All Forum Posts by: Nick Leamon

Also, I have been running the numbers and this is what I get, let me know if i am doing something wrong.

the average rental rate in my area is $0.75/sq ft

Using the 2% rule that means that I should invest in properties that are priced around $37.50/ sq ft.

Again I am in the North Dallas Area, Mckinney, Frisco, Allen, Plano

Are there really investors in the area that are able to find homes for $37.50/sq ft?

And if so any advice on where to look? Because I have never seen anything close to that on realtor.com

Thanks to everyone who has responded, I appreciate all the advice, and will look to use it in closing future deals. The taxes and insurance are included in my months payment as will less than 20% down they won't let you pay them at the end of the year. And yes I lived in the home before moving out and turning it into a rental, which is how I was able to use FHA financing, I believe this strategy of moving every year or so is beneficial, as you get primary residence rates instead of investor rates when financing, however without rental income you do have to qualify for both mortgage payments. So as to one persons concern I do have rainy day money and my wife and I both wrk, and could cover both house payments with our income, so if worst came to worst and it sat empty we would be fine, and yes I am saving all$245 in a different account, and if it builds up over time I'll consider it a nice little bonus.

Hey Mike thanks for the information and advice, and yes i know the PMI is kicker, but thats what you get for 4.5% down.

I bought the house in 2012 before they made the new rule on paying PMI the life of the loan, its only for the first 5 years on my loan.

as i said i bought the house for $142000 and put about $5,500 down.

I lived in the house for 1 year before moving out and making it a rental, and was able to do any touch up repairs myself during that time, i think I spent about $200 total at home depot doing little projects around the house.

As for what the house is worth, i haven't had it appraised, but one with the exact same floor plan sold for $160,000 two streets over in march of this year, and values have only gone up since then in this area.

thanks again, let me know if i forgot something.

I don't know if any of yall have heard of Mr. Money Mustache, but he writes a funny, and strongly opinionated blog on this topic, and has good ideas on how to save more and spend less, i currently save about 50% and am working on raising that number but I plan on combining RE investing and MMM's ideas to enjoy life, retire early, and not have to worry about money.

Well thank you all for all of your wonderful input, first day posting on this site and already learning lots.

To answer some questions that came up in responses, first of all, no I do not pay for any utilities or services, the tenets pay for all of that. Secondly I do understand the need for repairs and vacancy, and while I will address that in a minute, I do realize that most of my $245 above my payment will go towards repairs and vacancies (at least until the PMI falls off) and I am not paying anyone to manage my property, I manage it myself.

Now I might be way off base in saying this, as I know that a lot of you have been doing this for a long time. But as i mentioned, above I charge much less than "market value" rent for my property, and by doing so I get to be very picky in who I rent to, and again look for people who are going to be good renters, pay on time take care of the property, and stay for a long period of time. This also makes it "more expensive" for my current tenets to move, and therefore are more likely to continue to rent from me. Because of this management style, or perhaps my naivety, I find a 10% vacancy rate to be a little much. I sure wouldn't want to pay a management company to manage my property if they could only rent it 9 out of 10 months. Also, since tenets wont be moving out every year, there is less wear and tear on the house due to moving, and expenses like cleaning or replacing carpet, and paint only come around every few years. Now obviously things like A/C units and water heaters cannot be avoided and need to be replaced, but I do believe that this style of management cuts down slightly on repair costs, and I am somewhat handy and try to repair things myself first before hiring anyone.

Anyways thanks a lot everyone for your input i will definitely take all that i have learned into account when I'm doing my next deal.

So I read the beginners guide, and have been hearing a lot about this 2% rule since I started looking around Bigger pockets, and my question is, is that really true for single family home rentals?

My grandfather, who also invests in real estate, and who has most of his life has always told me that rent should be about 1% is that too low? or is it closer to 1% for single family homes and 2% for multifamily units? I'm not sure that 2% is realistic in my area.

For example i bought a house for $142,000

I put 4.5% down (FHA financed)

My monthly payment is $1150 with taxes insurance and PMI included (and after 3.5 more years the $150 of PMI will go away)

and it is currently rented for $1395 a month (this is below market value, but I'm more interested in quality, long term, low turnover tenets)

so i am currently cash flowing $245/month and it will be $395/month when the PMI falls off, and I am barely over 1% of the loan amount.

What am I missing?

Thanks for the help

Hi my name is Nick Leamon, I am a new investor in the North Dallas area, I currently own 1 rental property, and am hoping to grow my portfolio, if anyone knows any good contractors, and or handymen in the area please pass along their info! Looking forward to being part of the BiggerPockets community.