Is two deals at once too much? - Posted by Ivan

Posted by Ronald * Starr(in No CA) on August 09, 2003 at 11:33:37:


Hi, nice to meet you. I wish I knew you personally so I can be sure that I am giving you good advice, tailored to you.

From what you say, which may be biased toward the answer you want to hear, I’d say go ahead and buy both. The main considerations, it seems to me are condition of the properties and stability of the renters. With properties in good condition and longer-term type renters, the amount of work required to own rentals is really modest. Expect to spend maybe 5-7 days a year per unit per year average. However, this will tend to be “lumpy,” with much work whenever you have a turnover of renters, and much less work when thing are cruising in normal.

I’d recommend that you get a couple of good books on managing rental properties and start reading them, if you have not done so already. In fact, buy the books this weekend and start studying.

Remember, whenever a renter calls or has a note in the rent check envelop, there is trouble. Maybe not major trouble, but something with which you will have to deal. The renters never call you up to say “Hey, things are going well. No problems with the property, I got my rent check out a couple of days early.”

Hmmmm. Now, 8 and 9 cap rates are typical in real estate investing. Have you scoured the market to be sure that there aren’t a lot of other properties that could give you better deals? I prefer more like 15 cap rates or higher.

Good Investing*******Ron Starr***********

Is two deals at once too much? - Posted by Ivan

Posted by Ivan on August 09, 2003 at 10:37:16:

I’m a newbie though I’m very informed after spending over a year reading hundreds of articles and posts on this site. Now I have an opportuniy to purchase two properties a 2-unit and 3-unit both fully rented and one is section-8 with longterm tenants (over 3 years).

I received 70% financing for one property through a mortgage broker with the seller holding a second. Broker doesn’t care where the other 30% comes from. I’ve come to find that the other seller is also willing to hold a second upto 30%. The numbers are good and positive cash flow is over $200 a month each property. Cap rate is 8% on one and 9% on the other.

My question is should I try to get another 70% mortgage and do both deals. I’m confident that I could handle it but I guess I just need some assurances and some feedback.