The Entrepreneur Forum | Financial Freedom | Starting a Business | Motivation | Money | Success

Welcome to the only entrepreneur forum dedicated to building life-changing wealth.

Build a Fastlane business. Earn real financial freedom. Join free.

Join over 80,000 entrepreneurs who have rejected the paradigm of mediocrity and said "NO!" to underpaid jobs, ascetic frugality, and suffocating savings rituals— learn how to build a Fastlane business that pays both freedom and lifestyle affluence.

Free registration at the forum removes this block.

Thoughts on this rental I own

GetRichODT

Bronze Contributor
Read Fastlane!
Speedway Pass
User Power
Value/Post Ratio
36%
Feb 8, 2015
280
100
48
bought for $337,000 in Dalls / Ft worth area

Rents for $2795 / month

30 year note at 4.125%

25% down

Owned for 1 year so far. New roof. New a/c
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

bambambam

Contributor
User Power
Value/Post Ratio
85%
Jul 3, 2016
46
39
I assume you’re around 5k in taxes and 2-3k insurance annually and probably a single family home. If those numbers are close you’re probably cash flowing around 400-500/month after accounting for vacancy and capex.

If this is accurate then I would
hold on to it since much of dfw is appreciating well and you’re cash flowing ok.However I probably would not buy this property because I target properties that cash flow over 500 and rent for 1% of purchase price. It’s hard to find that in SFH so I invest in multifamily
 

GetRichODT

Bronze Contributor
Read Fastlane!
Speedway Pass
User Power
Value/Post Ratio
36%
Feb 8, 2015
280
100
48
I assume you’re around 5k in taxes and 2-3k insurance annually and probably a single family home. If those numbers are close you’re probably cash flowing around 400-500/month after accounting for vacancy and capex.

If this is accurate then I would
hold on to it since much of dfw is appreciating well and you’re cash flowing ok.However I probably would not buy this property because I target properties that cash flow over 500 and rent for 1% of purchase price. It’s hard to find that in SFH so I invest in multifamily

More around $700/month so far. Insurance is about $1200

I don't usually buy on appreciation, but this house already cash flowed and is in a primo area that should continue to appreciate.
 

Thoelt53

Gold Contributor
FASTLANE INSIDER
Read Fastlane!
Read Unscripted!
Speedway Pass
User Power
Value/Post Ratio
293%
Dec 8, 2016
826
2,419
Boston, MA
I’m totally unfamiliar with the DFW area, so forgive my ignorance.

How in the hell are you renting a sub $400k property for $2,795 per month?

I’m not in real estate and I’m probably naive, but I rent a ~$730k home in a Boston suburb for $2,250 per month.

Please educate me.
 

JWelch

Bronze Contributor
Read Fastlane!
Read Unscripted!
Speedway Pass
User Power
Value/Post Ratio
246%
Aug 12, 2016
160
394
Arizona
Sound like a pretty good deal for you at the current time as long as you have good tenants.
Disclaimer: I am not an attorney and nothing I say should ever be misconstrued as legal advice. Please consult an actual attorney.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.
Last edited:

GetRichODT

Bronze Contributor
Read Fastlane!
Speedway Pass
User Power
Value/Post Ratio
36%
Feb 8, 2015
280
100
48
I’m totally unfamiliar with the DFW area, so forgive my ignorance.

How in the hell are you renting a sub $400k property for $2,795 per month?

I’m not in real estate and I’m probably naive, but I rent a ~$730k home in a Boston suburb for $2,250 per month.

Please educate me.

I don't know the Boston market. In this area of DFW there are many houses that rent for even more than my rentals. This is an admittedly prime location and a nice 2,500 sq ft townhome with nice finish out.
 

GetRichODT

Bronze Contributor
Read Fastlane!
Speedway Pass
User Power
Value/Post Ratio
36%
Feb 8, 2015
280
100
48
If you’re getting that much rent out of it I’d hold on to it for another few years at least. Under Trump the economy is very likely to continue to climb so its value will increase. Plus another two years will get you out from under any capital gains tax should you chose to unload it.
Sound like a pretty good deal for you at the current time as long as you have good tenants.

