All Forum Posts by: Paul Shannon

That's a tough one.  I don't think having the main entrance on the side of the house will affect your rental acceptance necessarily.  Although it may affect your ROI when you go to sell, b/c most buyers won't want that. How long will it take for the cash flow to pay you back for your cash investment? If its a couple of years, its probably a worthwhile investment. Assume it won't appreciate or it even may depreciate and run your numbers based off that assumption.

I was in sales my whole career prior to leaving W-2 work.  B2B and med device/capital equipment.  You're always selling in real estate, whether you're selling property, selling a prospective tenant, selling a seller, or selling yourself.  A person with sales skills/training who enjoys finance is a natural fit for real estate I think.  

$200k is good starting point and gives you some options.  You'll definitely find better cash flow in the midwest versus California.  Do you feel comfortable investing out of state?

A big question to ask is how comfortable are you with leverage?  In the midwest, you could probably find a $50K house that rents for $800 a month pretty easily.  If you pay cash for those houses, you'll need about 112-14 or so to hit your $5K a month goal.  That means you need to save and invest another $400K over what you have already.  Can you do that in  4 years?

You have a high income, so you could easily qualify for mortgages as well.  If you were willing to carry some debt after leaving your job, you could probably do it faster than 4 years, but you'd need more like 30-40 houses based on my example.  Are you willing to leverage? 

You also may find you like real estate so much that you won't want to stop after you've hit your goal.  

I think it depends on the class of property you're trying to rent.  If you are in an A class neighborhood, you should be able to find someone with 600+ more easily than if you are in a C class neighborhood, where there are more folks living paycheck to paycheck (generalizing here).  So qualification criteria can vary.

For my business, I found that I was turning away good renters who had 500+ credit scores in a lot of cases.  Screening a tenant is some science, some art.  I do not rent to people with past evictions or a rough criminal history.  When it comes to credit scores, I get concerned if the applicant has maxed out limits with a lot of payments past due in the present. However, If they've have had some trouble paying bills but you can see that they have picked themselves up and are back on track, that tells me they take responsibility for themselves.  I don't mind renting to a person like this as they rebuild their credit.  

Tim, I had the same dilemma when my wife an I had a condo in Boston we needed to sell 2012 to move to Columbus, OH.  We decided to sell to get the equity out and give us a cash cushion and downpayment for our new house in Columbus.  We bought for $400K in 2008, sold for $413K in 2012 and the condo just sold for $795K in 2019.  Whoops!  It would have rented for somewhere between $2750-3200 during those 7 years to boot.  

Now this is a different time in the market cycle, so those gains are unlikely.  However, if you are in a desirable neighborhood in Chicago and can break even or better, I would consider holding.  Illinois is a little backwards fiscally and budget wise, and the taxes are brutal, but demand is there and that city rocks.  I actually lived in Lincoln Park for 10 months and think if Chicago was in a warm climate, it would be the best city in the country.  

Anyways, I digress....speculation isn't helpful.  But if you can swing it, and the numbers support the property as a rental, and it doesn't disallow you from buying your next house, you should consider.   The opportunity cost is other investments, so consider that. 

In my experience you can find multifamily listings on sites like www.loopnet.com or www.crexi.com, but rarely will you find a deal.  Loopnet has a reputation of "where deals go to die".  Not to say that you can't find deals on platforms like this.  Just not likely.  A lot of sellers seeing what they can get.
 

More effective to build relationships with commercial brokers, or residential in the case of small multifamily.  Direct mail to find off-market opportunities. Wholesalers. Networking with other investors.  

How many rentals do you have is what dictates the answer.  If you have a few, it makes sense to shop for the best price.  If they are vacant and under rehab, you may have to find a different carrier until they are stabilized with a tenant.  Then you can roll them to lower cost insurer.  Usually you can get more favorable deductibles and replacement cost value with these policies.  

Once you reach a certain point, you may want to switch to a commercial policy, if your properties are in an LLC. You will likely have a higher deductible and actual cost value for these policies, but vacant properties/builders risk and liability and property coverage will all be covered. You buy a property and send an email to add the property to the insurance schedule.

Check out replacement cost versus actual cash value if you aren't familiar with the terms. 

Older post, but wanted to chime in on Buildium review.  I've been very satisfied using the software for about 18 months now.  One-stop-shop for banking, accounting, reporting, tenant screening, e-leases, electronic payment, maintenance requests via tenant portal.  

It takes some learning to navigate, but they have "Buildium Academy" that is a video learning platform that walks you through the functionality.  Once you get over the learning curve, its very straight forward.  

I manage my properties locally with Buildium.  My property manager for my long-distance rentals uses Appfolio.  I'm also happy with that software on the other end of the transaction.  I don't think you can go wrong with either. 

Welcome Carrington.  I'm out of Indy but invest both locally and in Evansville.  Good luck.  

I'm looking for the same thing at the moment and found it with a local community bank and another credit union. A caveat with both options is that they want to be in 1st lien position, so if you have a mortgage it wouldn't work. Prime rate +1%, so about 4.25% currently. Has to be paid back within a year and then can renew. 80% LTV/Equity.

I'm sure there are other options.  Try community banks and CU's in Broward.