All Forum Posts by: Anthony Thompson

Sam, that's a lot of info. My bullet point thoughts are:

* You have to live somewhere; if you can make your residence also provide some rental income and property management experience, so much the better

* Do you actually want to live in that house/area, apart from the #s?

* Based on the house & area, what kind of tenants are you going to get?

* When you go to sell, are other people going to want to buy the house/area?

* Free money is always awesome; take it when you can get it

* However also read the fine print; besides the 5 year thing, make sure there's not also a clause saying you can't rent it out

Free government money is great, but just read the docs. I once insisted on reading the 25 pages of documents that accompanied a no interest lead renovation loan. Turns out buried on page 19 was something saying for 5 years I could only rent the units to people who made 40% or less of the median income, or something to that effect. Made the no interest loan pretty expensive - I passed.

Sorry, the 3252 is unlabeled - it's the property taxes.

You can determine that by going to the tax assessor database (they're all listed at https://www.RIPropInfo.com), looking up the property's total assessed value, then finding the town on http://www.statewidemls.com/realtorresources/taxra... and dividing the total assessment by 1000 and then multiplying by the Residential Property Rate column.

In this case the assessment was 141,700 and it was East Providence so I took 141,700, divided by 1000 and multiplied by the 22.95 rate to get 3252 total yearly taxes.

Stephen, this is literally a copy/paste from an email I sent one of my partners recently about a duplex we were analyzing (which had 16,200 gross income):

1500 - insurance

  500 - landcaping & snow removal

1620 - 10%management

1620 - 10% of gross inc for repairs/maint

3252 - $22.95 per 1000 in East Prov (142K assessment)

  200 - electric  (common)

  800 - water

  800 - sewer

  405 - 5%misc/turnover/screening/leadtests/etc.

It was a quick email so I might have missed some items, but there are some #s for you.

Also it's important to distinguish between "repairs when you buy it that you have to do to make it rentable" vs. "regular ongoing repairs and maintenance".

The former should be added to your purchase price in your analysis because it's what you need to do to get the building up and running. The latter can vary from 5-15% depending on how new or well-maintained (vs. deferred maintenance) the building is.

Hope this helps.

@Stephen Torti The expenses look very low, that's why your NOI is abnormally high and therefore so is the Cash on Cash return

Yes even though there are only 39 official cities and towns, there are hundreds of smaller areas which have their own names.

In some cases you actually have to use the alternate name in order for mail to get delivered correctly, e.g., Saunderstown vs. North Kingstown. And Pascoag (in Burrillville) even has its own utility company (!).

I had trouble keeping them straight for years (where's Ashaway again? What about Wyoming? A: Hopkinton and Richmond, respectively) so I made a page listing all the ones I know about: http://www.webuyri.com/blog/alternate-rhode-island-city-town-neighborhood-names/

I just skimmed your post, but it seems like you're asking for options to get started now, while bank/regular lenders want to wait until you have 24 months on the job (which is common by the way).

Since you're so close, at 18 months, I'd say you should line up private/hard money just in case you come across any great deals, then when you qualify for bank financing you can refinance out the private/hard money loan with conventional financing.

I frequently do this with properties, using private $ to buy a good deal quickly, then 6-12 months down the road (after I stabilize the property and give a good return to my lenders) I'll refinance with a regular bank loan.

Stephen, welcome to BP! Sounds like you have great conviction in the cause, that will help you out when you hit any challenges or bumps in the road. Lots of great resources here on BP including the podcasts, so check them out and good luck :)

If you end up doing anything in Rhode Island, the site https://ripropinfo.com has links to the land records (deeds, mortgages, etc.) for the different cities and towns that are online.

Yes, taxes are a real killer, particularly in Providence. I know a few investors who rule out Providence entirely for just that reason. (Not many, just a couple).

Sometimes I feel like a curmudgeon because I pass on so many potential deals, but the #s just don't work.

The thing that kills me is, I'm sure someone will make $ on some of these deals just due to appreciation, buying at the right point in the market cycle. But I can't bring myself to accept a negative cash flow in the meantime, just on principle - it seems a lot more like speculation (Kiyosaki taught me better, lol).

Anyway, thanks for sharing. The East Side has never been a good place to make #s work, but that's the price of buying in an "A" area. At least you know the values are solid, and the tenants are SO much easier to work with. Sometimes some of my tenants there contact me about something and I just want to write back "Can you train my other tenants to be as polite as you? PLEASE?" (lol)

AJ, welcome to Bigger Pockets. Yes you're right there is a lot of competition out there for MLS deals, because they are the most easily found. The best deals are the ones you find/create yourself, but that means you have to put the time and work in to find/create them.

Start with the neighborhoods around your house - do "driving for dollars" looking for vacant or derelict properties and send a letter or postcard to the owners offering to buy (to find the owners use RIPropInfo.com and the Assessor link for the town, then look the property up). You can also try calling For Rent signs to see if the owner is interested in selling.

Don't feel bad about being distracted by shiny things. I can't tell you how many books & tapes I've bought on shiny real estate things :) Pat yourself on the back for recognizing the danger, and pick one or two things to start with and learn the ropes on.