At this point id like to hold on to it forever. It's part of my early retirement plan. It seems like a good deal for me but I've only been in RE for 4 years and haven't experienced a crash yet.
 

CareCPA

Platinum Contributor
FASTLANE INSIDER
Read Fastlane!
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
356%
May 2, 2017
976
3,479
35
Pennsylvania
...
Plus another two years will get you out from under any capital gains tax should you chose to unload it.
...
Sounds like it isn't his primary residence. Under current law, I'd be careful dispatching tax advice such as this.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

bambambam

Contributor
User Power
Value/Post Ratio
85%
Jul 3, 2016
46
39
That’s a good insurance premium. What carrier? Also, any HOA dues?

More around $700/month so far. Insurance is about $1200

I don't usually buy on appreciation, but this house already cash flowed and is in a primo area that should continue to appreciate.
i
 

JWelch

Bronze Contributor
Read Fastlane!
Read Unscripted!
Speedway Pass
User Power
Value/Post Ratio
246%
Aug 12, 2016
160
394
Arizona
Sounds like it isn't his primary residence. Under current law, I'd be careful dispatching tax advice such as this.
Good call. My mistake, added disclaimer.
 

Douglas Vogel

New Contributor
Read Fastlane!
User Power
Value/Post Ratio
100%
Dec 10, 2017
4
4
33
Washington
At this point id like to hold on to it forever. It's part of my early retirement plan. It seems like a good deal for me but I've only been in RE for 4 years and haven't experienced a crash yet.


If you want to hold onto the prop as a cashflow retirement plan good for you. I would caution anyone buying a property based on super macro economics of the country and expecting appreciation. If you refer back to MJ’s books, what value is your LOCAL economy giving to support a perceived value added to you and thus your consumer (renter/buyer)? Maybe it’s new parks, jobs etc. or maybe it’s that time of season where buyers are looking and not a lot of sellers so the perceived value is higher until buyer said or seller demographics change which can happen very quickly.
Additionally one thing that’s great about real estate is there are many things you can do to focus on value to your consumer to communicate an increase in perceived value (landscaping, upgrades, home warranties, FINANCING, ease of transaction etc.) sounds like you are well on your way keep it up!
 

GetRichODT

Bronze Contributor
Read Fastlane!
Speedway Pass
User Power
Value/Post Ratio
36%
Feb 8, 2015
280
100
48
No HOA, primo area, cashflowing $700. Giggity

So far so good but always wondering if I'm overlooking something as this is an entrepreneurial venture I don't have much experience with
 

mike24601

Consumption Bear
Read Fastlane!
Read Unscripted!
Speedway Pass
User Power
Value/Post Ratio
267%
Apr 8, 2017
195
521
Illinois
So far so good but always wondering if I'm overlooking something as this is an entrepreneurial venture I don't have much experience with

You could have made a lot worse of an entry for your first rental. Single family dwellings are the least favorable buy in real estate because at the end of the lease your occupancy goes from 100% to 0% and your cash flow goes to $0. Keep your tenants happy, bend over backwards for them and keep the property attractive. If I were you, my next move would be to wait a few years and save up enough money to put down on a multi-family. Ideally 16 units or more
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

MidwestLandlord

Legendary Contributor
EPIC CONTRIBUTOR
Read Fastlane!
Read Unscripted!
Speedway Pass
User Power
Value/Post Ratio
759%
Dec 6, 2016
1,479
11,226
$84,250 down.

$700 monthly cash flow X 12 months = 9.97% cash on cash return.

That's assuming no vacancy.

8.3% cash on cash return with 2 months vacancy. ($700 X 10)

Decent numbers. Not great numbers though honestly. And as others have said, a single family home is more susceptible to cash flow issues.

With those numbers, is your $84k working as hard for you as it could be? (opportunity costs)

Your post is pretty vague. Is there a specific concern here?
 

