My last post was about a possible rental property I was very excited about possibly purchasing. It was on the east end of Long Island, and could be used in the future as a possible vacation spot for those people involved in the deal. However, as the title of the post indicates, the deal is all but dead. I am pretty annoyed about it, but it is what it is.
Regardless of how I ran the numbers I just couldn’t get it to work if I was using debt (i.e. a mortgage) or if I was using the rental company which took 30%. I was very up front and honest with the seller’s broker. I gave him my calculations and put it in his court to let me know what I was doing wrong. Instead of arguing my calcs and assumptions he just kept taking money off. I eventually got him down to him $310,000 from $345,000, but it didn’t matter because even at $310,000 the numbers just simply didn’t work.
My Future in Real Estate
With that particular property out I decided to reach out to a few buddies that showed interest and laid out what I was looking for:
- NO FLIPS
- NO FORECLOSURES
- NOT PUTTING A TON OF MONEY INTO WORK ON THE HOUSE RIGHT AWAY
- Home in a nice school district (right now my focus is on the area around my main residence solely because that is what I know)
- Cash flow positive – if I were going with cash flow negative I would have bought the previously discussed property
- I do not expect to do all the work as it relates to finding houses and/or operations. If something breaks there will be a rotating phone number call and I won’t be the only one to get the call/text/email in the middle of the day/night. If there are landlord-tenant court dates I (or if there is another attorney in the group) will not be going for free.
- I do not expect all those that I contact to end up in a deal. Maybe I end up with 2 guys, maybe 4 but I will ask those that seem interested in the process first when I do find something
- The home price is going to be under $400k…20% down and a HEALTHY reserve fund sitting in cash for dead months and/or repairs.
Upon sending that almost exactly bullet list to 4 buddies I can tell that 2 of them are likely not a good fit if I were to find something quickly…and that’s okay. One, is dying to do a flip and I just can’t stomach that type endeavor as being my first entrance into real estate. Him and I have talked about buying a place over the past few years, so I could maybe see something working out in the future. The Second, didn’t seem interested in my process, and that is understandable, but I am not willing to deviate at this current juncture. This is not to say it wouldn’t work out at a later date, but if I were to find anything quickly I would say that it would be unlikely I get to closing with him.
Wish me luck trying to find something!