I have owned from 4 to 20 unit multi family. A single family home you can get the occupants to somewhat take care of it. Much less likely in a multi unit. The experience may be good for you but get a course on landlording or learn from the school of hard knocks.
Anytime you want a tax write off send me a $1000. I’ll give you 150 or 280 dollars as a writeoff. The object of investing should be to make money. You will get a depreciation expense of about $3000 a year to offset profits. But you still want to make a profit.
Advice on purchase of our First Investment Property - Posted by David Douglas
Posted by David Douglas on December 26, 1999 at 10:52:34:
My wife and I are in the process of purchasing our first investment property. The 4-plex that has two bedroom units was repossessed by the bank and they were asking $129,000. Rents for each of the units is currently $450/month. I offered them $100K and they accepted. We are just days from closing. The place needs carpets and paint and some heavy duty cleaning all of which we will be doing ourselves. Comps for this type of unit are listed at $130K to $140K. After all bills (assuming all units rented) the units will bring a positive cash flow of $500+/month. I have not sought advice from Carltons Course but am thinking about it. My search for advice covers the following:
Is this a good investment?
Should we fix them up and fill with renters and sell so that we can reinvest the capital into several other rental properties?
Will Carlton"s course cover investment strategies to cover my questions?
4)Do we keep this property and build up the equity?
Re: Advice on purchase of our First Investment Property/Info? - Posted by Elizabeth/Tony
Posted by Elizabeth/Tony on January 14, 2000 at 17:57:28:
Hi David I was just wondering if you are the David Douglas from Winnipeg,Manitoba,Canada. The realestate agent because if you are we met you when we wore looking for a place in the summer last year. If so I {Elizabeth} am wondering maybe we could get together about some insights to some questions we have here in winnipeg. Would that be possible? Since I’m not sure if there is a place of gathering,where other people meet to discuss questions.
If you were a large company doing the investment you would allocate 10% of the gross for management, 10% for maintenance and 5-10% for vacancy. You are going to be paid that 10% for the hours you put in advertizing, collecting rents, showing the property and assundry other functions. There is always going to be fixup needed in addition to normal yardwork. You are hiring yourself out to do that work for part of the maintenance budget. Many times there is deferred maintenance on rental property. A roof that needs to be replaced in 5 years has a presant worth cost. Same for new appliances, hot water heaters, carpet and HVAC. A through analysis will factor in the present worth of all these repairs that will be needed in the future. As far as vacancy goes a large company knows the rate for large complexes. Yours is likely to much greater because of your ability to screen and evict tenants. You also do not have an office that gets applications daily. My guess is that your 500/month positive cash flow would be eaten up by these factors.
It may be a good investment but remember you are doing the work and it is called sweat equity for a reason. Multi family is less liquid than single family. The value is the cash flow. On single family the price goes up with supply and demand. On the multifamily you wait until rents are effected that increase you cash flow. How fast the property will appreciate depends on your area. Some areas have 1%. Some have had 10%+ in a year.
There are good investment strategies using rental property. Most investors do it because they have surplus cash. It will be a experience for a first timer. Hopefully a good experience.
Hello David,
I am jealous just reading your post. I bought
the C.S. course in 1991 and never used it because I
have never gotten over the fear. But I have studied
his course so much I could recite it from memory. My
advise is probably worthless for you but I can tell you
the only reason you need the course is just to have
more stratigies to use. You have already used one that
worked so that alone should prove the course to be
legit. Buying real estate is an art of communication
not a science. Good luck. I hope I’m next.
Re: Advice on purchase of our First Investment Property - Posted by Dave Douglas
Posted by Dave Douglas on December 27, 1999 at 14:47:57:
Bud,
You apparently have had some experience in the rental business. Are you speaking as a representative from one of these large companies of which you speak? What advice do you have for the first timer. I also plan to use this property as a tax write-off!
Any information on this subject would be appreciated.
Re: Advice on purchase of our First Investment Property - Posted by david douglas
Posted by david douglas on December 26, 1999 at 20:55:38:
I to had some sleepless nights during this process. I put my home up for collateral in the purchase of this investment property. I have never been in the rental business before, but I figured that if you don’t take a chance, nothing will change. I have realized that the 40 40 plan doesn’t work. 40 40 Plan is when you work 40 hours a week for 40 years and hope that company retirement and social security will provide enough to survive. I have two children that will be ready for college in a few years and I don’t have funds available to provide tuition for them. I have the maintenance skills to repair and spruce up the property to make it ready to rent. I think that this is key when working with rental investments. Many people think that they can hire contractors to do the work and still make a lot of money. In the short time that I have been working on this endeavor, I have found that everyone around me was making $$$$ on the deal like Real Estate agents, Bankers, Title Companies, Appraisers, Contractors, etc…
Keep in touch so we may draw from each others experiences.