FlipFlops

Contributor
Read Unscripted!
User Power
Value/Post Ratio
195%
Nov 26, 2017
20
39
55
Poipu, Kauai, HI
Sounds like a home run to me. I’m with midwestlanlords analysis.

And would add: in areas of high rent, “yuppie housing”, it is hard to hit cash on cash returns higher than 10%.
But there is a ease of management. All our tenants are on autopay, its been three years since we’ve had to ask where the rent check is. Also investors have fewer units for the same net worth. But for cashflow, management intensive properties are better.
 

Kak

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Rat-Race Escape!
Read Fastlane!
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
493%
Jan 23, 2011
9,678
47,666
34
Texas
$84,250 down.

$700 monthly cash flow X 12 months = 9.97% cash on cash return.

That's assuming no vacancy.

8.3% cash on cash return with 2 months vacancy. ($700 X 10)

Decent numbers. Not great numbers though honestly. And as others have said, a single family home is more susceptible to cash flow issues.

With those numbers, is your $84k working as hard for you as it could be? (opportunity costs)

Your post is pretty vague. Is there a specific concern here?

Read my mind! The numbers that matter are the money in the deal and the money that pops out. The occupancy rates in DFW can realistically beat 10/12 months though as long as you’re priced competitively.

I probably wouldn’t sell it... maybe a cash out refinance when your LTV gets where it needs to be and get an additional property or two.

I don’t like assuming it will appreciate to wrap my head around a deal. But it’s probably going to in DFW.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.
Last edited:

lowtek

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Fastlane!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
332%
Oct 3, 2015
2,164
7,186
42
Phoenix, AZ
Sounds like a reasonable deal to me. Are you self managing? If so, then the amount of time you spend doing that needs to be in your calculation.

Just passed off my twelve unit property to a professional manager and I couldn't be happier about it. It took up a decent amount of time and caused way too many headaches to justify managing it myself, for the amount of cash flow.
 

CementFeet

Contributor
Read Fastlane!
Read Unscripted!
User Power
Value/Post Ratio
192%
Feb 23, 2017
13
25
53
Huntsville, AL
bought for $337,000 in Dalls / Ft worth area

Rents for $2795 / month

30 year note at 4.125%

25% down

Owned for 1 year so far. New roof. New a/c
You are below the 1% general rule of thumb, which would make it a bad deal for me. However, 4.125% was a smoking rate on a 30-yr non-owner occupied note (my last deal was 5.125% 30-yr but that house was under 100k and the lower the value, the higher the interest rate), so that makes up for some of it. Go to www.biggerpockets.com and use their free calculators to see what you may have missed. It's a volume game....gotta buy a lot of places to see any real impact to get out of the rat race.
 

garyfritz

Silver Contributor
Read Fastlane!
Summit Attendee
User Power
Value/Post Ratio
116%
Jul 16, 2011
694
807
Colorado
Renting for 1% of purchase price doesn't happen here in Northern CO, at least not for SFH. I have a $300k 4br house that rents for $1800 and (not counting occasional repairs) cashflows about $1600 (fully paid for), a $175k 2br townhouse that rents for $1200 and cashflows about $850 (fully paid for), a $300k 4br house that rents for $1800 and cashflows about $1000 (40% LTV), and a 2br walk-out lakefront apartment in the basement of my house (40% LTV) that rents for $1100. Other than the basement apartment the properties return right around 6% cash-on-cash.

I have too much cash tied up in these properties, and way too much of my net worth in local real estate. That's been a good thing in Colorado, but given the way the economy looks, I'm not confident it will continue to be a good thing. Especially since a lot of the rental demand is driven by oilfield workers (fracking) and that won't last forever.

