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    Real Estate Investing: What due diligence do you do before making an offer on a rental property?

    March 01, 2021

    Real Estate Investing: What due diligence do you do before making an offer on a rental property?

    What due diligence do you do before making an offer on a rental property?

    Posted: 28 Feb 2021 01:42 PM PST

    I've found a rental and the numbers make sense. What inspections should i do, questions should i pose to the current owner / realtor, etc.? First time rental property purchaser - hopefully this one goes through!

    Multifam, 4 unit home. 90 year old building in need of some TLC which i'm willing to do. I'm concerned there might be things beneath the surface of the home that I'm not aware of - how do i ensure i'm not buying a bag of nails?

    submitted by /u/reddituser223311
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    Why do landlords cover all utils in leases?

    Posted: 28 Feb 2021 06:43 PM PST

    Found a great fourplex, but it's tenet occupied and the leases say the owner pays all utilities. It would be over $500 per month just utilities and so the cash flow is crap. It would be great otherwise. Technically I could try to change it once the leases end, but seems like a headache if I had to fill all 4 units again.

    Edit: Thanks everyone. I didn't even think that they wouldn't have separate hookups.

    submitted by /u/zoeey123
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    Is the market Current pricing making anyone else consider selling?

    Posted: 28 Feb 2021 05:02 AM PST

    We have a townhouse/condo In a seasonal vacation spot and a few of the neighboring units sold recently. That last available unit just went under contract. And at a nice number apparently because of a bidding war.

    For some background, our unit was purchased from a bank as it was a REO. This was our first purchase as an investment. But because the price was so good we made the classic mistake of not having a exit plan on purchase. We figured we could fix the cosmetic issues and rent during summer to cover costs and enjoy off season and let it appreciate after we fixed it. I always had in my mind that our condo was worth double what we paid for it. But price for some reason stayed low. Probably due to my low purchase price.

    Our working assumption was we would sell primary home, then live in the condo as our residence for 2 years so it qualifies for the no cap gains, then sell and move out of state.

    With the recent sales we seen the price approach my original target. So that has us thinking about listing.

    Vacation rentals are a PITA due to the cleaning and we're currently touching up paint etc for the next season. We are very hands on so it's basically a part time job on top of our current full time jobs. But at times it can be fun playing "real estate investor". Gives us something to talk about.

    Also COVID has changed the vibe of the town. We used to like off season as we could walk to bars have some drinks and listen to bands. That stopped during most of the last year. But oddly enough our rentals went up as people stayed close to home. Last year was our best rental year even after making some mistakes with our listing.

    Other factors are a high HOA Fee and we do like to vacation in different places. But it's difficult as we are such hands on managers to be far away when summer vacation peaks for us. I think my wife is tired of the extra work, but at the same time we are too cheap/and such control freaks it's hard to outsource a lot.

    For some numbers we paid 217,000 in 2015 put like 15-20K into Sheetrock and cosmetic repairs(carpet/flooring shower doors) a few years ago a new HVAC cost us 5K. Mortgage company appraised it at 267,000K 4 years ago. Most recent sale hasn't closed but I was told it was above 400K for a smaller unit. My original target was 425K Last year we netted about 26K in rentals for 3 months. Which covers all the expenses so it costs us nothing other then time to let it continue to appreciate. If we REALLY worked it my one neighbor supposedly was pulling in 45K a year.

    As there is almost no inventory in the area, if I buy another property it would be similarly inflated. And I have no need for the money right now for anything. But My wife was thinking of just throwing a crazy price out there almost 100K more then I think it's worth to see if there are any bites.

    That would give us a over 100% gain in 5 years.

    So real question is: How do you determine the optimal time to sell? Is it solely based on current market? Is it as percentage of appreciation? Or is it simply due to wanting to exit the game?

    TL:DR - I may be sitting in 100% gain in price, have. Nothing I'm interested in buying to replace the property. Thoughts on if should we sell anyway just to capture the gain?

    submitted by /u/friendofoldman
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    Any investors in Florida, specifically Miami areas or little north (Surfside, Coconut grove, Bal Harbor, etc)

    Posted: 28 Feb 2021 04:10 PM PST

    I currently invest in NY, and have been here in Florida for 3 weeks.

    I'm enjoying here a lot and have gotten to explore a few places.

