Anyone have rentals, or anyone in finance. I could use some input.

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Rx Senior
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I have a few rentals, I flip homes for a living. I am looking to get into the rental business quite a bit more, however I am having a hard time deciding which route to take.

Here are the numbers I am running. Ok so just a background on the numbers I am using. $600,000 original investment, 120,000 price of duplex, 100% occupancy(For simplicity), 0 extra expenses(for simplicity), $3000 taxes, $1200 insurance, $1400 Rental income($700 per side). Here are the 2 scenarios.


Profit Potential on 1 duplex 100% Cash




120000​

16,800​

-3016​

-1200​

12,584​
Profit per duplex

<tbody>
</tbody>




Profit Potential on 1 duplex 50% Cash





60,000​

16,800​

-3016​

-1200​

-3192​
loan amt
9,392​
Profit per duplex

<tbody>
</tbody>




Assuming these 2 numbers I would be able to buy 5 duplexes with 100% cash with option #1. That would be annual profit of 62,920 or 10.5% ROI. However, the original investment would be about 10 years. Using option #2, using 50% cash I would be able to purchase 10 duplexes and would profit 93,920 a year for that same $600,000. That ROI is 15.5%. Now the question is how does the factor that I am not paying off the homes in 10 years like I am with option #1 vs having a 30 year loan on 1/2 of every duplex. To get more confusing though, I would be able to get the $600,000 back from option #2 in 6 1/2 years however I would still owe 23 years on the 30 year loans. There is a lot of factors in all of this to consider, but I wanted to get your guy's opinions.






 

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Handicapper
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Housing is close to the bottom right now and money is almost free.
This is the perfect time to leverage.
I am not in real estate right now besides what I live in, so im sure you would rather hear what people that do that for a living would do.

I would love to get into the rental business but for the same reason I cant get into the booking business is the same reason I cant get into the rental business.

My heart is too soft. I just dont have what it takes to kick someone to the curb for not paying there rent.
I can be a mean bull in the business world when in comes to business, but I just dont have the heart to kick someone out of there house.
Not saying people that have that abilty are mean and uncaring by any means.

But thats just my 2 cents.

Good luck.
 
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I have been doing this for pushing 8 years where I live. We mainly buy foreclosed properties and renovate, but have also purchased apartment complexes on 10 year notes. Interested in seeing discussion.
 

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Cash has never been cheaper. If you're ok with the extra risk (10 duplexes versus 5), I'd go that route assuming you can get a good loan under 4%. I've had rentals for about 5 years. They can be a breeze or a headache. All depends on the tenant as you are probably well aware.
 

Rx Senior
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I have been doing this for pushing 8 years where I live. We mainly buy foreclosed properties and renovate, but have also purchased apartment complexes on 10 year notes. Interested in seeing discussion.

Tarheel, that is exactly what I do. Mostly foreclosed properties or some other avenues that I have found to get them. Here is one that I have on the market. Had a deal fall through and now am in a tough time to sell.

http://iowarealty.com/buying/detail_ml.asp?SearchFilter=8&list_numb=409299
 

Rx Senior
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Cash has never been cheaper. If you're ok with the extra risk (10 duplexes versus 5), I'd go that route assuming you can get a good loan under 4%. I've had rentals for about 5 years. They can be a breeze or a headache. All depends on the tenant as you are probably well aware.

Yes, this is exactly why I am seriously considering getting into it more then I am now. Tough to turn down rates under 4% on rentals! I am still trying to figure out the numbers to understand if they make sense.
 
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Cash has never been cheaper. If you're ok with the extra risk (10 duplexes versus 5), I'd go that route assuming you can get a good loan under 4%. I've had rentals for about 5 years. They can be a breeze or a headache. All depends on the tenant as you are probably well aware.

Exactly, be very selective. Even being very selective fails at times. Have a set date to send out a notice, then have the set date to go to court to kick them out. That's the business, if they blow their money on their kids Christmas they still have to go on that date.
 
