not a question of lying, don't get me wrong. It's just that appraisals can have a drift factor the length of your arm.
You also don't have any set asides for capital expenditures (repairs, maintenance) and vacancies if/when your friends move. So you are actually in the red more than $30 a month. It's just eating into your free equity faster, that's all.
What do you do if interest rates don't fall?
Post: I am doing bird dog method
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Quote from @Stepan Fedetskiy:
I am doing the bird dogging method and have a couple of properties that I would love to present to an investor. Just need to find investors that would be interested in the properties. Please give me some guidance.
Post: Did I Get a Good or Bad Deal?
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- Votes 1,250
Quote from @Jaxon Ludtke:
Cash Flow: -$30/month. Yes, negative. Location: Utah Valley, UT. Hot growing market. Avg Appreciation over last 10 yrs in my area: ~8% annually Equity paydown over next 5 yrs based on amortization schedule: ~27k
Bought home for 400k, appraised at 485k.
FHA loan, 30 yr, 5.875% int rate, MIP is $175/mo.
Strategy: Date the rate for 4-6 yrs, pray int rates drop to 4-5%, re finance into conventional with LTV less than 80% due to existing equity, take off PMI/MIP, have a lower int rate, and cash flow ~$200-250/mo.
Good deal? Bad deal? Bad strategy? Feedback.
second, $85k (if true) is a cushion on your cash flow deficit, if true.
third, what are your alternative investments?
fourth, if you have to hope that fundamentals change (e.g., interest rates), it’s a bad investment.
Extended low interest rates raised asset prices. Prices are slow to come down, so rather than lower prices, they don’t sell. You aren’t taking into account psychology.
Quote from @Jake Martin:
I flip houses in St. Petersburg Florida. My contact info is on my profile!
I'm looking for a real wholesalers to buy from (agents with pocket listings too!). The industry here has gotten out of hand with how bad the deals are and how many daisy chainers there are.
I'll get a deal sent to me for $200k in the morning, by the end of the day I've seen it 3, 4, 5 times for $210k, $215k, $225k etc.
I'm ready to buy now. Reach out if you wholesale or get pocket listings in the area!
Quote from @Scott Allen:
@John Clark where would you recommend getting Craig's head examined? If you have something in Ohio that you're working on/I'd be happy to look into it for you
@Craig Cann preserve hardwoods when you can or use LVP when the floors are relatively level/not slopping. For plaster vs drywall. Encapsulate plaster on rentals - it's likely it's already been encapsulated and painted over multiple times over the years. If you're doing a flip or have a good brrr - update it to drywall if the numbers make sense.
Medicine, like real estate investing, is best done locally.
Quote from @Craig Cann:
Im looking into investing into the Cleveland or Columbus market and learning new things everyday especially being from out of state. Im looking into MF units and finding most of them to be 75+ years old. I've been reading on the forum about making sure to scope the sewer lines which we do out here in CA.
The thing I didn't think about till I started to talk to PM was about the lead based paint and walls being plaster not drywall. I've been reading a few ways to take care if it; one if the plaster is intact and not peeling badly, but I have a feeling most of the lower priced homes will be peeling or cracking badly, paint over it with a special lead encapsulating paint (probably the cheapest). Two, just drywall right over the plaster and it seals the lead based paint under the new drywall. With that method Id have to pull out all the electrical boxes to compensate for the thickness of the new drywall (probably the second cheapest). Three, remove all the old plaster down to the studs and then put new drywall. If I did this method then it would be a good time to do electrical upgrades and add insulation (seems to be the most expensive by far). I could be missing other ways of tackling it I am not sure.
What's suggestion does anyone have to fix this challenge?
The other obstacle I am finding is the flooring. Seems like most of these homes have hardwood floors. Ideally if the floors are in reasonable condition I'd just sand them down and refinish them.
What suggestions does anyone have if the flooring is beyond just sanding it down and refinishing it?
I am open to all opinions and ideas to help me learn more about what kinda cost I am going to incur.
Thanks in advance, Craig
1. How much experience do you have in being a landlord?
2. What kind of experience do you have, if you have any?
3. Old structures, 2,000 miles away? No/little experience in out of state investing? No. Don't do it. Spend the money on getting your head examined. It'll be cheaper and more productive.
Post: Who determines the price of a house?
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Quote from @Ken M.:
Quote from @Adam Macias:
Quote from @Ken M.:
Quote from @Adam Macias:
Who determines the price of a house?
It's always the buyers.
Always. Always.
It's not the Realtor.
It's not the Seller.
It's not the Appraiser.
It's not Zillow.
It's not the News.
Only the buyer.
Doesn't matter if it's 70% of it's ARV.
Or if it's $100k over asking.
So having the right buyers is the
most vital piece of a successful RE career.
.
Well, half right. If that is changed to "Cash Buyers". Few and far between in this market. A seller is not required to sell though, which means if he disagrees on the offer, the house can sit for an indeterminate amount of time at an indeterminate value.
Buyers can't get financing if the appraiser doesn't give the value necessary to support the financing, no matter what the asking price or offer price is.
Sellers can't sell for less than what is owed to the bank, if the bank won't do a short sale and reduce the amount owed to what new financing will allow.
A lender will pull back the loan if a defect in the property makes the property uninhabitable.
There are a lot of reasons a sale will fail.
"A house is worth what a willing seller will sell for, to a willing buyer who has the ability (money) to close." Isosceles circa 1306
Actually, this proves my point entirely. It's still all about the buyers you have regardless of the scenario. If you only have "cash" buyers well then there's no room for retail homes.
If you only have retail buyers, you miss out of the fixer upper opportunities.
Your buyers determine how well you do in this market.
A buyers list of a variety of clients determines the ability to go out and shop for what they're looking for.
Actually, you goal determines the type of buyer you will accept.
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Prices that are not unconditional cash prices are always discounted.
Let me give you all some basic econ 101 definitions which you all -- in your sophistry -- seem to have forgotten.
The market price is determined when a LARGE number of sellers who do not need to sell and whose individual control of supply will not shift supply agree to a price that clears the market with a LARGE number of buyers who do not need to buy and whose individual control of demand will not shift demand.
That works for commodities. As for houses, the definitions of "supply" and "demand" depend on neighborhoods. That's where shills (r.e. agents) and other factors come in.
Everything else is just Ken and his ilk whistling past the graveyard.
Post: Solution for not being able to pay mortgage and very low selling price.
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This needs to be made a sticky as to WHY YOU DO NOT INVEST OUT OF STATE!!!!!!!!!!!!!!!!!!!
HYPER local. Got that folks?!?!?
H-Y-P-E-R---L-O-C-A-L
Post: Tenants not leaving
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Quote from @Robert Davis:
Looking for some advice here:
I gave my tenants a 6 months heads up that the lease would not be renewed as we are going to renovate the unit. I provided a notice to quit 60 days ahead of the end date. The tenant just told me days before the end of lease (May 31) that they do not have the money for the new place and will not be out on the planned date. Would greatly appreciate some insight/ recommendations on how to handle this situation in the most effective way.
Thank you