All Forum Posts by: Brant Richardson

Definitely a good place to find deals. Also check out Homepath.com and Homesteps.com they are other government owned foreclosure properties. I have found no problems dealing with them.

I didn't go through all your math but the 50% rule does not include HOA fees. So if you come up with $161 cash flow with the 50% rule you are actually at 161-250 = -89

For your real calculations you need to include vacancy and maintenance as others have said. I use 10% of rent for each. If you plan to use a property manager then minus another 10%.

@Engelo Rumora

Would you mind sharing the website you use to confirm previous sale prices? My understanding was that MO was a non disclosure state and this information was not available to me.

I would like a turnkey to be absolutely honest about the quality of the neighborhood. First off they would not even have D's or C-'s in their inventory (they all claim they don't but its not necessarily true). The ROI looks so good on those properties that its tempting to use them to draw investors in. If an investor wants to take the risk on D's, too bad, it just wouldn't be available at "The Perfect Turnkey Inc.". Secondly, the C neighborhood properties would not be marketed as B's. An out of state investor can do some pretty good due diligence on confirming the rent and purchase price range, but neighborhood is something they have to trust somebody about. Thirdly, if it is being sold at full market value, it should have an awesome rehab, every inch of it, granite/hardwoods, roof etc.

That sounds like a good plan. Check out the government foreclosure websites.

HUDhomestore.com

Homepath.com

Homesteps.com

I have noticed a lot of big older homes in Michigan and Indiana which are converted to duplexes. That might be a good way to go for you. You could bring in some rent even though you are getting the benefits of being a owner occupier. Being handy and onsite would make these less trouble than they would be for a lot of investors.

@Kiran R.

I am very skeptical of turnkey companies so I was expecting to tear your investment apart with this information but that was not the case. Schools of 6/5/5 are pretty good, I was expecting the 1-3 zone. 3/2.5 is better than I was expecting too. 900/mo sounds easy for a 3/2.5 in a decent area of Raytown, I was expecting it to be overinflated . Raytown and Independence are the areas I invest in too.

I use a little different numbers for expenses than you to calculate cash flow. 900 - 90 (10%vacancy) - 90 (10% maintenance) - 90 (10% property management) - 50 (insurance, 50-60 in my experience) - 125 (tax) - 260(P&I with 20% down) = 185. Which I would happy with... but then there was a HOA fee of 110. That brings cash flow down to 75. I would say this is a decent deal except the HOA ruins it.

HOA is a good thing for keeping the neighborhood looking nice. There are no couches in the front yards or kooky pink and green color schemes. HOA fees are often a deal breaker though

That's odd, I invest in KC and bought a Homepath this year, they only wanted 1k earnest money.

Kansas City has a huge spectrum of properties. Whether this is a decent deal or not would be highly dependent on location. The numbers would look very similar to what I shoot for there except mine don't have an HOA fee. I look for a rent to purchase ratio of 1.5% which you have, but I would want better to cover the HOA. This gets hard to find as you get into better neighborhoods and is very easy to find in worse neighborhoods. Is it a single family 3/1 renting for 900 (preferable)or a cheap duplex 400-500 each unit?

What is the address? If you dont want to give the address, then when you look at this property up on Zillow what is the Zestimate, Zrent and Great schools ratings? Not that Zillow is highly accurate.

I have an awesome realtor in Kansas City who also runs rehabs and property management for out of state investors. Let me know if you want his contact info.

The nice thing about a Homepath loan is you only need a 10% downpayment as an investor and you do not need to pay for an appraisal. If the property needs serious rehab you will need a homepath renovation loan, in which case you will need to pay for an appraisal and will need a bigger downpayment but can finance the rehab. Homepath is a great source for finding flips or fix & holds.

A lot of cash and a portfolio lender is one strategy. If you have the cash (or hard money lender) to complete a few properties then you can finance them with a portfolio loan. The speaker in podcast 64 is doing this.