So I don't think I want to pull cash out of these properties to buy multi-family units. That's just increasing my exposure to NoColo real estate. Still looking for a good place to put some of that value. I work half-time on a six-figure training/consulting practice, and I know my limitations well enough to know I'm probably not a good bet to successfully launch a business from scratch. So I keep looking.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

CementFeet

Contributor
Read Fastlane!
Read Unscripted!
User Power
Value/Post Ratio
192%
Feb 23, 2017
13
25
53
Huntsville, AL
Renting for 1% of purchase price doesn't happen here in Northern CO, at least not for SFH. I have a $300k 4br house that rents for $1800 and (not counting occasional repairs) cashflows about $1600 (fully paid for), a $175k 2br townhouse that rents for $1200 and cashflows about $850 (fully paid for), a $300k 4br house that rents for $1800 and cashflows about $1000 (40% LTV), and a 2br walk-out lakefront apartment in the basement of my house (40% LTV) that rents for $1100. Other than the basement apartment the properties return right around 6% cash-on-cash.

I have too much cash tied up in these properties, and way too much of my net worth in local real estate. That's been a good thing in Colorado, but given the way the economy looks, I'm not confident it will continue to be a good thing. Especially since a lot of the rental demand is driven by oilfield workers (fracking) and that won't last forever.

So I don't think I want to pull cash out of these properties to buy multi-family units. That's just increasing my exposure to NoColo real estate. Still looking for a good place to put some of that value. I work half-time on a six-figure training/consulting practice, and I know my limitations well enough to know I'm probably not a good bet to successfully launch a business from scratch. So I keep looking.
Well...Look at the positive. You are probably making 6% tax free. Mine are 10-12% cash-on-cash. I've been looking for that 15% ROI "great" deal and will continue to do so. I would rather have cash tied up in property than a 401K/Simple, but only above 8-10% cash-on-cash. If you used MJ's approach to find a good 5% dividend fund, you would be paying maybe 15-20% tax (not so bad either), and it would be liquid. I would probably go for the advantage of liquidity below 6% plus it's really no effort to move money around in dividend stocks. I"m in the South. I also think we are in a nice housing bubble here but we didn't see huge gains in prices so whenever the next crash happens, the fall should be less painful.

I shall refrain from making any jokes about NoColo pot houses.
 

garyfritz

Silver Contributor
Read Fastlane!
Summit Attendee
User Power
Value/Post Ratio
116%
Jul 16, 2011
694
807
Colorado
OK, then I will. :rofl:

We had this figured out from the start in CO. When we first legalized medical marijuana, on the same ballot we also legalized same-sex unions.

Because it says right in the Bible that if a man lies with another man, they shall be stoned. Got it covered.

::rim-shot::
 

FlipFlops

Contributor
Read Unscripted!
User Power
Value/Post Ratio
195%
Nov 26, 2017
20
39
55
Poipu, Kauai, HI
OK, then I will. :rofl:

Because it says right in the Bible that if a man lies with another man, they shall be stoned. Got it covered.

::rim-shot::
I'll go for the Pot Jokes.
I worked hard to get plans/permits for a 46 unit apartment with 3 commercial spaces on the first floor. Decided the neighborhood was a bit rough. So I sold it to a guy, his hang up was the three commercial spaces. I sold him on it, "What do you mean, its perfect! You put in your Pot shop, a Subway, and a massage parlor."
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

BrandonS85

Silver Contributor
Speedway Pass
User Power
Value/Post Ratio
378%
Sep 8, 2015
143
541
38
Ohio USA
If it's in a good area with likely appreciation it seems like a good deal.

In my case I just get cashflow monsters and go on about life.
 

GetRichODT

Bronze Contributor
Read Fastlane!
Speedway Pass
User Power
Value/Post Ratio
36%
Feb 8, 2015
280
100
48
If it's in a good area with likely appreciation it seems like a good deal.

In my case I just get cashflow monsters and go on about life.

How do you define cash flow monsters and how do you find them and where geographically?
 

Post New Topic

Please SEARCH before posting.
Please select the BEST category.

Post new topic

Guest post submissions offered HERE.

Latest Posts

New Topics

Fastlane Insiders

View the forum AD FREE.
Private, unindexed content
Detailed process/execution threads
Ideas needing execution, more!

Join Fastlane Insiders.

Top