All Forum Posts by: Simcha Davidman

@Sara Aviv Berger welcome to BP and good luck!

We should touch base. I'm in the JLM area. Message me if you're interested.

Hi @Account Closed welcome to BP (looks like you're still relatively new here)!

I think your vacancy is light. 1 month vacancy on a sfr is 8.3%. You're projecting a vacant month less than every two years.

I think you're maintenance/repairs is also on the light side. Unless you have experience, it'd be a bit safer to budget a bit more than that. I've seen some people do a flat $100/month/unit. I've also seen people use anywhere from 5-10%, most commonly 8%.

Also, what I don't think the calculator takes into consideration and you might have to deal with is leasing fees. In some locales, this is a service provided by the property management, or the tenant pays a fee to the leasing agent. However, more often in my experience, the owner will pay a fee, anywhere from $100 to a full month's rent. If you're only putting a new tenant in there every couple of years, that's amortized to a pretty low amount - but you'd have to really know your market to determine if that's reasonable to assume going in.

Also, something to consider is - and I don't know whether the calculator takes this into account - how the hold time affects your returns. The fact that you're tying up $92k for 6-7 months is worth something. I don't know if the ROI includes that type of consideration, but you should consider it to determine if this is the best way to invest your money.

I'm not unrecommending this deal, I just think you need to consider these points and determine your comfort level with the investment. Best of luck!

Hi @Eric Sanford Welcome to BP!

If you're looking for a bunch of non-residential tenants, it sounds like you should focus on office and/or retail (think strip mall on Main St.).

But nobody can definitively tell you what to narrow down - it depends on what you want out of it. I think you can do a pros/cons list of sorts on each of your questions and see what the costs and benefits of each are.

You may like having smaller properties to diversify, or you may want to save yourself a bunch of transaction headaches and plop it all down on bigger one. I also think you should consider whether you want to invest near home or 100 or 500 or 2500 miles away.

In my experience, if you're looking at listed deals, seller financing will be hard to come by. If you get a chance to actually speak with a seller, you'd have a better chance, only because you can really hear what they need and want, and then tailor an offer to that (and to your benefit, of course).

Also, you may not have meant it literally, so I apologize if I misunderstood. But don't use all your cash for the downpayment. Generally speaking, if things turn downward, they only get really bad if the owner is not properly capitalized - i.e. liquid enough to keep going through a bumpy road.

Generally, the less money you have in a deal, the more potential profit you can make. But it also means that there's more leverage and higher risk, in one form or another. That's more of a personal decision - what are you looking for.

Interesting "problem" to have. I like your first option - take her to the bank and let her get a cashier's check which you can then deposit where you need it. Not to throw the proverbial little old lady under the bus, but if she can prove that it's legitimate and post-tax, she won't have any problems with it. If you brought a suitcase full of money to the bank, it can definitely raise some flags.

@Zach Campbell Welcome to BP! Congrats on getting your first deal under your belt already - that's definitely the harder half of the battle.

I'm just going to add Vermont on the chance that this sends notifications to those users that have Vermont as a key word (I'm not sure if all posts trigger it or just the op).

Welcome @Morenika Somerville! You've certainly come to the right place. There is so much gold within these virtual walls that if you keep at it, you will no doubt find what you're looking for - and much more!

I personally love the podcasts, but the forums are a tremendous resource with real people.

Perhaps you can state where you're from - this way, investors who have that location (city, state for example) will get a notification of your post and might be able to respond. It would be great for your education and investment career to meet more like minded people, especially if they're successful, and especially if they're local to you.

I'd recommend spending some time on the forums here and other places just learning about the different options. Then try to focus one (maybe two) areas and really learn and do.

I'm getting longwinded here. Last tip - when you want to tag someone, use the @ symbol and then start typing the name of the person. This way, that person will get a notification and be more likely to respond. Otherwise, with thousands of posts a day here, it's hard for everyone to see everything.

Best of luck!!! If you have more specific questions, post them here, a different thread, or feel free to message me directly.

Thank you everyone for the feedback!

Hi,

I was recently told that "nobody" (presumably buyers and sellers) uses attorneys for closings in the Lehigh Valley, specifically in Allentown. Do you agree?

Thanks.

@Roberto Ramirez sorry nobody has answered you! Yes, that's essentially how it works. In the industry, it's called building equity. That's what you own of your property after the debt. You build equity by (1) paying down the mortgage, (2) appreciation (market and inflation related), or (3) adding value to the property (also generally will lead to appreciation).

For example, if you buy a BRRRR for $100k and put $20k down. You fix it up slowly, put good tenants in there, and pay down the debt. After a couple of years, your debt balance might be down to $70k (from $80k at purchase) and the property might be worth $120k. You've added equity of $30k ($10k from debt paydown and $20k of added value). At the same 80% LTV, you might be able to refinance the property and pull $26k ($120k x 80% = $96k, less the current mortgage balance of $70k).

On the other hand, if you buy a turnkey property, you will only get the debt paydown and whatever the market/inflation pushes the value up to.

Also, use the @ symbol to tag people so they know you're talking to them and they're more likely to respond. Welcome and best of luck!!!

If you have no other choice. Credit cards are high interest, and you're essentially paying 8.7 points right up front.