All Forum Posts by: Tucker Cummings

Just reiterating what someone else said - If you're intending to move into it and house hack, I'd say that's a great. But your PITI is probably in the low $400 or upper $300, then budgeting $150/month for maintenance and capex, and renting for $750, and then you're left with your $200 cash flow. But that's market rent for a full 3/2, not just a room you would househack with. If someone is just renting a room from you, while you live in the other parts of the house, I'd think you're probably going to get closer to $400 in rent and just breaking even. Which if you're living there, and you have to by law, then that's great.

If you’re not intending to live there, you might run into some trouble. But also if you’re not intending to live there and those are your numbers and all works out well, I’d say you’re $200/month cash Flow is solid.

Since your interest rate is at 4.5% I would advise getting into real estate. Let’s look at it this way:

Option A) Pay down the debt. The way I see it is that you’re just saving money or cutting costs at a 4.5% return.

Option B) You’ll borrow money at 3.5% interest in order to make money back at a 20% return or more. Returns like that aren’t hard to come by in RE. Yes you’re taking on more debt, but you’re netting a 16.5% difference in interest. Then you can use the extra to pay down the debt. You could also say that you’ve got someone else (your tenant) paying down your student loans for you.

Option C) GameStop call options...

@Tim B. I live in Raleigh, NC & invest in Fayetteville, NC which is about an hour south of me. And yes I BRRRR'd all those properties. Honestly I think the biggest thing is to not be afraid to be VERY picky about what you decide to invest in. I looked at well over 100 deals from the MLS, wholesalers, courthouse listings before pulling the trigger on one of them. It's been one of those things that I looked at so many deals that as soon as the those deals hit my desk I knew immediately they would be great money makers.

I’m looking at this less from the market of supply and demand and more from what we’re seeing with the virus. 

Before we go any further, this is NOT a political post.

I don’t know about y’all, but I’ve already seen inflation kick in quite a bit in my area, which i think is a result of the money printing. Then if we see $15 minimum wage go through, we can expect inflation even more. I think given those two things, we can expect rents to really go up. As to when that will happen, I would assume it will be very gradual until all the eviction moratoriums are lifted. With that, we can expect both rent and housing prices to increase, but as for closing the gap between rent and housing, that’s anybody’s guess. 

You can definitely make it happen, it’s all about your network and team that you have in the area. I say that not as someone who invests out of state, but as someone who helped out of state investors before. I have a friend gay lives in San Francisco, and I helped him get comfortable with our area, set him up with my property manager, who connected him with a contractor, and shortly thereafter he picked up and started cash flowing his first rental. Find somebody you trust that can help you in your target area. 

@Steve W. I leave it up to my PM, but as I understand, as long as on your marketing you're saying you're advertising to soldiers then you're good. Same thing as people advertising their AirBnB to travel nurses or traveling business execs

@Joe S. my property manager (who is fantastic) does the management for me. Which if you're getting a massive premium with rent by room, I would highly encourage outsourcing your management, because you should be able to afford it. Market rent in my area is about $1000/month for a 3 bed, 2 bath. I'm getting around $1500/month with rent by room. My PM is 10% rent, so I net positive $450/month - well worth it.

When I started doing this, the common objection I heard was that people would say they didn't want to do rent by room because they were more rough on the property with more people moving in and out. Here's what I would say:

1) When you have turnover, you only have to spoof up one room, rather than the whole house, so cost savings there.

2) If I rent to a family, the kids are just as rough, if not more than adults. Kids write on walls, run into walls and other stuff, etc. Not to mention, that kid is getting FREE rent! If I'm going to have a room occupied, I should be getting paid for it. May be harsh at surface level, but its a business not a charity. 

3) I only rent to soldiers at Ft. Bragg in Fayetteville, NC. Soldiers tend to be much cleaner and disciplined, not to mention we have direct lines of communication to their CO and HR on base. So direct payments and a way to be able to get them reprimanded if they are overly rough on the property. That only scrapes a few benefits of soldier renting.

In summary, I'm getting a premium for rent by room, the management is outsourced, the turnovers are cheaper and the people I rent to keep the property in good shape. Hope this helps you!

@Dennis Wayne I see what you mean, but I'll just go back the fact that it seems like we're jumping to conclusions without knowing all the facts. I'd like to invite you to show me where in my post I showed an opinion. Perhaps it was where I said there is a surefire way to discredit yourself, I'll admit to my abrasiveness. But anyone that's spent time in discussion and human interactions can see how your post may be very standoffish. And, if we're just going off profiles, can you please direct me to where your profile shows your real estate transaction and credentials? I just checked and couldn't find anything. Not saying you haven't done any, I'm just pointing out a statement of hypocrisy. 

As for me, I just started investing in RE December 2019. I have 4 properties now, my first I spent $20k to get into, the second one I made $4,000 off the refinance, another I made $20k off the refinance, and the last I will make about $5k off the refinance when the refinance closes. So while I'm new, I'd say I'm doing alright & those four properties are cash flowing a total of $2400/month by using rent by room methods. I'm very proud of this, though small compared to many on BP, and hope to have 10 units by the end of 2021.

It's unfortunate that we got off on the wrong foot. And wish you good fortune in all your Real Estate goals and endeavors.

I would say raise the rent. Couple of things can help with that. Prior to first signing, you can do things like setting the precedent that your standard practice is to raise rent by 3-5% annually, so they know from the start what will happen. When you’re in the process of raising rent or when the renewal comes around, you can show them other market rents and show that you’re still in line with the market. I wouldn’t use the $300 credit you mentioned unless they said they had to move. Use that as a negotiation piece.

So you say, “Mr/Ms. Tenant, you’ve been a great customer and I hope you’ve enjoyed living here. Do you want to continue living here”

“Yes”

“Im really glad you’ve enjoyed it. I’m looking at the market rents right now and, in order to stay competitive and in business, I have to raise rents and I’ve come to you with two options. A) Sign a 1 year lease for rent + 5%, or B) Sign a 2 year lease for rent + 3%. I know it seems like a lot now, but the way rents are spiking, these will be way under market 2 years from now. Which would you like to do?”

“Neither, you’re a criminal landlord! Peace out!”

“I’m sorry you feel that way. Would it make it more manageable if around Christmas time I gave you a $300 gift card to Amazon to help you with your holiday shopping?”

“Hellz yeah, I had my eye on that new PlayStation!”

“Great, just sign here.”

Aaaaaand scene...

Lol @Dennis Wayne what was that first post? There’s a surefire way if alienating people and discrediting yourself fast, you nailed it. We can’t just say “your numbers probably suck” without asking the questions, “what are your numbers? Are those in line with what your goals are? What are you doing to improve those numbers?”

For the original poster, if the numbers are working for you and you're hitting your goals, why change anything? Your post gives me encouragement that I can find some good OOS TK SFH Properties too!