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Tarheel, that is exactly what I do. Mostly foreclosed properties or some other avenues that I have found to get them. Here is one that I have on the market. Had a deal fall through and now am in a tough time to sell.

http://iowarealty.com/buying/detail_ml.asp?SearchFilter=8&list_numb=409299

I like that Kruser! Nice to see others doing the extra detail work to get one to sell. The one listed under Valdese on this site is one of the last few that we have sold. http://www.hefnerrealestate.com/forsale.html
 

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Looks good man! I like those hardwood floors!

I listed this one about 10 days ago

http://iowarealty.com/buying/detail_ml.asp?SearchFilter=8&list_numb=410457

Kruser, can I make a suggestion from a buyer of 3 houses now?

The inside of your homes look great. I love the cabinets, the appliances, the hardwoods and everything really.

What I can't get past though is the front yards of both places. Neither one has very good curb appeal at all. If I were a buyer, I wouldn't even want to go in the house after arriving to look at the house. No shrubs, plants, brick anything.

Just an observation. I hope I don't offend you.
 

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Enfuego, not offended at all. the one is ugly as hell, problem is we have 12 inches of snow and its 0 degrees here. Not much I can do right now. The other one isn't that bad, new decks, new driveway, new rock all around
 
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I like the tiled shower, we do that a lot on flips. Do you ever try the boxes on those for shampoo or something to sit on? They are a pain but gives a neat look. I think both should sell quickly this is just a down time of the year for the most part. After Christmas usually picks up.
 

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I have a few rentals, I flip homes for a living. I am looking to get into the rental business quite a bit more, however I am having a hard time deciding which route to take.

Here are the numbers I am running. Ok so just a background on the numbers I am using. $600,000 original investment, 120,000 price of duplex, 100% occupancy(For simplicity), 0 extra expenses(for simplicity), $3000 taxes, $1200 insurance, $1400 Rental income($700 per side). Here are the 2 scenarios.


Profit Potential on 1 duplex 100% Cash




120000​
16,800​
-3016​
-1200​
12,584​
Profit per duplex

<tbody>
</tbody>




Profit Potential on 1 duplex 50% Cash





60,000​
16,800​
-3016​
-1200​

-3192​
loan amt
9,392​
Profit per duplex

<tbody>
</tbody>




Assuming these 2 numbers I would be able to buy 5 duplexes with 100% cash with option #1. That would be annual profit of 62,920 or 10.5% ROI. However, the original investment would be about 10 years. Using option #2, using 50% cash I would be able to purchase 10 duplexes and would profit 93,920 a year for that same $600,000. That ROI is 15.5%. Now the question is how does the factor that I am not paying off the homes in 10 years like I am with option #1 vs having a 30 year loan on 1/2 of every duplex. To get more confusing though, I would be able to get the $600,000 back from option #2 in 6 1/2 years however I would still owe 23 years on the 30 year loans. There is a lot of factors in all of this to consider, but I wanted to get your guy's opinions.







If financing isn't a option definitely go option 2 for atleast half of them. It isn't a black or white answer, you could buy 7 or 8 if you wanted but I'd say the 10 is a good # if you can get financing easily and those are the #s.

It is in Des Moines though so keep in mind the appreciation is going to pretty much be shit over 10 years (equal inflation at best probably)

You are pretty much just buying for cashflow+tax benefits.
 

Stumblin' around, drunk on burgundy wine.
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Those are some really nice kitchens in some ugly ass houses. Nice work fellas.
 

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Kruser do you do the handyman work yourself or do you hire someone
 
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I've done it on a couple of Condos ... Flipped two, kept two. But it's not a business for me.

Should have, could have a couple of years ago when they were cheaper...

a friend does it down in Florida, buys up in Not so good areas. Fixes them and rents or flips them.
He says those are the best areas.
 

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Kruser/tarheel,

I think I'm going to take a stab at my first flip. Hope I can get some advice fro you guys.
 

Rx Senior
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Kruser do you do the handyman work yourself or do you hire someone

I do almost all of it myself right now. This year I am going to try and do 10-15 of them so I am hiring someone to work with me fulltime
 

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