All Forum Posts by: Peter McDonough

DM me please

lmao which PM company is this?  Is it Astro Property Management?

Don't do section 8

Yes, you will have more trouble than within Huntsville city limits.  Schools are mediocre, not a lot of high end employment.  High end renters here will only live in the unit a year, while they look for their own house to buy that's closer into town, leaving you with significantly higher vacancy and turnover costs.

You should NOT be expecting your agent to be " crawling around in the basement crawlspaces, collecting cobwebs and assessing the plumbing".  LOL

Send them to me, I'll pay you a finders fee.

At industry standard 55% expense ratio, and a rent of 1750, this 277k property has a cap rate of 3.4%.  Since you closed on this deal in mid-March, I suspect your interest rate on the property is somewhere in the mid to low 4s.  

In other words, I hypothesize that you have negative leverage on this investment, and thus will slowly lose money over time unless you get large rent increases or huge appreciation gains, or can cut operating expenses.

Rent increases: I don't think you'll get large rent increases because folks that can afford that larger rent and want Madison City schools will actually just go and live in a nicer house in Madison.  This house is in Triana(way south of Madison), where the median renter is fairly low income, so this property puts you at the very top of the market--which makes it difficult to bump rents.

Appreciation gains: The house has a converted garage to make it a 4 bedroom house, and is relatively newly built, so there's not a huge amount of potential value add.  From the county data, looks like this property sold for about 130k in 2016.  Huntsville is likely going to see some appreciation, but I don't think I'd count on a doubling on house value in the next 5 years.

Cut operating expenses: You're out of state on this one, so can't save money doing work on the property yourself, or managing it yourself, convert to short term rental, etc.  House will require a new HVAC and new roof within 3-5 years due to age, possible water heater, etc.   Due to the factors listed above, I think the renter profile will end up being folks who only stay one year, then move elsewhere.  You'll have consistent yearly 8-16% vacancy and continued yearly turnover costs.

Oh ok here's a tip.  Don't spend 277k for 1750 in monthly rent.

I don't think congratulations are in order.  This is a terrible deal.  You will lose money on it.

You bought a 275k house in Triana, where the median income is something like 40-50k a year. How do you expect to find good renters? The house is not in "madison" it's just in the madison city school district. Good for fooling out of towners looking for a one year rental that don't know the area and are only looking at schools. Are you ready to pay to turn this property in 12 months? Looks like you closed in late march, so at interest rates were still fairly low. That said, 50% of rent probably doesn't even cover PITI. Looks like that house will require both a new roof and a new HVAC within 2-3 years---how exactly do plan to pay for those? Throw more money at the situtation?

You need to find a competent realtor or a local who can point you in the right direction.

Plus, is that a converted garage on the front in a neighborhood full of new builds?!  Yikes!

There are a bunch. But there are in not great areas of town.