    Anyway, I'm wondering; for any investors, how are things going? Short term, long term rentals, is it worth it? Is Florida consider a landlord friendly state?

    I'm used to NY, high property taxes, high state income taxes, etc

    Is return on investment good here? I'm willing to get a condo in a high rise as both a primary/rental for when I'm overseas.

    My budget is about 700k if this helps. Just looking for some advice and possibly locations on where to begin looking that has the best ROI and highest rental market.

    Cheers

    submitted by /u/IDidReadTheSideBar
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    Need help from Experienced investors

    Posted: 28 Feb 2021 10:17 PM PST

    So I have a 20 year old house recently remodeled and it's up to date and modern looking. The roof,Hvac, and water heater are all 20 years old though. I have $10k set aside for upcoming expenses right now. Should I continue to build maintenance and repairs fund or should I start putting extra into other investments?

    Mortgage is $1083 per month and I pay property manager $155 per month to manage. Home rents for $1550 per month. I've heard a lot of different methods for saving for expenses. I wanted to get some feedback from experienced landlords.

    If I sell the house after closing cost and all those fees I'll make like 3k. Considering selling before these items due on me. It was a free house so I don't have any money in on the deal.

    submitted by /u/lilbitdead
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    How many of you are by definition: Real Estate Professionals? Does it help?

    Posted: 28 Feb 2021 02:11 PM PST

    I'm currently in the process of working with my state to take my licensing courses to get me on track to become an agent, which I feel will help me get better into sales, network better, and overall get a good feel for the industry by getting my feet wet by working with properties.

    Obviously I want to invest in my own properties, whether flips, BRRRR's, renting, etc, I want to do it all. My question is, how many of you are actual Real estate professionals, and aside from tax related benefits, what benefits do you yield from that title when it comes to your properties?

    submitted by /u/_CPT_
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    Renting out a condo unit with high fees

    Posted: 28 Feb 2021 09:35 AM PST

    I have a 1 BR luxury condo, will be paid off in 7 years. Considering selling.

    A long-winded breakdown of some factors I've considered...

    Some reasons to keep:

    1. Mortgage will be paid off in 7 years.
    2. Pretty easy to manage - it's a small unit with an on-site manager.
    3. Rent is enough to cover expenses (for the most part).
    4. Property value has appreciated 33% over the last 10 years. Not sure how good that is compared to comparable properties, but I know it's a good area and my property will sell quickly if I wanted to sell.
    5. I have 2 assigned underground parking spots, a somewhat rare commodity in this area.

    Some reasons to sell:

    1. I can't keep a tenant longer than a year or 2. I've had 4 tenants over the years. All good tenants, except all have been young couples who eventually relocated or wanted a house.
    2. Condo HOA is high: Maybe 3-5% annual increase, which isn't bad, but I pay these monthly, which is about 30% of the rental income. HOA is high because it's a nicely maintained and pretty private/small condo complex.
    3. Can be hard to find renters: I've never had any large gaps between tenants, but people are definitely not fighting for my rental. I usually have only one applicant every time it's available. There are cheaper 1-BR alternative rentals in the area (albeit a bit smaller and managed by apartment management companies). My unit charges higher rent/sqft, but it is kinda unique since it's a comparatively larger 1-BR. I need to find that perfect tenant who will stay there forever!
    4. About an hour drive away. Not a big deal but it could be a hassle if I needed to take care of things. Over the years I haven't had to go there besides meeting new tenants and minor maintenance. I don't feel the need to hire property management at this time.

    I don't like finding new tenants every year or 2, but I also enjoy the fact that I only have 7 more years before it's paid off. In terms of generating profit, it can be great in the long run but I have to consider the costs (expensive HOA, maintenance costs as the unit ages).

    Any advice? Insight?

    submitted by /u/Makeleleroll
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    IRR and the true Real Estate Investing guide

    Posted: 28 Feb 2021 10:57 PM PST

    Hello dear friends.

    After reading most posts here, I can't help but notice a big old problem with everyones math. Not that it's not close to alright, but it's missing the key point for profitatibiliy (imo).

    An investment has an initial cost. It will then generate income, and have running costs. After time X it has a value. I believe most of you experience easily finding deals netting 5%-7%.

    7% is for me very bad. Low cost global index funds will over time regress to 7%, with "no" work.

    The real money is in the exit strategy. There are a few, but the easiest plan buys an empty prop. and sells a fully let out prop., prefered on long term contracts.

