All Forum Posts by: Kevin Hunter

@Account Closed, I just purchased a four family and am renting to Section 8 tenants for the first time.  In this case thus far I have been extremely happy.  In fact, when I purchased the house, the unit they are in was rented under market value.  I was able to immediately raise the rent to market value with no additional money out of the tenant's pocket.  One thing that is more annoying than anything, and take that with a grain of salt, is I get two checks each month.  First check is from the housing authority and that arrives on the 2nd or 3rd of each month, then I receive a second check from the tenants around the 5th.  Although not a big deal, it is just one more moving part. 

The tenants themselves have been good thus far.  I closed in May so I am only a couple of months in but it has been ok so far.  I will keep you in the loop as time goes by. 

One other thing I like is the housing authority does a quarterly inspection. I actually like this because they are checking up on the house for me for free, essentially.  Just one more look every couple of months in addition to my property manager.

@Victor Yu, welcome to the site.  Good luck!

@Account Closed, try loopnet.  Keep in mind though that everyone else is looking at that site as well.  Have your client specify areas in those states and reach out to other agents within kw or other agencies in those areas.

@Emiliano Medina, moving in to your own rental property is a great way to get into your first investment.  Are you looking at multi-family or a single family in which you plan to rent out rooms?  It comes down to your comfort level and long term goals. 

@Ryan Grinstead, how long have you owned your current duplex?  What was the curb offer you made and what was the response from the seller?  How much rehab is "some cosmetics?" 

@Ira Dallam, welcome to the site.  Check out the podcasts and webinars.  Tons of great info.  Good Luck!

@Carolyn Keller, first of all, great job on buying a cash flowing property, getting it right on the first try. Buying properties cash is a great way to do it. Have you thought about traditional financing at all? If I were you, this is what I would do. Put together a file of your current property, pictures, costs, rents, expenses, etc... Go online and pick three small banks in your investing area and go talk to their mortgage department. Ask about several options: a HELOC on your current property, a traditional loan, home equity loan on your current property.

  My opinion and take it as just that, do not wait 3-4 years.  You have had success and keep it going.  Figure a way to get another property now.  Waiting 3-4 years is just that.  Don't wait, act!!!!

@Nick Hedberg, Ralph R is spot on.  I use a local credit union.  The title company emails me the documents, I print, bring to my bank (it is free if you are a member, if not, they charge 25 cents per page) and sign the pages required to be done in front of a notary.  Then I scan and email a copy to the closing attorney or title company and mail the originals.  Easy!!!

@Roger Rustad, use everything you can to your advantage, right!!!  Great story.

Italo, my two cents here.  It never only comes down to management but that certainly is a factor.  First, I believe you need to get all of the information you possibly can from her.  Get records of the past two or three years of rental contracts and expenses.  Saying that the yearly revenue is about 22K and the expenses are about 6K can be a slippery slope.  Get her to show you what they have been exactly.  I understand with a vacation rental they can vary, but a three year average is better than a rough number.  You have to be evaluating with all the information possible and the historical numbers for this rental are a must.

My assumption is her expenses do not include the principal interest tax and insurance payment (PITI) that comes with a mortgage. Are you planning on buying the property with cash or are you hoping to get financing? If so, that becomes an expense as well. With a 30 year loan that monthly payment will be around $500 per year depending on the interest rate, amount of down payment, mill rate for taxes, etc.... (loan principal of 77,600 @ 4.25% = $381.75, taxes vary by location but call it $1000 annual or $83 per month, and call insurance $75 per month = $539.75 per month PITI) That equates to an additional $6000+ annual requirement. Now the expenses are 12K per year, not 6K.

Most property managers charge between 8% and 12% of rents received.  If you hire a property manager for 10%, you now lose another $2200 annually.  That 12K of annual expenses is now $14,200 of expenses.  Based on only those numbers, and a purchase price of 97K, the Cap Rate works out to 8%.  

That cap rate would be too low for an investment for me but it ultimately comes down to what you are comfortable, what kind of a return you want etc...