All Forum Posts by: Patricia Miller

Thank you @Michael Lee - good advice about the HOA.

@Bill S. Your proposed strategies seem very solid from what I have learned so far from the BP materials. In fact, we don't really need to see cash flow in the short term since we still have income from a job. That cash flow becomes more important 5 and even 10 years out. The ROI piece would not truly be realized 10-20 years out. So, yes. Steady and slow.

Yes, indeed @Bill S. We had set up a spread sheet a week or two ago, and then got caught up in looking at what was available in the market. Last night, I ran some numbers with several scenarios - a 200,000 property and a $100,000 property with 4 different levels of down payments each. Ouch! I used 10% for reserved expenses (cap ex, maintenance, prop. mgmt, vacancy) and - duh - gone was the cash flow except in the case of the highest down payment (40%) which quickly eats up all the cash for future investing and offers a poor ROI. Never mind finding these properties without reno costs (I did add $12,000 renovation costs for the $100,000 properties -assuming they even exist). The average rents in the areas where these properties could be found did not offer enough to make this worthwhile at all.

Now, I'm having second thoughts.

Of course, finding the deals (requiring experience and skill) is key. As beginners, we should not expect to be that good at it. So, I might need to continue to let my thinking-outside-the-box tendencies to flow freely and see what turns up. But always with the numbers in mind.  

Multiplex units? (Everyone is looking for those!) VRBO? Buy a new property before it's built and rent/sell? Land? 

Your reality-check posts are most appreciated!

I forgot to mention @Matt M. that my husband currently has a full time job which he is going to hang onto for several more years and we have excellent credit with no debt except our current home (to be on the market soon). I appreciate the idea that keeping options open is a good idea as to the type of property we first purchase for investment - hopefully with house hacking of some sort.

@Dan Mackin So when you say the HOA can be a help, do you mean because of the maintenance/upkeep tasks they perform and amenities paid for by them (pool, clubhouse, etc.)? We lived in a few townhomes with HOAs that seemed to do a fine job, but we were only there for 3 years each. Recently, we were considering downsizing to a condo/townhome community and, fortunately, one of the agents (she was selling her own home) told us that a series of $15,000 assessments were being levied across the community in the units by groups. That certainly changed our view of the prospects in that community. (Didn't buy). I also recently saw some new properties north of Erie, I believe, with fairly hefty HOAs. Unless an incredible sales deal could be realized on a property there (unlikely in a new community?), they were prohibitive from a cash-flow standpoint.

Thanks @Kevin Grinstead I thought about living in a duplex/multifamily and renovating as needed - or - converting a single family into a duplex (the opposite of what some neighborhoods would want you to do). Part of our research, then, should be to find out where that idea would be more acceptable, or at least not against local codes. We've already had the experience of building a house on a slice of land that was empty forever - and then having to live with cranky people who could not accept that the land was developed. No fun!

Regarding HOAs @Dan Mackin - we realize there can be surprises there. Certainly, at the outset one can calculate an HOA into cash flow, but down the road, if a sudden large expenditure is passed on to the residents - that can wipe out any gains built up in the preceding years. Good point to consider! We might wish to be very careful about holding onto properties with HOAs. Perhaps, those are the house hacking properties - if you can get out before a bomb is dropped!

Great ideas.

So, assuming this is a question for the "Fire Round" on the BP podcasts - is anyone willing to offer an opinion about or strategy for the following idea? Condos or apartments? Townhouses or SFRs? etc., etc.

Goal: develop modest cash flow ($3,000 - $8,000 per month) while building a buy-and-hold portfolio over a period of 5 years in the Denver and surrounding area.

Initial investment: $80,000 cash immediately; additional $180,000 within 6 months (from sale of home), need to live somewhere as part of the plan after the sale of the home.

Investor experience: 0

Investor strengths: Willing to work, research, organize, engage in and manage light-renovations (or build?); super-high level of motivation; experience with 2 new home builds (with contractor) and a life-time of home renovations 

Investor weaknesses: not willing to deal with difficult tenants; leery of investing in lower rent/unsafe areas; moderate risk tolerance; probably more passive involvement after 5 or more years

I'm doing lots of research now, listening to podcasts all day long, reading, and pouring through Zillow, MLS etc to see what is what. Currently realize that deal-finding is critical...

Thanks!