All Forum Posts by: Jon K.

Hello @Ian K Laszlo, don't worry too much about what you may have missed out on in the past because it doesn't matter any more. Best time to plant a tree is 20 years ago, second best time is today.

So for this particular deal I think you're missing some things. Your estimated down payment is roughly 3.5% so I'm assuming you intend to use an FHA loan to purchase this property. Unfortunately, you won't be able to use such a loan unless you're living there. FHA loans are for owner-occupants only, so you're likely going to have to come up with a 20% down payment plus some closing costs. I recommend talking to some lenders, tell them what you intend to do (purchase a property to use as an investment) and then discuss your options.

That being said, even if your down payment was only $4500, your cash flow calculation doesn't take into account maintenance, capex or vacancies. You mentioned accounting for maybe $100/month for maintenance (common repair). You also need to account for capex (a new water heater every 8 to 10 years, new hvac systems every 10 to 12 years, new roof etc). And vacancies: when tenants move out, you'll miss 1 to 2 months of rent while you place a new tenant as well as the cost of turninv over the unit. I suspect when you add those things in you'll find that this particular deal may have a negative cash flow.

That being said, is $1,350/month the most you could get for this property? Are the current tenants paying a reasonable market rate or is there room to raise the rent without a major renovation?

You are correct. So if you've earned 10k in cash in 4 years on a 170k investment then your CoC return is 1.4%. $2,500 / $170,000. That's objectively a very low return. But as others have said a small return is better than no return, so it's probably a good idea to identify another path before making a decision to sell something.

@Ana Brasher If you don't have direct access to the MLS, I'd recommend checking out Propstream for comps. It includes data from the MLS and other sources.

Cash on cash return is a measurement of the net cash return you receive on the capital that you yourself have invested in the deal. In other words, how much rent money is left over after paying the monthly bills, times 12 (to annualize), divided by the total amount of cash that you used to purchase the property.

It does not factor in things like appreciation (forced through a remodel or otherwise), depreciation, or debt paydown.

CoC is just one metric you can use when evaluating how good an investment is because there are of course other factors such as the appreciation, depreciation and debt paydown that CoC ignores.

Whether or not an investment is "good" is very subjective and should be based on your own personal investing criteria.

I can't explain it, or anything, better than J Scott so I highly recommend you check out his book Real Estate By The Numbers. It will provide a lot of insight into this sort of thing.

The name is public record. For contact information you'd need to skip trace them and there are countless services that do this with varying degrees of accuracy.

This isn't an endorsement but this is one: https://skipgenie.com/

You need to find a bank that will allow a HELOC on an investment property. And if you have a mortgage on that property, you'll have to find a bank that will allow a HELOC on an investment property in second position. They're hard to find. TD Bank used to do this (assuming it's titled in your personal name and not in an LLC or something like this). Not sure if they still do but they're worth a call.

You don't necessarily have to refinance to have access to the equity. If you look around you may be able to find a bank that will give you a HELOC in second position which would give you access to the equity when you need it (when you find deals to BRRRR). That's the main strategy I used to acquire most of my portfolio.

I don't know if they still do it but TD Bank used to do a HELOC on investment properties in second position provided they were titled in your personal name and not in an LLC.

Not in AACo, but in BCo my voucher experience is that you call and email relentlessly until they answer or your stuff doesn't get done.

Hard money loans are some of the most expensive loans you can get. Someone paying all cash can likely pay more, all other things being equal (plenty of factors go into the amount someone can pay).

I have in the past but quickly determined it wasn't for me, nor did I want to run a call-house. I've been doing well with direct mail for a long time so that's what I stick to these days.