Questions for the Experts

General Real Estate Investing
1

Hey Everyone,

My name is Jason Stephens, I have been hopping around these forums for god knows how long and have learned tons of valuable information. When I first visited this site I was a young college graduate with tons of ambition but no follow through. Since then I have gotten a really good job as a broker in NY, but the problem is that its commission based. I am looking to Real Estate Investing to supplement this risk with both Assets and Monthly income.

My job has allowed me to get a bunch of money to invest and am trying to get all my things together and invest.

So far I have trimmed my goals to the following. I have an overall goal of accumulating 54 income generating properties each with monthly income of 300 dollars. I figured once I get going and have the investing perfected it works to be 3 a month for 1.5 years. I know I should start with just one, but I need to get an overall image of where I want to be.

My questions for all of you are the following:

  1. How much money should I start with in the bank as safety / emergency money? This money will be used for repairs if a roof goes, plumbing breaks, etc.

  2. Can I get a complete list of expenses that go with owning a rental property?

With the knowledge you guys provide I think I will be well on my way to achieving my goal.

Thanks again in advance

2

Welcome back jp…I have often wondered where you had gotten off to!

Please go back and reacquait yourself with the Forum’s rules ('nuff said!)…

Keith
Moderator

3

Hi JP,

  1. $50,000
  2. Look at the National Apartment Association website. Here’s the short version: throughout the entire United States, operating expenses run 45% to 50% of gross rents. Of course, you still have to subtract the mortgage payment to find cash flow. Forget everything you ever read about expenses from the “gurus”. It is simply fiction.

Good Luck,

Mike

4

Welcome back JP.

I’m far from an expert…

Just my 2 cents:

Don’t let your ambition cloud the #1 goal:

Buying at a steep discount that makes the numbers work.

Otherwise you’re just spinning your wheels.

I think heeding propertymanager’s advise is extremely important.

Otherwise you fall into the trap of assuming you’ve bought low enough…when, in fact, you have creepage of costs that eat away at cash flow.

If a deal doesn’t pass the financial litmus test…then you’re probably better off salting away cash. This may stretch out your timeline…but what’s the alternative? Leveraging yourself to the hilt in a risky fashion?

-Mike

5

So basically a formula to find homes could literally be the following…

Take the average rent in a neighborhood, and take 50% of that and deduct a mortgage payment…if its cashflow positive then we’re set and its a good property?

6

PM me if your interested in actually making money without using a dime of your capial.

No Advertising - do not post advertisements, solicitations, or offer your services;

7

JP,

Yes, you’ve got the formula correct to determine cash flow, but that does NOT make it a good property. There are MANY other things to consider. How much equity will you have? What kind of neighborhood is it (a warzone)? If it’s a warzone - do you own a gun and are you licensed to carry it? Are there any upcoming political considerations that will change things (new regulations/laws)? ETC, ETC, ETC.

Compsciboi,

I’m interested in making money without using a dime of my capital. In fact, I’d like to just start traveling the world on my yacht (earned with all the profits from your program) and never do any work (unless I get bored). So why not dazzle all of us with YOUR program instead of advertising on the board against the rules? I’d love to hear how you’re going to do everything for JP and expect nothing in return? Let’s shed some light on this wonderful program.

Mike

P.S. There is getting to be more solicitations on this board than on TV!

8

P.S. There is getting to be more solicitations on this board than on TV!

I agree - especially those blatant spam posts about drugs, etc.

9

To all Members,

If you are having trouble with receiving unwanted solicitations from other Members or from people that you believe are “farming the boards” and cannot rectify the situation, please notify any of the Moderators or the Site Administrator.

Keith
Moderator

10

Now that I understand the .50 percent of gross income, is there anyway I can get a breakdown of what costs make up that 50 percent?

Also any opinions on how much I should have in the bank per house?

11

Propertymanager makes another good point…

In your search for finding a property at a steep enough discount…you need to do a balancing act.

If it’s steeply priced because it’s a warzone then can you handle that?

If not…your timeline will probably require more patience in finding diamonds in the rough.

Generally speaking…you’re looking for that distressed property that is the sore thumb of the neighborhood…the one that is aching to get fixed up and get back on par with it’s neighbors.

Again…I’m no expert…but that’s my take on things.

-Mike

12

Well I am looking in two college markets, Hamden Connecticut where there is Yale/Quinnipiac University close, and Scranton, PA where there are extremely cheap homes with college rentals as well.