Hi Eric thanks for the comments, I do know of people that insist on investing in “good areas” only. I like the working class neighborhoods. Low income but not bombed out slums. I do have all my tenants so far are sectioin 8 but I would rather deal with that and get 1300 per month rent for a 40k investment than get a 1300 rent for a 100k property you know what I mean? Big differences as far as the paycheck goes. As far as learning, I have actually learned some good insights on your site. Thanks for the info.
Back to the post on my lack of cashflow, I dont know about your market place but in mine on an 40k purchase the AV would be set at $20k so with non homestead taxes set at 45mils my tax bill would be roughly $900 a year and insurance runs $45 a month, so if you ad up those two my operating income is roughly $120/building with 4 buildings the expenses would then be $480/mo, no where close to the $1562 you described as operating expenses, also keep in mind that when I refinance these homes, they are practically brand new, so I wont have to worry about any large expenses in the next 5-10years. So yes they do cashflow pretty good.
Eric,
It’s clear that you are a brand new landlord. You’ve been drinking way too much guru Koolaid. There are many experienced landlords on this site and you can’t get away with making silly claims here. Do you really expect anyone (even the brand new newbies) to believe that the only operating expenses are taxes and insurance? Not even the gurus are silly enough to try that! It would be impossible to be a landlord for even a couple of months and not realize that operating expenses are more than taxes and insurance.
How about management? Maintenance? Damage caused by the tenants? Evictions? Legal Fees? Exterminations? Replacement of Carpet? Court Costs? Fuel for your vehicles (to go to and from your properties)? Lawsuits? VACANCIES?
I could go on and on, but you get the idea.
Get real,
Mike
Now I understand. You’re a newbie trying to sell stuff to newbies. I saw you website!
Good Try!
Mike
This is true Mike dpeending on the area you are in expenses can be pretty high. One of the properties I got, got flooded in the basement for the first time in 60 years and I had to have the hot water heater replaced in the first month, then code decided that my front stped needed to be replaced because it had some cracks in the concrete. section 8 stuff all of this in the first month it cost me 700 bucks to get it all fixed so these expenses are every where you just have to have enough cash flow from others and the property itself to pay for any unwanted expenses that come up because you never know. You need a decent amount of positive cash flow to go fulltime in real estate investing and a decent slush fund built up. What I do like about rentals is once you do have a nice income built and you dont feel like “flipping” then you dont have to. You still have that monthly coming in and you dont have to find a buy low sell high deal to put food on your table. Its great once you get there but its not easy as it sems
dwj,
Throughout the entire United States, operating expenses run 45%-50% of the gross income. In areas where rents are higher, so are expenses. That 45% to 50% includes everything (including capital expenses). Obviously, not all expenses occur every month. That’s why many new landlords with only a few rentals think that they are making a lot more money than they really are. It is also why the vast majority of new landlords fail in a relatively short period of time. Eventually, the expenses will catch up with you and you’ll experience every one. As your portfolio grows, the real expenses become readily apparent.
This 45% to 50% includes having paid management and paid maintenance. If you do these things yourself, you can earn more money.
Mike
yea that is exactly the rule of thumb I try to go by as far as expenses go and I do have property managers taking care of my properties. It frees up my time to find other properties. Property manager what is your rule of thumb when you are looking at properties? What is the minimum net cash flow oyu look for each month per unit on average?
I am very much a newbie, if newbie means im still learning then I am absolutely a newbie. If im a newbie now, I cant wait to see how much money I will be making when Im educated like everyone else.
Im glad you visited my website, I dont intend on making money off people for things that dont help, as you can see, there is no spot to even pay me for anything. I do intend on getting paid for my time though. I will make somewhere around $220,000 this year working about 35hrs a week (This $220,000 does not include any rent money from my properties) so on average my time runs $125/hr. I get alot of request from people who would like my advice. This time could be taken from my family time, or my work time. I love my wife and kids so I choose to take it from my worktime. Which would mean that I need to get paid what I make at work. I dont want any money if I havent helped people. What would you do? Take from your family, or take a pay cut.
To address the point of property fees, I have no attorney, so no fees there, I have no management company, so no fees there, I have mostly single families so my tenants pay all of their own utilities and take care of the lawns. So my main expenses would be property upkeep, on the properties described in my post, everything is new that would need replacing any time soon. So where is my 50% going, evidently I need someone smarter to tell me as I am just a newbie
If anyone doubts that I have 20 some properties you are welcome to visit the accesskent.com website and enter my name in a deed search and I think their are around 54 entrys with my name on them. My most recent properties wont appear as the turn around time on deeds in my area is up to 2 months.
I am happy with the label newbie, you can call me completely idiotic if it makes you feel better. Five of the homes that are mentioned in this post are now sold and I will make somewhere in the neighborhood of 100-120k.
