All Forum Posts by: Scott Rogers

sell them on craigslist you will recoup some rehab costs and they will be removed win/win

Insurance is based on rebuild costs  (110 sq ft in GA) and risk assessment.  

Risk assessment is roof and siding type and age. distance from a fire hydrant. crime rate of area , occupied type. ect.

Insurance agent will give you a free quote

I would keep him in house 2.  and rent house 3 for cash flow.  Unless you need that 50k from house 2 its money in the bank and family is important.

Are the taxes owner occupied or investor owned? Many areas have home stead exemptions that can significantly lower the rate. so what current owner is paying may not be what you will be paying.

Also what is the valuation the taxes were figured against compared to new sales price. those taxes could raise significantly

Your insure estimate would be extremely low compared to my area in Georgia. I would call a agent and get a more accurate quote

in my area houses are insured for approx 110 sq ft.  as that is supposed rebuild costs.  so if you pay 25k or 50k or even 75k for a 1000 sq ft house insurance will cost the same give or take a few variables. distance to fire hydrants siding type roof type and age ect.  

I try to keep insurance costs about the same as 1 months rent.


Taxes. they go up about every year. you can get a idea by looking to see what current owner is paying as well as what the owners of the comps are paying. I try to keep it under 1 months rent .

turn over hopefully they stay a couple years and dont trash your place.  but I figure 1 down month  to rehab and get new tenant screened every 2 years.


Rehab at turn over is at a minimum cleaning and light painting.

capital improvements.  carpet averages 5-7 years. vinyl flooring 7-10.  ac units 10 years. roofs 15-20. ect. ect.  

return on investment, thats your threshold on what it takes to be worth it for your time and risk

Personally I pass on anything I cant get atleast 500 a month out of so when I look at a place its not how much it cost im concerned with. Its what do I need to do to it to get it to pay out what I need. so if they want 22k and it needs 6k in rehab. but is only see a return of 500, Im going to offer 18 firm . or adjust the rehab to better finishes so I could get 600

I dont think anyones numbers will be the same as yours so adjust to make it worth your time.

I do have a question about your 2 examples.  How did you determine expected rents? could your perceived rental value be lower then average in your area?

Things to think about
Property Taxes

insurance

maintenance and repair

capital improvements

turn overs and lost rents

return on investment

property manager (optional)

tough to cover that with the numbers in your 2 choices IMO

neither would make my numbers or be suitable for my portfolio. 

mine are 25k purchased and necessary repairs to make rentable to rent for 525-550

for the 32k i would want 600-650 mo

Since they have established residency I believe you have to file for eviction. but I havent had this happen to me yet so not positive. 

15 minutes , but I still have a good PM.  Its worth the 10% for me not to be tied to the day to day.

Dont rush into a bad deal. It either makes sense or you keep looking. But dont talk yourself into a marginal or bad deal because you feel its taking to long for a good deal.