    Expected IRR need to be minimum 10%, your worst case preserve equity.

    TLDR; Always assess the exit value and strategy to every investment, even if you love the cash flow.

    submitted by /u/Kapi777
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    HELOC vs Cash Out Refi

    Posted: 28 Feb 2021 08:03 PM PST

    I own a property in full and I am interested in getting either a HELOC or a cash out refi to invest in another property. The property I own is worth about $125k and the properties I'm interested in buying are small single family homes under $100,000 after repairs. I will probably sell the investment property, not rent. Is my best option a HELOC or a cash out refi? I will likely want to invest in another property after I flip the first one. This is making me think that a HELOC is probably not the best option since they're higher rates. Any advice is greatly appreciated.

    submitted by /u/Turk4o9
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    Need some form of guidance

    Posted: 28 Feb 2021 03:35 PM PST

    So, I've decided that I want to try and look for off market properties. Then I realized I didn't know what exactly to do when I find a home, as dumb as it may seem. I don't know anyone who I could ask, so I turn to the helpful people of Reddit. Have you ever found any off market properties that you've bought? How do sellers transition from home being sold to another place? Does the buyer give them a timeframe? Any HELPFUL advice is welcomed.

    submitted by /u/Junior_S1
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    What type of return are you looking for in an investment property?

    Posted: 28 Feb 2021 03:32 PM PST

    10%

    If I buy a 100k property should I want at least a 1k a month in rent? Or could you make it work on a lower % return.

    How does this work if you take out a loan, verse paying cash?

    Does everyone write off depreciation on their taxes over the life of the investment?

    Thanks for the input!

    submitted by /u/Nick_X_Mofo
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    Good new investment?

    Posted: 28 Feb 2021 08:28 PM PST

    What do you guys think about a first time investor purchasing a fourplex for $350k in an area that is swiftly and steadily growing. All units are occupied and have a long rental history. Rent currently totals $2800 per month. Would you go for this?

    submitted by /u/eazzedroppin
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    Where to learn real estate investing?

    Posted: 28 Feb 2021 03:04 PM PST

    About a year ago I learned a lot about investing in the stock market through Youtube and found it very simple to find Youtube videos and to follow the natural flow of what to watch next. I am now learning real estate investing and finding it much more difficult to find the same flow of what to learn next. Is there any Youtube playlists or long videos that can explain the broad subject and piece it together for me. Also, if there are any good books that are like a lesson plan that would really help too because I have found that I learn the best that way. Thank you so much to anybody who helps!

    submitted by /u/MitchFox02
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    Eviction Moratorium rules on property sale

    Posted: 28 Feb 2021 01:37 PM PST

    I'm considering buying a property that is claimed to be rented month to month right now. With the current eviction moratorium, will the tenant be required to leave if I buy the unit from current owner, or because of the moratorium would there be no way to remove them, even on sale of property? Obviously a RE attorney will have the best answers but you could point me in the right direction. Thanks

    Edit: This is Florida if it matters.

    submitted by /u/admiralANCHOR
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    Advice on Real Estate Investing

    Posted: 28 Feb 2021 11:11 PM PST

    Advice On Real Estate Investing

    Hello, I'm new to this Reddit but wanted to know what are the key things a young investor would need. I currently do not have the capital but I will be trying to start different businesses and see which ones will work. I am also currently in school for engineering, so I cannot work a full-time job on someone else's time frame. But I am willing to put in the work to achieve it I just wanted to know the correct steps to make to not meet any terrible pitfalls.

    submitted by /u/LilakDraw21
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    Cash out!

    Posted: 28 Feb 2021 10:28 PM PST

    I'm preparing to do my first cash out refinance. What questions should I be asking lenders?

    submitted by /u/onlinesongs_88
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    How much would you pay for a 3D matterport virtual tour, 20 4k photos and a 2D rendered floorplan?

    Posted: 28 Feb 2021 06:22 PM PST

    I live in the Seattle area and was wondering what is an average price for a 3d tour, photos and a rendering 2d floorplan.

    View Poll

    submitted by /u/JoeTatoChip14
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    Selling current primary residence and we can't yet afford what we want, how can we best leverage our resources?

