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All Forum Posts by: Mike Roy

Mike Roy has started 20 posts and replied 217 times.

Post: Help!! My Wife Only Gave Me $10K

Mike RoyPosted
  • Rental Property Investor
  • Bath, ME
  • Posts 220
  • Votes 288
Jon - I'd do my homework before spending a dime. $10k isn't a lot to get started in real estate, but it's still a lot of money. No offense, but you are asking some pretty basic questions that Google could quickly answer. Some of the more successful investors here studied for years before deploying real dollars. If you're looking to prove something to your wife, the first thing you should prove is that you know what you're doing. There are a lot of angles to get into real estate with varying degrees of risk. Many of them are nothing more than jobs too, so you really want to think about your motivations, goals and exit strategies before spending that $10k. Good luck!

Post: Bubble?

Mike RoyPosted
  • Rental Property Investor
  • Bath, ME
  • Posts 220
  • Votes 288

I tend to classify Buyers of Assets into two categories: 1) Investors and 2) Speculators.  I think this applies to real estate, stocks, buying a business, etc.  Investors are generally looking to purchases a stream of income - i.e. cash-flowing real estate and dividend stocks.  Speculators are generally looking to purchase with the expectation that the asset will increase in value - i.e. house appreciation or growth stocks.  

In my humble opinion, Investors can generally weather ups and downs of business cycles much better than Speculators.

Getting back to your question about a real estate bubble, if you can find a deal that's generating stable cash on cash, it really doesn't matter a whole lot if you didn't time the market perfectly.  There is, of course, the opportunity cost that you might have gotten a better deal if a bubble pops in a couple of years, but that would make you a speculator.

Post: Dishwasher ROI

Mike RoyPosted
  • Rental Property Investor
  • Bath, ME
  • Posts 220
  • Votes 288

I'm closing on a 4-plex this month and none of the units have a dishwasher.  I'm in a "utilities included" kind of market and am paying water/sewer.  I was wondering if any of you have added dishwashers and have seen a measurable decrease in water consumption as a result.  I've read that dishwashers can use up to 1/6 the water used washing by hand.

Have any of you been able to measure the cash return of adding a dishwasher?  Aside from having a nice amenity to offer, is it worth it from a strictly water savings standpoint?

Post: Request to lower the rent.

Mike RoyPosted
  • Rental Property Investor
  • Bath, ME
  • Posts 220
  • Votes 288
Originally posted by @Colleen F.:

Just had to share - the request went something like this --we have kept our dog in the yard and paid our rent on time,  we want to stay another year or two then  buy a house so we want to go month to month, and can you consider reducing the rent? So I am doing what I am supposed to do as a tenant please reduce my rent.  They are coming up on one year and said they wanted to stay long term, probably like 10 years was what was said at move in.

They like the place so that isn't the issue and I never believe move in statements like I am going to stay here for 10 years. People are gonna do what they are gonna do.  I know my answer given this particular tenant  but I am wondering what experience other people have. What kind of reduce the rent requests have you received?

The way I look at it, you're either running a business or your running a charity.  If you're running a business, your objective is to maximize profits.  f you're running a charity, then you're certainly free to lower the rent in the name of altruism.  However, I believe that your tax deductions are contingent on the IRS believing you are running a for-profit business, so be careful there - and don't take my word for it, talk to a CPA.

I would never take a tenant at their word.  The only thing that matters is what's agreed to in a signed lease.


Post: 1st rental property gets 10 interested on Craigslist. Now what?

Mike RoyPosted
  • Rental Property Investor
  • Bath, ME
  • Posts 220
  • Votes 288
Originally posted by @Rhondalette W.:
Originally posted by @Mike Roy:

Have you considered that perhaps your asking rent is too low? With that kind of response rate, it just may be.

 You maybe right Mike. We are asking $1250 a month and it seems to be lower than others in a few mile radius. The closest rental is on the next street south of mine and they are asking $1295 but they also have  300 more in square footage.  Would it be unethical to raise asking price once I have published it  online at $1250 and have gotten 10 responses. Can I say we have raised the rental price after already telephone screening? 

I think it would be unethical to raise the rent outright.  Also, for $50/mo., it's probably not worth the headache and possibly prolonged vacancy.  If further research suggests that you can get another $100 or more, it might be worth turning down your ten interested parties (without breaking any discrimination laws) and re-listing.

Good luck!

Post: 1st rental property gets 10 interested on Craigslist. Now what?

Mike RoyPosted
  • Rental Property Investor
  • Bath, ME
  • Posts 220
  • Votes 288
Have you considered that perhaps your asking rent is too low? With that kind of response rate, it just may be.

Post: I am a 20 year old male, no idea where to start!

Mike RoyPosted
  • Rental Property Investor
  • Bath, ME
  • Posts 220
  • Votes 288

Hi Alex - The fact that you're here is certainly a great start!  Search "house hacking" and give that some thought; if you're serious about real estate investing, this will likely be one of the easiest ways a young person with limited funds can quickly gain exposure to investment and property management while potentially living for free.  It's basically the college scholarship of real estate investing.

$5,000 is a down payment on a $140k property financed with an 3.5% FHA loan. Not sure what your market looks like, so maybe you need $10k for a $280k property. The idea is that you find yourself a 2-4 unit property, live in one of the units and let rents from the remaining units cover your expenses.

Property expenses you would need to consider include P&I, Tax, Insurance, Heat, Electric, Water/Sewer, Trash, Maintenance/Repairs, Capital Expenditures and Vacancy.  If you can find a property that allows you to live in one unit and remaining rents cover these expenses, you're pretty much golden.  Lots of good info on this site about evaluating properties and considering expenses.

The other thing you want to consider is your income - you need to qualify for a loan.  While there is money to be made as an agent, the most important thing you can do while you're young is to maximize your income, maximize your savings, and maximize your investing.  Any job will do, but try to pick one that will best utilize your skill set and pay you the most for your time.  If it happens to be as a real estate agent, that's great!

Best of luck,

Mike

Post: Need Roofer in Midcoast Maine

Mike RoyPosted
  • Rental Property Investor
  • Bath, ME
  • Posts 220
  • Votes 288

Hi BP - I'm looking for a good roofer for a 4-unit in Bath, Me.  Please let me know if you have a recommendation.

Best,

Mike

Post: Feedback on my insurance quote in Maine

Mike RoyPosted
  • Rental Property Investor
  • Bath, ME
  • Posts 220
  • Votes 288

Hello - I'm preparing to close on my first investment property, located in Bath, ME, and I'm wondering if the Mainers here might chime in on the insurance quote I received for a DP3 policy.  Here are the details for this 3,250 brick 4-plex:

Replacement: $564k

10% Rent Loss

$1 Million liability

$5k medical

$5k personal property

$5k deductible

Premium - $1,703/yr. ($142/mo.)

Does this look reasonable, can I do better, and who might you recommend me reaching out to if so?

Thanks,

Mike

Post: 50 % rule in NH

Mike RoyPosted
  • Rental Property Investor
  • Bath, ME
  • Posts 220
  • Votes 288

Have you considered filing a tax abatement with your local municipality?  I'm working on a 4-unit deal in Maine with an assessed value of $265k and have it under contract at $180k.  Basically, the city is taxing the building based on a pre-recession value.

One of the first things I'm going to do after closing is to appeal the assessment with the city.  I'd be curious to know if anyone has successfully reduced their tax bill through an appeal process and what strategy (appraisal, comps, etc.) they employed to pull it off.

Mike