I'm not sure your last sentence correlates like you think it does. You are implying that every tenant is constantly vigilant about their finances and always know what market rents are in their area. You must have some very savvy and sophisticated tenants if you feel that is true.

When you and your tenants discuss extending the lease, tell them you're raising rent by 3% as per your standard yearly increase. It won't phase their decision one iota.

I have no idea if your tenants always know what market rents are. Likely they don't.

You asked if the tenant would be more likely to stay if you raised their rent twice in 3 months rather than all at once. The only way they could leave you is if they shopped around for a new place to live. While shopping, they are going to find out what market rents are in the area. So yes, in any situation that matters to you, I would say you have to assume your tenants will know what market rents are.

If you have ultra-passive tenants who are sleepwalking through life, in my opinion you're more likely to wake them up if you raise their rent twice in succession rather than just once. But then, I've never tried it. So if you do I guess I'd like to know how it works out.

Not a bad idea. Although after the initial year lease I prefer month to month. But I suppose if the initial lease had that sort of wording in it, they would expect it and would be less likely to move out (in theory).

anyone?

Vacancy rate is just one more component affecting cash flow. Since I make my decision on whether to buy a property based on expected income, I just plug my expected vacancy rate into my formula. If the numbers still work for me after adjusting for vacancies, I buy.

BTW, I own rentals in different neighborhoods in 3 different towns and my long-term vacancy rates don't really vary all that much between properties. Unless a major employer shuts down and people are leaving the area in droves, as long as you keep up with what's going on in the market and adjust your rents up or down accordingly you shouldn't have that much trouble filling your property. The important thing is to buy low enough that you can drop your rents if you have to and still make money.

I think I may have my first deal.

4 unit building
$500/mo per unit rent
$120,000 purchase price

$36k down
$84 financed at 5%

12.5% vacancy allowance
$21k gross year 1 income
$10,108 expenses

$10,892 NOI
$5,411 mortgage payments

$5,481 cash flow
15.22% COCR

Go?

Seems like a reasonable deal. The big question I'd have is deferred maintenance -- are there any major repairs (roof, hvac, plumbing, electrical, etc) that would increase your basis into the property and hurt your COC?

Looks OK to me. I'd try to put less down. You should be able to find at least 75% financing on a fourplex and it's always nice to have the extra cash available for repairs & rehab.

Horrible deal.

Thanks for the info, also thanks to the others who answered.

What would the maximum price be to pay for something like that?

It's still available and no potential buyers, so maybe i can get some off the buying price!

This was good advice. Drove by and, contrary to the agent's representations, there is a ton of deferred maintenance. Going to pass.

For anyone who may be interested, I started a separate thread specifically on rehabbing, flipping and building houses:

http://forumserver.twoplustwo.com/30...thing-1420919/

slow down. none of the lenders with decent rates want to touch anything with that kind of underground parking and it sounds like that property has a ****load of deferred maintenance

Hey guys. Potential deal or stay away?

Asking price 175k.

Fully rented triplex that.brings in $2235 gross per month. 100% occupancy.

20 minutes from the city and 20 minutes from my house.

Sales history of property is as follows. 82k in 1996. 165k in 2006. 75k in fall 2013.

Extensive renovations done to boost the purchase price. Brand new water heaters and ac units. Etc. Each unit has private garage and two bedrooms.

The triplex building is 3k sq feet. How much would you pay for.this property and how much net income would you expect to earn on that 2235 gross since no management company is needed due to it being super local, and since its been fully renovated?

Sounds like a terrible deal. Would be a bad deal at half the price.

I assume Riverman is just trolling. Because it sounds like it has some potential to me, obviously without knowing a lot more details and without seeing the property myself. If that truly is the gross monthly rent, the math seems to work out.

Took me like 5 days but finally finished reading the whole thread (skimmed last 1000 posts cause it got super repetitive). Thanks to spex and many others who contributed. Not sure I'm ever gonna try REI but it's been worthwhile just to understand the practice better.

I know it's been mentioned several times not to rent mobile homes but I'm not sure it was explained fully. I know if you're a park owner it makes selling the park more difficult when that time comes, and many park don't allow you to own the home if you're not living in it, but is there any financial reason for not renting them out that I'm not thinking of?

Also can I find sales history of properties online for free anywhere?

What information comes with have a paid account on loopnet? If anyone has one and wouldn't mind me browsing a little on there I'd really appreciate a PM.

I'm sure I'll have more questions once I process all the info a little more, but thanks again for those who made this thread what it is. Worth its weight in gold.

Where would you guys recommend trying to put a real estate investing group together at? Is there a good website to link up with other non accredited investors?

Basically I'm just trying to find 5-10 other people that want to invest in RE but would prefer a more passive role in it (as I would be doing all the active management) and would want to invest anywhere from $5k-$15k per person.

Thoughts?

Most park owners don't want to own the homes and rent them out because then the park owner is responsible for maintenance of the mobile homes. Mobile homes can require quite a bit of maintenance - more than a stick built home.

One of the major appeals of owning a park is there is little that can break since it's basically the dirt, utilities and roads the owner is responsible. When the park owns the homes, that is flipped on its head.


Depends where you live. Redfin is a great source if it's available in your area.

Thanks Bwana. Another question:

What could be the reason taxes on a property like this are so high (7-8%)? Is it because of unpaid back taxes? Haven't readjusted? Just a the county's going rate?

http://www.redfin.com/IL/North-Chica.../home/17132358

http://www.zillow.com/homedetails/80.../4822357_zpid/

On Zillow they're listed even higher at over 8k. Looks like after building sold for 300k in 2006 they bumped the taxes 60% but even at 5k+ its a huge amount.


Here's another similar property that has really high taxes so I assume it's a county thing not unique to the property.

http://www.redfin.com/IL/North-Chica...operty-details

http://www.zillow.com/homedetails/11.../4822279_zpid/

In the taxes section on zillow, there is a link to the county property tax assessment site. You can search it for the property and see the breakdown of taxes. Keep in miind that the property was sold for $300k in 2006, which is probably when the value was last assessed for tax purposes. It looks really high now because it's listed at 100k. The taxes will probably go down after it is sold because the current market value is lower than 2006. The purchaser may have to petition the county to reasses at current market value if the county doesn't automatically do that. But, I know nothing about Chicago taxes, so I'm just guessing based on my experience.

Yeah from checking out the county assessor's website I gather that's roughly the process.

If a property is bought on short sale or in foreclosure will the assessment be based on the purchase price or more likely on comparables? I assume this completely depends on assessor/county but if anyone has experienced this I'd be interested to hear how it went.

So from reading an article on creonline it seems as though the county will often fight you very hard on getting an assessment lowered and you would probably have to get a lawyer to win. Often you will even have to take it to the state appeal board because even if the county drops it one year they will often bump it right back the next. The reason being that it's politically difficult to raise the tax rates so they instead go after increasing assessment values, and often people aren't even angry at an increased assessment because they think the value of their property just went up.

Somewhat fair assessment minus the part about needing a lawyer to win. I contested mine a few years ago and got it lowered without questions. But then they raised it back up 2 years later.