All Forum Posts by: Steve Moody

@Tony Ngo I don't know much about Longview, but from what I've read houses are cheap, but there can be issues with low income renters and the unemployment rates. Have you seen this to be the case? 

@Daniel Chang There are lots of pros to a newer home, but in the Portland area I haven't seen any chance of positive cash flow unless you get a distressed home at well below market value, and even then the ROI is pretty low (some of my stocks in my IRA have made 4x what I'm projecting a Portland buy/hold to make in CoC). If you can find brand new homes in Portland that will cash flow with our low rents, buy as many as you can and then sell them to the people who are paying retail for buy & hold here (there seem to be a lot). Ok, I'm being a bit over reactive, but only a little bit :-)

I'd still be really reluctant to buy into an HOA as they're often times mismanaged and run by homeowners who may not have your best interests in mind when making decisions. I feel that way about HOAs in general, except maybe in a condo situation where you're essentially paying them to maintain the exterior of the building and in some cases plumbing is covered by HOA. In this sense you're just paying some of your CapEx to the HOA. They'll replace the roofs, paint, etc when needed (IF they managed their funds properly).

If you go with newer I'd say that CapEx will be slightly less, but not significantly. You still need to paint the outside in X years, and get a roof in Y years, furnace, water heater. Do the math and save the CapEx. Maintenance will be lower as everything is new. If you go with old, and not renovated, the maintenance will be higher, and CapEx may be higher as well if you think the big items need replacing sooner than in a new place. Of course if you renovate and replace all the big things (water heater, HVAC, roof, paint, etc) then the CapEx is almost the same as the new place, but you want that maintenance buffer in there for little things that will go wrong with an older house.

Good luck with whatever you decide, and keep us posted

It seems like most people are on the same page here. If I had $100k I wouldn't be tying it up in real estate.  I'd use it as leverage for purchasing real estate, but would be looking to get my money back out ASAP. 

If you're into buy & hold then BRRRR would be ideal, and having cash will afford you the ability to buy deals that those of us with little cash can't. Getting your cash back out allows you to repeat over and over

Someone else mentioned on a thread here that they started putting these humidity detecting fan switches in their rental bathrooms. Seems like a great idea to make sure the tenant uses the fans (having a quiet fan helps as well!). Not a bad idea IMO, and pretty inexpensive. I might just get one for my kids bathroom as my boys are not always good at turning on the fan when they shower. 

http://www.homedepot.com/p/Leviton-5-Amp-Humidity-Sensor-Fan-Speed-Control-White-R02-IPHS5-0LW/204734988

@Account Closed Slugs can come up through the drains too. They like moisture, and eat mold (bathrooms are a perfect environment). So, I'd look for any mold/mildew and get rid of it. If there are any cracks or holes in and around the baseboards/floors plug them up, but you may want to remove the molding just to check for mold (moldy molding? I can see why the English language is confusing) 

If the bathroom is 1st floor, and has a crawlspace get under there (or pay someone else to) and check the shower drain for any cracks or leaks.  You pretty much have to remove what they're coming for, and limit their ability to enter. I would ask the tenant if this has happened before, and what, if anything, the previous owner did. At least then you'll know if this is a tenant being nit-picky, or if it's a sign that the previous owner neglected possible issues. 

I suppose there's a fine line between jumping at every beck and call, and seeming disinterested in your tenants and the property. Don't let the rents factor too much into how you treat the tenant. Showing them that you have pride in the duplex may go a long way in helping them have pride in the place too. 

There are a lot of factors that would go into the decision factor for me. How much are you going to put down? Are the utilities owner paid, or paid by the renter (or both) What's the estimated monthly cost of utilities paid by the owner? You mentioned rehab, but didn't mention how much that's going to cost. Factor in the cost of insurance, CapEx, and regular maintenance. Even though you expect the units to remain rented long term, still factor in some vacancy, 5% maybe? (one unit being vacant for 1 month a year = 2% of your rental income).

What do you consider to be a good Cash-on-Cash %? What's the minimum cash flow you want per door, per month? 

There's a good rental property calculator on this site under 'Tools' in the header bar, or you can make your own spreadsheet (as I have, though it's still lacking a lot) 

@Account ClosedThanks for the explanation. Keep us posted on the progress!  

@Account Closed I'm a little confused by your numbers. I'm new to the game so maybe I'm missing something, or being overly cautious. You state rents will be around $1300, but listed gross income at $43,200 ($1800/unit). You don't have any calculation for CAP Ex, is this because you are replacing everything, and will sell before anything big needs replacing again? What about regular maintenance funds? You don't have any PM worked into the calcs, I understand you have a plan for management, but would it make sense to put it into the calcs in case you decide to have a management company do it? Using my calculator I'm seeing ~$740 cash flow (12.6% COCR) and that's with no CapEx. Maybe I'm being overly cautious with my calculations though.

Now that said, I'm not trying to be a Debby Downer, great job on finding a duplex for that seems to be able to make a profit (the don't seem to exist in Portland)  

 What you probably saw being built was the Top Golf driving range. I live over in that area and there's not a whole lot of new home construction going on. You have to get out to Forest Grove, or North Plains. There's a bunch of new homes going up in North Plains off of Jackson School Road. Otherwise this area has rising home values, and rising rent, but the rent is still so far away from cash flow you'd be better off investing elsewhere unless you get a smoking deal 

http://topgolf.com/us/hillsboro/

Holy cow! If I could get 2-3% of the home value back in rent every month I'd be buying up houses too. I really question why people rent in these areas when you could buy for so much less than rent. And people complain about rents going up in Portland! 

If I could only rent my current house out for $7000/month! Good on you for finding a crazy market and buying into it at such a young age, I'm jealous.