    Posted: 28 Feb 2021 01:20 PM PST

    My partner and I are currently selling out primary residence and will probably walk away with a $220k from the sale. It was our first home. While we figure out what is next have moved into a family member's rental and they are allowing us to stay here for free for as long as we want (like years, if we want to). We have a good relationship with them and I'm not at all worried about this relationship going sour.

    Our ultimate goal is to buy a property with 5 or more acres of land, which in our area goes for $700k at the least. This is out of our price range currently, but we're trying to figure out how we could get there soon. We also want to start investing in real estate for our future. For reference, we have the $220k plus another $40k saved for a downpayment and we would like total monthly payments to be around $2000. We have a few ideas-

    1. We just find a really cheap 5-acre property (it happens, but its extremely rare.
    2. We find some raw land now and a) build something or b) put a manufactured home on it. Figure out real estate investing later on.
    3. Buy another home to live in and retrofit the basement or other ADU space as a rental while we live there. Move out in 3 years and rent out both the house and the basement. Leverage the equity in the house to buy a property. Or if we have to, sell it and use the proceeds for our acreage purchase.
    4. We buy a duplex now with a 15 year mortgage using the proceeds from the home sale as a down payment. We rent it out while building equity. Then in a few years we do a cash out refinance and use the money to finance a property. In the mean time, we keep living in our relative's house.

    We really don't know much about real estate investing yet, but have done a little bit of research. We'd love some feedback on our ideas. We are also open to other ideas!

    submitted by /u/Sunflwr86
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    Second Vehicle Tax Write Off

    Posted: 28 Feb 2021 10:47 AM PST

    I've been looking at trucks and SUV's as a beater for my minor landlording work (I hire out the big stuff).

    It dawned on me today that I can write it off since it will be for business purposes.

    Just to clarify, if I spend 3K let's say, and depreciate 100% in the first year (with section 179), I'm not SAVING 3K on my taxes- correct?

    I'd be saving 3K x my tax bracket. let's just say 25% idk for sure. So spending 3K is really like spending 2250 because I'll save 750 real dollars on my taxes. Is that right? TIA

    submitted by /u/wc1048
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    Distressed property app��️

    Posted: 28 Feb 2021 07:32 AM PST

    Hi all! A youtuber i subscribe to mentioned an app that allows you to take a pic of distressed looking houses. The app then helps you make offers on them before others do.

    I can't for the life of me find this rewatching episodes.

    Does anyone remember the app? Is it Homesnap? Seems like a similar idea but i think it may only work on properties that are listed on other major real estate sites already.

    submitted by /u/Hollida4
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    Vacation rental home advise

    Posted: 28 Feb 2021 07:18 PM PST

    I am looking for advise on obtaining, managing, taxes, pros and cons of owing a vacation/rental property. I am interested in owing a property my family and I can use 2-3 weeks a year that can be rented to help pay for the expenses. Interested in southern Florida or Alabama in close proximity to the beach.

    A little background: 39 years old $160k income No debt (including mortgage or car payment) 6 month emergency fund
    $500k invested in IRAs and brokerage account (index funds) contribute $30k annually to investments

    I feel like reducing my annual contributions to investment accounts and investing it in a vacation/rental property can be a win/win. It can help diversify my investment portfolio and be used for vacations.

    Any books suggestions and other resources would be greatly appreciated.

    submitted by /u/DickyRiverbed
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    Does anyone know of any reliable real estate news websites

    Posted: 28 Feb 2021 03:21 PM PST

    Just as the title says. Rather know about any new information that is happening or predictions by credible people I can see. Thanks if anyone decides to comment :)

    submitted by /u/BernardCX
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    What are property managers good for anymore?

    Posted: 28 Feb 2021 03:58 AM PST

    I have managed my rental from a different state and haven't met my last two tennant's. Any maintenance issues I either find someone on facebook marketplace to do it or hire a company. I vet my tennant's through zillow and do online lease too. I do virtual tours. I collect rent online. There isn't anything I can see that a property manager could do that I couldn't do online.

    submitted by /u/ghostcaurd
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    New investor question (Philly)

    Posted: 28 Feb 2021 12:14 PM PST

    I'm currently looking for a single family under 100k in Philadelphia. Willing to finance the property and hopefully find something under 15k in repairs . I have 40k cash, as an investor do you feel that I have enough to do this ? Should I just wait until I saved the full 100k to invest? Any creative strategies? For some reason I feel like 40k may not be enough . Thanks for your input

    submitted by /u/BlackRenaissance92
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