All Forum Posts by: Aaron Mikottis

Looks like I'm going to have to watch this thread. Any time two people disagree so vocally, it's an opportunity for me to learn a whole lot.

I shoot for 2% although admittedly it always falls short. Realistically I consider 1.5%+ to be a good deal. I've got high property taxes in my market, however, and alot landlords around me pay water. Like Steve was saying, these variables can have a big impact on the bottom line, so adjust the rules of thumb according to your local conditions. Also, I'd be wary of a rehab budget that large if you havent itemized the work yet, especially since at your figures you are just hitting the 1%. It seems that more often than not, rehabs go over budget. A rock solid scope of work will go a long ways to help you out. Just make sure that you have enough spread to cover unexpected costs.

My lender is requiring 25% down for non owner occupied investment properties - if you have confirmation that you can do 20% - great! If not, I'd want to know ASAP. That extra 5% could mean needing a lot more cash on hand.

Kind of like cap rates, I think that you need to get to know your personal market and adjust these rules accordingly. Find people who are currently flipping in your area and ask them for their numbers. From there you'll have a more realistic picture of what the market can bear and what bar you're shooting for.

I'm a big fan of nerdwallet.com for helping wade through the sometimes murky waters of credit card sign up bonuses and requirements.

Like others have mentioned in the thread, it gets the bulk of the transactions right, but you do need to check in on it and categorize some purchases on a regular basis. I also find it to be buggy at times, dropping login info to my accounts or not refreshing them right. That actually played to my advantage recently, however, where it failed to refresh the activity on one of my credit cards and that allowes me to spot some fraudulent activity that had already been wiped from my CC statement. Personal Capital is really great - love their retirement calculator. I'm more familiar with mint's transaction history interface, however, so I continue to use both somewhat regularly.

@Jacob Pereira, I think that you hit the nail on the head as to why it is a poor decision to buy for appreciation. It's such a common misnomer for folks to buy a house because "it's an investment". I like to think of a personal residence as more of a forced savings plan.

"I bought my house for $100k and then sold it for $150k ten years later, what a windfall!" 

But this owner is forgetting about the cost of repairs, cap ex, and taxes, just to name a few.

You're right, the appreciation is underwhelming. That's why it's a better idea to buy for cash flow and take the appreciation as gravy. One thing to consider, though, is the cash on cash ROI. If you bought a house all cash and it appreciated 30% over ten years, that's one thing. But if you only put 3.5% down with an FHA loan or went conventional with 20%, and the total value of the house appreciated 30% over the same time span, you're doing pretty well.

I think that this thread should be titled "best cities to invest in ten years ago"

One thing I've learned about refinishing floors is that it depends. If it's 3-1/2" wide planks, refinishing is the way to go. If its the thinner planks, usually around 1-1/2", it may be more cost effective to replace the floor. Reason being, the thinner planks are also shallower on install and they are an older style which means they may have been sanded down already a couple times. If the floor has already been refinished, contractors will need to take their time and take off the bare minimum to get it done right. Of course, your milage will vary, so I would ultimately recommend that you get at least three flooring contractors in the place and get bids for both.

The first property I had under contract with the intention of performing a bunch of repairs with a 203k loan. After I got itemized bids for every aspect of work that I wanted to get done, the ARV was $40k under my total all-in cost. I wasn't putting in golden toilets and granite countertops - I just grossly underestimated how much exterior work costs. There was no way that the bank was going to loan me that money, (and it turned into a sour deal) so I backed out.

The second one was a little different. I was trying to build a seller credit into the purchase price to cover some repairs that I wanted to get done. The seller agreed to our price but when it came down to negotiating the actual details during attorney review he became a royal PITA and wasn't willing to play ball. I probably could have kept that deal but things were not going to work out under the terms I wanted and I was going to have to foot the bill for repairs out of pocket, so I decided to back out. Better to have no deal than a bad deal...