Hey all,
It’s been a while since I have posted…Been busy with non RE related business…So far my investment properties that I purchased upstate NY are doing well for me…I bought extremely low and closed with no mortgages…I did this by choice because I don’t like leverage and I also saved on closing costs…I’m fully aware that my cash on cash would be lower due to the fact that I didn’t go the hardly anything down route…I have figured my cash on cash at around %18 annually and most likely higher…I have an excellent management team that has been guiding me through the market and I honestly can’t complain…The homes I bought fall into the %2-%2.5 of asking price in monthly rent roll…So there isn’t a problem there…One of my properties is actually %3 of the asking price in montly rent roll…So I’m quite happy at the moment…Obstacles that I did hit was the mortgage market meltdown…I initially tried to do stated loans but it was taking too long and the appraisers were pissing me off so I told them to keep their money and I closed cash…The mortgage broker I dealt with upstate was stunned when I told him…My credit score is 780 and I have assets,homes etc…So I had little tolerance for being hassled for a mortgage on a home that costs as much as my car…Other than that I have not had any nightmare stories to tell,I’m sure they are coming though…I hardly believe I will be simply sitting back collecting these nice checks every month…But for now it’s all good…I purposely did not put what area I’m investing in so please dont ask…
I am curious to know how long you have owned your properties?
How much is it costing you in management?
Have you had to deal with any forms of rent control in your market?
I have owned them for a few months…
%10
not that I know of
So where did you say you were investing?
lol…NY state…Between Hunter Mountain and Buffalo…
This is like the “you’re getting warmer game”…tell me when someone wins.
rookieNYC
Can you elaborate a bit more on your deals upstate.
I am currently in the bronx, will be moving up to Monroe over the summer, then I will looking for rehabs and possibly rentals up around there, or further north. can you give me any advise, info on the RE market in New York.
zenn,
I’m following the rules learned here…Make sure the monthly rent roll is at least %2 of the asking price…Find out if the area you are investing in gets reassessed after each sale and how much…The property taxes upstate are high but if you look there are good deals as always…Also make sure to buy at a deep discount…There is no money paying retail and most likely you wont cash flow…As for rehabbing there is a good amount of contractors at decent prices but how good or how fast the work gets done is up to you…Check insurance quotes and make sure to find the rebuilding cost for the home and get insured for that amount,not the amount you are paying…You will quickly find out that your estimates for insurance costs were too low…Also make sure the utilities are seperate…I can’t tell you how many homes I have seen upstate in the dead of winter having their windows wide open…Stick the tenants with those bills…Also make sure never to buy sight unseen and get everything inspected professionally…There are many possible problems to run into upstate structurally…If you have anymore questions let me know how I can help…
rookie, thanks for the reply.
I want to start off doing rehabs, then eventualy roll the profits (if things go well) into rentals.
I know paying retail will is not the way to do this. How do you find non-retail deals. How do you get wholesalers and flippers to contact you when they find something?
I know upstate, especially at the lower end of the market $100-200K, the properties can be somewhat sketchy structurally, if not completely unsound. There are alot of converted bungalows with shoddy foundations, and winterized hunting cabins passed off as year round houses.
I have a 3 family now in the bronx, I put in seperate meters for the utilities, If the tenents dont pay, they deal directly with ConEd.
I am sorry, but 2% of the asking price in monthly rent! How is that possible. It means that a $140,000 townhouse I about to make an offer on, should be rented for $2,800 per month???!! I am sure I am missing something, could you please elaborate, because going rent would be $1,050 here in Asheville NC.
Thank you
the 2% is unreal in some areas…i have been mega profitable way less than
that,
but i do agree with everything else…depends on how much u buy…crunch the numbers and what works for me might not work for you,
my 2 cents
Robert A. Doncaster, Jr.
Import/Export Entrepreneur & Investor
*** DO YOUR HOMEWORK ***
Chicago Illinois USA
& sometimes Salzburg, Austria
Iggy,
2% is right! If you think you’ve got a deal on a $140,000 townhouse at less than 2%, post the numbers and we’ll take a look. We need purchase price and gross rents to properly evaluate it.
Bizzarefun,
You haven’t been MEGA profitable on way less than that! Even if you buy at 2% or better, the margins in the rental business are low. Post the numbers!!!
Mike
it all depends on what “MEGA” means,now i sound like bill clinton lol
one of my 1st deals about 20 years ago i bought for 50k…my rent was section 8 of $700…5 bedroom…a very nice family,they made all their payments…i sold property after a few years,wonderful tenants…my friend managed the property in lieu for other services…the only upkeep was routine wear and tear to pass inspections…my operating expense was peanuts…
plus i made about 25k when sold…
too me its all inclusive…the property was a holder…too me i add up the profits when i sell plus the cash flow…i just dont look at rents,there are time i was neg cash flow for $100 a month on other properties…still a great deal…i will pay a neg cash flow of $100 a month to own a house in 15 or 30 years plus appreciation…i prefer not too but it all depends on many factors
p.s. but i do agree … the closer to 2% the better…it all depends on the tenants too…
p.p.s. i bet there are many many investors on this forum not near that 2% that are doing OK,
in closing MEGA $$$ alone is not the only factor…its a big one but i look at all the numbers,if i break even …BIG DEAL…i will get it back eventually…not every deal will be a MEGA profitable and i never intented it to be that way…sometimes an investor has to give a little,if it takes giving up some $$$…big deal…if you plan it right u wil ldo ok
my 2 cents
Robert A. Doncaster, Jr.
