All Forum Posts by: Joshua Rogers

To keep this brief, I will simply highlight that a tenant agreed to another 6 month lease beginning in January 2015 (agreed via text...perhaps not the most legally binding, but nonetheless).  They decided to move this month after giving me 30 days notice, and I didn't mention the 6 month lease at that time (for fear they wouldn't pay their rent as a way of utilizing their deposit for rent).  So, they broke the lease 3 months early.  Rent is $1350 a month.  Disregarding damages and a few other issues at the property, does the single fact that they broke the lease entitle me to keep entire deposit? (essentially they owe 3 months rent, for a total of $4050.)  Thanks for the help.

Nevermind, she said -$169 A YEAR, my bad.  I sure wish there was a way to delete personal posts.

@Jay Hinrichs Perhaps I read her post wrong, but I believe she stated the property is -$169 with all three units rented at $700 each.  If she lives in one, that wipes out +$700 and she's looking at paying $869 a month for her unit/property.  Did I miss something?

The numbers on this deal look bad every way you slice it, even if it was move-in ready and %100 updated or BRAND NEW!

Lots of factors to consider...will you be living in the quad? What are your long term REI goals? It seems most people transition to multi family if they want to grow HUGE, though I personally only own SFR and a couple duplexes. If you are looking at quads, be sure every unit is separately metered for gas, electric, and water if your area allows tenant-paid utilities. You don't want to pay for ANY utilities, other than a few security lights at most. Are you self-managing? A quad would make outside management more cost effective. A few points to think about.

And one last point.  Numbers give some idea, but being that there are so many factors (location, stability of job market, tenant selection (no matter what screening system you have, there is a degree of luck here), unforeseen maintenance expenses,and so on...in the end, if you're creative and keep learning, you can make "almost" any deal (within reason) a positive (financial and educational) experience.

Hey Brad, congrats on pulling the trigger in the REI game. To summarize your deal, it sounds like you'll be roughly 80k in on a home with ARV around 100k, rent around $950.

As far as closing on a HUD home, I have purchased several, and never once did the contract not go through, and I was also using conventional financing, oftentimes using equity in another property as down payment, which slightly complicates the deal/financing (all credit goes to my agent, I simply sign where she tells me). So, you should feel confident that the contract will go through.

As far as repairs, it's difficult to say whether you will be under or over on the actual costs.  I have a skilled home inspector (I no longer have him do inspections, but that is because I do my own), but I would not value his opinion on actual repair costs.  Your inspector may be more knowledgeable in this area.  

I'll assume you have a full-time job and are now investing on the side. If that is the case, the numbers seem like they will work, but they are a bit "tight" in my experience if you want cashflow. However, the fixed 4% with the HELOC should improve the cashflow. I usually think in terms of 20 year mortgages with 5 year balloons, or a 15 year fixed, but you most likely have a 30 year fixed with the owner occupy advantage. This will smooth out some of the learning curve in terms of expenses or a bad tenant.

Given the numbers and it being your first deal, I think this will prove to be an awesome starting point for your investing career. If you can still pull from that HELOC, look for a stronger margin on the next deal without owner-occupy, unless you want to wait the 1 year on the HUD home before your next purchase. Best of luck.

Congrats.  Reminds me of a Seth Godin quote (paraphrased due to my poor memory)..."Using debt to buy things you don't need is stupid...using debt to create income is genius."  Well done my friend.  

I agree with many of the previous comments.  A clear theme is that dumping all 1 million into RE without prior experience seems imprudent.  At the same time, do your homework and you can leverage that into substantial RE holdings and serious long term wealth.  I don't know what you do for a living, but with that kind of capital, you may want to think about full-time investing for the next few years, whether it's hard assets, paper, etc, then semi-retire when the money starts flowing.  Don't rush your next move, wealth is oftentimes slowly built, yet quickly lost.  

In hindsight, should have filled in the pool with dirt and called it a day, but oh well :)