Malibu pics, as promised

The new condo, which is currently rented (no more teaser pics):

Property Analysis #1, continued...

I want to attack this analysis by two different methods. The first is probably not new to anyone. All we have to do in this method is determine the income and expenditures to see if at the end of the month there is a positive net flow. Let's do it for this Shelton property...

Income: +$1,200/month

Taxes: $1,455/year or @$120/month

Insurance: $50/month

Water/Sewer/Garbage: $100/month

Property Management (optional): $100/month

Vacancy (5%): $60/month

Maintenance: $50/month

Mortgage (assuming 5% interest, 20% down): $385/month

I may have missed something. Probably not. Anyway, when we run the numbers, at the end of the month there is a residual net cash flow of $335/month! Most investors would say that $100 profit per door is a minimum, so this property meets the criteria, including management fees. Management companies might be more liberal with repairs than a tightwad landlord like yours truly, so the maintenance number might be a bit higher, but I would be happy with a "hands-off" property that puts $250/month in my pocket. Your return on the original $18,000 (20%) down payment per year is $3,000, or 17%! How does that compare with the stock market? Since it's managed, there are no phone calls in the middle of the night!~

A lot of real estate investors suggest that prospective properties adhere to the so-called 50% rule. The rule dictates that 50% of the rent, over time (considering minor and major repairs), will be dedicated to liabilities like taxes, insurance, repairs, maintenance, and utilities. Count on it. If that's the case, the other 50% is left to pay off debt, to wit, principal and interest. Let's apply it to the Shelton property. Half of the rent is dedicated to repairs, insurance and such, while the other half ($600) is applied to the debt of $385/month. This method of analysis yields a $600-$385=$215 net income per month. Looks like this is a property worth looking at!

Property Analysis #1

It's now an ingrained habit; I look at properties every day. I've told myself that I won't purchase another property until after my first professional exam in late August, (ABR I-Therapeutic Medical Physics) but I know I'll have one eye on the market, keeping at the ready for when the test is over with.

There are a lot of duds on the market at any given time. It's a challenge wading through the hundreds of properties on the block, but luckily there are some good websites out there that provide search filters that help in the hunting. I primarily use Redfin, but unfortunately, it's only available in larger markets, so others may not find it as helpful.

Here's a property I found awhile back:

This property is technically a multi-family because it is a single lot with two homes. This one is a bit out of town, approximately 20 minutes NW of Olympia in a town called Shelton. Shelton is definitely a self-sustaining community, but is small. Certainly properties here are much less expensive than in Olympia or Lacey. However, it passes my first test: the rent the property should draw on a monthly basis must be at least 1% of the purchase price of the home. That is to say, if a home is purchased for $110,000, it should be rented for at least $1,100/month. In easy markets like Indianapolis or Buffalo, investors say the number should be 2%, but that just isn't a possibility in locales with higher housing prices.  This Shelton multi-family is listed at $89,500, and is purported to bring in $1,200 a month, or $600 per side. It's enough to pique my interest. Too bad I'm not buying...

Of course, an smart investor wouldn't base his financial strategies on a single 1% criterion, and there are many other measures by which rentals are compared. I'll further analyze this same property next time.

In my world, 2 comes before 1

If we play by my rules, we'll start by documenting my second property. I say my, but really the last two project homes have been conceived, mentally designed, and executed by our committed efforts. It seems to work well enough.

Hello, I'm Tyler Blackwell. By education, I'm a physicist, with computer reading glasses to boot, born in Montana and bred by American culture. My partner in real estate and life, Hallie Torrey, is also part of the nerd troop; she uses her Master's degree in math in her daily rituals as a community college teacher and tutor. We're fueled by more than science, it turns out. More of the story will unfold with the forthcoming posts.

First, a peek into property #2. This property was purchased with the intention of renting it out to someone with a mind to help me build a retirement portfolio. A picture would be nice, you say? Of course, of course:

This is a tease, I know. Just one picture for today? Look, I know this one gave you goosebumps, and I need to keep you coming back, so yes, just one.  This picture gives great insight into what property #2 (Malibu) is all about. Unsightly, but SOLID. If I've learned anything about rental property in my years of rearing, it's that if something in a rental works, leave it alone. This vanity dates itself square in the 80s. See the towel ring? My thought on this is that if someone has been using this sink for 25 years and it's still in this condition, it's going to last another 25!!

In the next post I'll reveal the oven, another gem from the 80s.

Staring into the mirror, the face of a slut

These days, a hobby of mine has been developing. Some say it's not a hobby, but rather a business, only on the predication that the hobby makes money. But if you love doing it, it doesn't matter what you call it....

A propensity toward the real esate world has plagued me since high school, fueled by my father's own commerical and residential exploits. Since then, I have been waiting for my opportunity to make the game mine. The opportunity has come.