Import/Export Entrepreneur & Investor
*** DO YOUR HOMEWORK ***
Chicago Illinois USA
& sometimes Salzburg, Austria
in closing MEGA $$$ alone is not the only factor...........its a big one but i look at all the numbers,,,if i break even ..BIG DEAL...i will get it back eventually...not every deal will be a MEGA profitable and i never intented it to be that way.....sometimes an investor has to give a little,,,if it takes giving up some $$$...big deal....if you plan it right u wil ldo ok
If it’s break even, it IS a big deal if you’re trying to build a successful rental property business or get out of the 9-5 or build significant wealth. If you plan to only have one or two hobby rentals, then being break even or putting in some money may not sink you.
However, my goal for an investment is to actually MAKE MONEY. With every additional rental I buy, I want to have additional equity AND additional cash each month. In addition, that additional cash is after all the REAL expenses, not just “wear and tear”. You can only get away with “wear and tear” for expenses if you only have one or two rentals and are extremely lucky.
Mike
Sounds like you got lucky…what would happen to your cashflow if the tenants trashed the place or if you had a cash paying (non sec8 tenant) that didn’t pay and it took you 4 months and thousands in atty fees to evict him?
mike
many ways to skin a cat,and also many ways to make $$$$…i disagree with the 2% figure…i am sure there are investors who make $$$ less than that 2% and make money,i have…
you dont need to squeeze every drop of blood out of the rock…
its all relative…and its personal for each investor…
i agree and disagree most gratiously mike… lol hehe
my 2 cents
Robert A. Doncaster, Jr.
Import/Export Entrepreneur & Investor
*** DO YOUR HOMEWORK ***
Chicago Illinois USA
& sometimes Salzburg, Austria
i would evict them and move on…then i would figure out how much $$$ profit after that property was disposed of in my portfolio…i look at the whole pic,not just for a few months,the sum of all parts,cash flow and equity…if i had the rental for 10 years…then i look at the full 10 years,not just the 3-4 month bad time…
i agree to maximize rents but i dont want them too high where the tenant is being raked over the coals…
being a salesman my whole life …sitautions can be diffused and comprised,
p.s. there is a time for 100% maximizing profits business model and then a time for reality business and economic trends…u can make $$$ from “hobby” rentals…so anything less than 2% is hobby rentals??
mike, it just depends how much profit u want,we both can disagree all day on that and get nowhere,
my 2 cents
Robert A. Doncaster, Jr.
Import/Export Entrepreneur & Investor
*** DO YOUR HOMEWORK ***
Chicago Illinois USA
& sometimes Salzburg, Austria
For me its about both the cashflow and the equity not just one or the other. The cashflow is going to provide me income and the equity is going to provide me wealth. To me both are integral to the rental game, I don’t see any reason to only go for one.
hello my fellow cashflow fiends,
Im just dropping in to give another update on my progress/issues/pitfalls etc…At the moment I own 5 properties that range from singles to quads…Some problems that I ran into which I consider extremely minor were a tenant moved out in the middle of the night (idiot forgot that I had a months security) and a flooded basement that cost me $500 to repair and clean…Overall I’m very happy with my decision to get into the real estate business…Like the beginning of my thread I keep to my rules of never buying outside of my formula (propertymanagers Mike’s actually)…%2–%2.5 of asking price in rent roll each month…I make sure the taxes aren’t high and no property gets purchased until my inspector goes through it thoroughly…I also do not want to buy in war zones drug areas…I always factor in %20 vacancy and maintenance into my equation to make sure I leave myself room…At the moment I’m looking into some Syracuse properties but have not purchased anything there yet…As it’s quite far in comparison to my other properties…Everything I learned here has paid off and very thankful for Mike’s help…As I annoyed the heck out of him with questions so much that he doesn’t answer me anymore …lol…Anyhow for all the rookies let it be known that if you have a few dollars the deals are out there…I’m actually quite happy about the current state of the market…Bad times equals more deals and better cap rates and desperate over leveraged sellers…I always bid %70 of the asking price and take it from there not caring who I insult or who denies me or thinks Im crazy…This is business after all,nothing personal…I have no experience with these no money down deals as I used my own money to buy properties with no mortgages and I have gone through banks as well…I think its best to say that you need money and income to get into this business…By no means should you use your last dollar to buy real estate…Other than that everything I learned was from these boards…I don’t read books and have the patience of Ralph Cramden…
Out of curiosity what else do you do besides owning these rental properties. You said your car cost more than a house. I am just wondering.