All Forum Posts by: Larry K.

@Christian Bors

Put the notice to pay or quit on their door, email, cert mail, hand it to them, whatever.

If they don't pay by the date you set then start eviction.

That is pretty much what the pay or quit notice says.

Check with your attorney though

@Christian Bors

I would go with what @Chris K.has suggested 

@Justin Ericsson

@Radhika M.

$1900 gross rent for $150k over ten years is $228,000 gross income investing 20% upfront on $150k here in chicago which is $30k in cash to make $228k in income over 10 years. $228k divided by $30k is 760% which is 76% per year.  

Justin, Radhika is right. 

You are basing the return off the gross income. The return should be based off the after debt cash flow, not the gross income.  How does this scenario work out when done that way?

@Joe Bertolino

"They do all of the work for you... and they also take most of your profits. It's a brilliant business model. Buy low, rehab, sell high to a lazy owner 1500+ miles away that doesn't know your market, make management and maintenance fees (higher with more turnover) and then offer buy it back at a discount when the poor sucker is ready to tap out. Rinse and Repeat."

I often wonder why a turnkey company would not simply hold the properties for themselves (they are presumably good deals right?) Why not just get long term loans, hold onto them and build a nice rental portfolio. Maybe what you say here is why.

Appreciation does not have to be just a flimsy thing you hope for.  You can actually create it by adding value.

Also the appreciation you cant create yourself is tied to income growth.  These top tier markets can see better income growth and resulting rent growth which will drive the values up for all residential property in their area. 

@Chris Field what you pay for them today is what you get for them when you sell. 

Well said

@Justin Ericsson

Chicago is a major city too. It's not a small Midwest city. 

Do you think your model would work in NYC,SF,LA? Or are you in a geography that has the advantage so you can do it.

@Account Closed

I will still always look at the rent to price ratios or lets just call it the gross rent multiplier  since that is what it is. I mean at some point that number can be stretched so far that you are just not going to be able to cover.

But if you can still cover and have some left over then I get the point to not get too hung up on the CCR when you have rent growth and appreciation on you side.

I had thought appreciation was the upside. I was not sure if it would be enough to offset these low GRM / High cap rate returns of the podunks but listening to you it sounds like it is. Thanks.

@Account Closed

when I say high, I mean a high number between the two, such that they are far apart.

@Aaron Mazzrillo

thanks for the feedback guys. you are helping me to feel better.

my sense is that some in say the Midwest have an easier time getting cash flow on a buy and hold. yet when you factor in appreciation along with cash flow these top tier markets (mine being north Jersey) do have an upside, perhaps better overall.