All Forum Posts by: Matt N.

@Troy D Swift

Hey Troy. Some comments below.

Change Management to 10% - this is the going rate for 1 property managed by a company

Change Vacancy to 8.33% - this is one month per year. (1/12). Consider this to be higher if you are renting to students. 

Change interest rate to 7.5% - investment properties pay higher interest

How are you accounting for initial repairs? It looks like this calculator is assuming a $60,000 home that needs no work. I'd add in $25,000 to your loan amount for repairs, or to your cash down number. Since you will need to spend some money to stabilize this property. Unless it is turnkey @ $1200/month. Needs to be accounted for somewhere.

Best Regards,

Matt

Nice Guy Realty LLC

Hi Justin,

For a quick and dirty calculation. (NOI - PITI)/2 is what I use to estimate cashflow and expenses for a buy and hold. This is a VERY rough calculation. And you'll see that I am simply assuming that after fixedmy expenses, I will keep half of the income and spend the other half on things like repairs, management, vacancy, etc. This comes from my experience buying and renting homes in C and B class areas.

I hope this helps. For more detailed analysis or just to talk more please feel free to send me a DM. I'm a realtor and investor who specializes in working with investors to find cashflowing properties. 

Cheers,

Matt

Ying,

Here is what worked out for me. I am retired at 33 years old. Writing you from beautiful Sun Valley Idaho, on a ski trip. Disclaimer: buying houses all cash is not the smartest way, this is just what I did at the time. My journey was a marathon, not a sprint. Started in 2013 with the hack, and the rest of the journey is below. 

I house hacked right out of college. Bought a 3 bed in Manayunk with PITI @ $1000. Rented the two spare bedrooms to my friends for $500/month each. I lived for free. Built in a 4th, smaller bedroom. By then I rented that for another $500 and as roommates changed over, I upped to $600 for the bigger rooms. I was making $700/month + saving around $1000 in rent. So I socked away that $1700/month for a while and bought a house for all cash in brewerytown. Rental #1. from a wholesaler.

Fixed and rented #1 for $800/month (small and not a great house). Pulled a HELOC on #1 and used that to buy Rental #2, all cash again, wholesaler. #2 rents for $1450 a month. I guess I just like showing up at closing with a briefcase full of money. Rents from #1 and #2 were used to pay down my HELOC quickly to avoid interest.

Rental #3 came from a wholesaler. $21k cash purchase (used that same heloc, AKA SOMEONE ELSES MONEY). Easy rehab. Rents for $900/month... im now I'm at $1700hack + $800 #1, + $1450 #2 + $900 for #3 and I'm making $3400/month after PITI but before any expenses. Not bad.

Rental #4 another all cash deal. $35k... What was I doing!!!. Squatter special 3 unit. One family was living in all 3 and running an illegal daycare out of it. I came in with a lease agreement and an eviction notice, their choice. They signed the lease :) ... Triple net lease for $900/month. That means I FIX NOTHING AND PAY NO BILLS.... $4300/month Not great but not bad for a young person with a full time job. #2-4 were all bought with that same HELOC. Just kept recycling those benjamins.

Rental #5 First BRRRR! 3 units. Hard money 90k purchase, 80k Rehab. Cross collateralized my free and clear properties to secure the loans with no money down :) Maybe buying all cash was smart? At the end of the day, COVID happened and my refi did a drive by appraisal and I got screwed. Had to bring $20k to the closing table to get my final mortgage. PITI was $1200. Rents for $3200 total, so that another 2k for me.... we're at $6300/month now.

#6 and #7... due to low interest rates and my income I bought two homes for around 100k each. They rent for $1200 and $1100. PITI for both is $1100/month. Thats another $1200 for me and now I'm at $7500/month income after debt servicing and taxes.

This is when I quit my full time job. People here might say, $7500/month is not great. But Hey. I'm fishing and skiing every other week :)

Good luck. I hope this is helpful or useful in someway!!

Try WSFS. They are pretty reasonable. 

Hey Jake.

Start running so many deal analysis that you can look at a property and price and know instantly if its a good deal (dont be hasty this takes time).

Your next lesson should be on Self Directed IRAs and your business structure. You want to invest correctly for the future and structure correctly for the present. I am no expert here but there are videos and lessons online.

Good luck! If you need help reach out. 

Matt

@Ashley Glinka @Tim Herman

I would caution against assuming you will always manage it, and your husband will always repair it. You probably plan on owning this asset and others for a very long time. A lot can change over time and if you move away, or lose interest, you still need to make sure it will cashflow. I'd consider Tim's inputs and include 8% vacancy (1 month per year), 5-8% repairs depending on the area, 8-10% management. If it still works then its good. 

@Jonathan Saft

I think an important piece of info is missing. Is your mom going to pay you rent? Will the rent cover the mortgage + expenses? If YES and YES then put as little down as you can, and make sure the rent is covering mortgage/taxes/insurance/condo fees/ 5% repairs / 0% vacancy (shes going to stay i assume) / 0% management (assuming you manage it).

Make sense? 

If you're straight up buying a house for mom, and you have the cash doing nothing else, I like your plan.. It just might take longer to refi than you want. 

@Jason Winter

Another tip here: There is a small dial on the meter itself. If that needle is moving, there is water flowing somewhere. So you can turn everything off, check the meter, and its a sure way to know if there is a leak. Then find the leak ofcourse like you did!

@Ashley Glinka

To be more specific as to why its easier to keep it all in an operating account and not separate.... If you have a $7,000 sewer line replacement in month 6 of ownership (Happened to me!) ... you'll never have set that much aside for repairs by month 6. So you'll end up exhausting the repair account, and dipping into your operating or personal account, thus making the accounting very confusing come tax time. 

For any and all tips landlording/investing please reach out. Check out my bio, I am happy to help!