All Forum Posts by: Michael Kiley

Very good point @Isaac S.  As a landlord, I wouldn't be willing to sabotage the next landlord to get rid of a nightmare tenant, but I know many others would! I might just make myself unavailable to tell them anything negative because I want them gone ASAP...so beware of the landlord who is unavailable or doesn't make it easy to get your questions answered!

I definitely like the idea of asking a question with false information to see if the "landlord" corrects you. Thank you for all the great ideas!

You just received an application for your rental. You call the prior landlord and find out your applicant was their best tenant ever and always paid rent early! Things are looking up! But how do you know that this is really the prior landlord and not just their best friend doing them a favor?

Listen to Joshua Sheets on the Radical Personal Finance podcast! He has covered this topic in depth and the short answer is it depends on your situation and the type of vehicle you are purchasing/leasing. Good luck

I'd be concerned with the vinyl floor for tenants too because when (not if) the floor gets scratched, there is not an easy way to fix it. Laminate, as long as it's not the super cheap variety, will wear much better.  If it were me and I was planning to keep the rental for a while, I'd prefer hardwood or ceramic tile but labor will be more costly on those options

My friend loaned me 100% of the 15k purchase price for a fixer upper with 5k cash out for repairs.

I completed the rehab with 25k from my home equity line.

For his security, we put the house in his name. 

Option 1. Sell:  Sell for 85k. My friend gets his 20k back plus interest and I would invoice him for the difference. After I pay back my equity line, I'd probably gross 35k. 

Option 2. Hold: This strategy is in line with my long term goals. Every major component of this house has been replaced so capital expenditures would be minimal. Here's how I would go about "purchasing" the house from my friend:

-I give my friend an invoice for 50k for the renovation improvements.

-I sign a purchase agreement to buy the house for 50k

-I go to the local community bank to apply for financing with 25% down (that's $12,500 down payment)

-I use the money I received from the invoice to come up with the down payment and pay back my equity line and cash to pay my living expenses while I did the rehab. Upon closing, my friend gets 50k back and agrees to add the original 20k into another loan I have with him. There would be no increased payment on that other loan. In the end, I would own a house with a 300 positive monthly cash flow and no money out of pocket.

Does it make sense to keep this or take my profit and run?

Numbers from the BRRRR Calculator:

Gross Income: $10,800

Monthly cash flow: $300

NOI: $6406

Cash on Cash ROI: 120% (I'm not even sure how this was figured since I won't have any money invested in this)

Also, I'd be open for suggestions if anyone knows of a better way to finance this. I know this was a lot to digest so I appreciate you if you made it this far. Thank you all for your advice!

Those are good ideas. Thank you!

I think Cleveland, Ohio is a great place to invest! The 2 SFR rentals I have on the west side of town I purchased for 20k, put 10-15k into them and they rent for $950 & $800. They are both in B- neighborhoods. There are many homes that can be bought in the 60-90k price range. In fact, almost every house I have listed in my profile was purchased in that price range, or less. It's not too difficult to find homes that cash flow here. Reach out to me if I can be of further assistance. Best of luck!

Next month I'll be finishing my smallest flip to date... a 780 sq ft house in the Westpark neighborhood of Cleveland, Ohio.  Because of the extensive renovation, I plan to price it at the high end of the comps around 90k. 

1. What could I expect to pay to stage this small house?  It only consists of 2 bedrooms, living room, kitchen and bathroom.

2. Is it worth the money to stage a house that would probably appeal to a first time home buyer?

3. Any reccomendations for a good staging company in Cleveland, Ohio?

Thanks!

Here's my plan:

I want to be financially independent by selling my personal residence and investing the proceeds to pay my living expenses.

If I net 180k from the sale and use 10k toward the downpayment on my next residence, I'll have 170k left to invest. If I invest the 170k with a 30% cash on cash return, I'd reach my FI goal. Cleveland is an easy place to find deals that cash flow but is this realistic and if so, any advice on how I would go about this would be very much appreciated. To this point, most of my experience has been with single family houses and a duplex but would consider larger multi unit property's if I could get the financing and the numbers work. Thank you for your help!