I dont say anything to impress people, I say it more to impress upon people that if a newbie like me can do it anyone can.
Eric Medemar ???
You only have 20 low income units and newbies pay $125/ hour to talk to you?
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I didn’t mean low income or high income is better or worse. I meant that in low income housing you’ll be lucky to make $100-150/ month per unit. It seems strange that someone would be willing to pay $125/ hour to learn how someone is making $2-3k/ month in rental income. It seems like Eric is marketing himself as a hugely successful real estate millionaire even though most of his money is probably coming from “counsultant fees”. 20 low income rental units certainly doesn’t qualify you as an experienced investor.
P.S.- Green Berets ARE better than spec ops in any other branch. 
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Swirlaze,
What I’ve found is that a person is only credible if they are consistently correct. If you claim to be enough of an expert to be providing consulting services to newbies, then you certainly should at least know the basics. Not knowing that operating expenses are more than taxes and insurance is a clue that someone does not even know the most basic aspects of operating rental properties. If you can’t believe that, then what can you believe?
Also, I couldn’t help but notice that Eric’s income was $100,000 a few posts ago and now is $220,000. That sets off alarms for me!
Mike
Even though the Army Special Forces are one of the more versatile units. SquEALS are better at advertising themselves. Ofcourse I’m kidding, it’s like comparing apples and oranges as you said. I believe it was a Brigadier General that said since SF is taking younger guys, spending less time on language and culture training, and more direct action missions, we’re turning into SEALs who can’t swim as well. Sleep easy knowing that US SOF are some of the most professional, highly discipled and skilled men in the world. There are several hundred creeping around in someones backyard right now. I would still be in if it wasn’t my turn to ride along in the support company. You have to love being in places where stupid gets you killed.
You guys are so funny,
Ive never seen a bigger bunch of people who want to win a pissing contest. I will make 100-120k on the homes mentioned. I have done other deals, and I will make over 100k selling real estate so sorry I was wrong I will make more than $220k, anybody can pm if they would like to review any of my documents, I have them all.
I dont claim to be a rental specialist or anything of that matter. I just know things that you dont, and you know things that I dont. It would be worth far more that even $1000 to learn a way that I didnt know to make $20,000.
If your time is worth $125/hr, what would you charge people for an hour of your time, Nothing. If you go to the site you are speaking of there is no place to pay, no place for anything, in fact I think I say only pay if you feel that I have helped you. Those definately sound like words of a crook. You get the service, then if its good you pay. Man watch out for me, I might be dangerous.
I will make $120k-who knows where this year doing real estate flips, I must know a little something, maybe just a little. Im sure 99% of people in here know way more than me. But I do know how to make money, and that much I do know.
Keep adding up my numbers for me, I’ll keep supplying them, not to impress anyone, but success leaves tracks, and if a newbie, idiot, liar like me can do it anyone can.
Eric Medemar
p.s if anyone would like to review my docs, I can have them scanned and emailed, or you can call me, I have nothing to hide. I will pay anyone in these forums to teach me just give me a call.
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what really changed though, I said I would make over $100,000 flipping properties and I will. Then I said I will make $220,000 this year (note :I did not mention I would do it flipping homes)
The problem is I was stating my income to justify why I would charge to consult. Should I have broken my income down? Should I have said I Make 100+ being a realtor, and 100+ flipping properties.
Honestly I didnt know anyone was counting. If I would have known I could have broke it down a little more.
People should honestly stop doing accounting with my numbers, If your that concerned about me, dont be, Im really not that interesting. If people know how to make more money than me great, give me your number, i’ll pay for lessons.
Evidently there are countless people in here who know 10 times more than me, I say awesome. I want to see what people make, what they spend, what they do, this shows me the way to people that know more than me. When it all comes down to it, money is just a scorecard, a bad money player wont have many points, a great money player will score many points.
Do you want to learn from the guys with no score, or the guys leading the game? I think I will go with the game leaders everytime.
Eric Medemar
Eric- Essentially your selling yourself as a guru qualified to give expert advice. That’s the reason your getting picked apart. No one means you any disrespect, just double checking to see how qualified you really are. A lot of us are here to share our experiences and give tips where we can for free. Your here to indirectly sell yourself. While I understand your logic that your time is valuable, you’d have to be at a whole other level to justify compensation. Here, you are an average investor with a few properties under your belt.
Swirlaze- I have nothing but the utmost respect for all SEALs. I have trained and worked with them many times and they are all truly the quiet professionals and amongst the best in the world. In the military, branch to branch jokes are very common. Don’t even get me started on how weak the conventional Army is getting. I have contemplated many times going to BUDS to become a SEAL and I may still go for it if my business remains stable and I don’t get too old too fast.
I have to ask where are you from buying houses at these prices??? You couldn’t buy a draining ditch here for 30K
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