All Forum Posts by: Logan Cheek

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $126,900
Cash invested: $48,000

This is a single-family home with four bedrooms and two bathrooms located in Wilmore Kentucky that is currently being rented out for $1400 a month.

Quote from @Katie Peters:

I saw a post from 3 years ago suggesting a couple of management companies. I am looking for up-to-date insight on reliable rental management companies in Lexington area for a single family home. I’ll appreciate your input. 

I’ve been seeing a lot of landlords going with Kentucky Rental Homes for their management lately. They’ve existed for a long time but recently focused on expanding their services and network. I’ve heard a lot good things about their services and their team!

https://www.kyrentalhomes.com/

I agree completely with what Grant says. I don't work with my family as directly, but my parents are home inspectors that my clients choose to use from time to time, so we do work together in ways.

I would encourage you to just be as transparent and honest about all of your goals from the beginning. I would even consider putting each of your expectations and roles on paper for one another to see so that there is no confusion later on. Sounds kinda cheesy to do, especially with parents but you wouldn't believe home much easier putting things on paper can be in the long run.

Personally, I would probably just hire the property manager. I am not a property manager but I do know it's not easy work. I would hire a professional to do it (probably two at first and eventually pick between the better of the two) so that I don't have to spend my time training someone to do a task that someone else is already better at. Also, in my state, you usually need a real estate license in order to manage property that's not yours anyway. Most of the landlords that I know around me that do something similar to what you're talking about find a good handyman that they can just send their issues to when they arise and then just handle everything else.

Just some of my thoughts!

I have a lot of clients that like the 1% rule in my market. Although it is difficult to find a 1% deal in my market. What a 1% rule basically means is that a 300k property should rent for $3,000 a month. This all depends on what numbers you like to see and what matches your individual investing goals. We also like to make sure that the units are separately metered (this can really change your numbers a lot if not) since tenants often pay their own utilities in my market. We also look at all the big-ticket items in every home we see to check if they are at the end of their life, like the roof, HVAC, hot water heater, appliances, etc.

Hope that helps!

Hey @Ralphie Martinez!

I know you aren't looking to invest in CA, but I think the best place to start is with a house hack. It will cut down your living expenses and allow you to save more to invest in those other markets you're interested in. It will just accelerate your investing career! Get a small multi-family or even a single-family home with several bedrooms and just rent out the empty space/units/rooms. That's what I would do!

Hey @Tuna Sakallioglu!

I think the numbers make sense depending on your goals. I would like those numbers personally. I don't know your market or area so I can't speak much on that. What I can tell you is that the property is old, and in my experience, older properties can have some unexpected costs. You'll definitely want to have some set aside even if you plan for it to be turn-key. Also, make sure all the units are separately metered. If they aren't, you'll need to do some recalculating. I've seen many good deals on paper turn bad because of this. Hope that helps!

Hey @Austin Irwin!

In my market, rentals are still surprisingly hot for this time of year. It is starting to slow down but there are many people seeking a rental property that can't find one here. I would still probably prefer a short-term lease so that you aren't renewing this time next year. It's difficult to say what the rental market will look like then. I would also charge a little bit higher price knowing its short term. Just my thoughts.

Hey @Matthew Chalfant!

If I were in your shoes, I would be hesitant as well. If you’re cash-flowing at it’s current rent price and they’re good tenants that don’t give you any issues, then I would leave it the same or only raise it a little. If they are moving out anyways then I would raise it.

At the end of the day though, you’re a business and should treat it as such. I just think there’s a lot of value in a good tenant.

Hey @Hunter Young! Here are my thoughts on your questions:

Is this a good strategy?

I don't think it's a bad strategy depending on how you execute it. I always love the idea of taking an amount of money like 250k and turning it into an investment portfolio worth much more. Leverage can be an awesome tool!

What are the biggest risks?

It sounds like your dad is fantastic at working on properties! Keep in mind that managing a rental is a much different skill set that often comes with a learning curve. So do your homework and learn from any mistakes that are made!

What kind of loan do you need to build a house?

Many of my clients that build homes often use a construction loan in this situation. They can be more tricky but can be effective. Talk to some local lenders in your area and they should be able to help!