A New Direction

Hey people out there in internetland. Hope everyone is having a good holiday and ready for the new year. I recently read an article on biggerpockets that has helped me realize that I need to shift directions when it comes to my RE endeavors. Basically it talks about capital expenditures eating up all the profit on houses that rent for less than $700. While his numbers are sky high, he makes a good point, and I have a few houses which are “PIGs” like he mentions in the article.

The plan moving forward is to sell the PIGs before the major cap ex comes into play and only take the cash flow for 5 or so years. Moving forward I am looking to only acquire houses with multiple units or that cashflow much better than what we see now. Also I am going to consider price appreciation in the houses moving forward also as the PIGs aren’t going to be worth more no matter how much you put into them.

The 4-plex is going to kill it! I am expecting to be all in <50k and maybe even <40k. It will gross $1800 monthly and we have to pay water and gas so i will just ball park $1600 gross before other expenses. Also, it is actually a 6-plex, there are 2 additional units but they need egress windows and are not up to code. I ran all my numbers with it just being a 4-plex but if we can get the other 2 units up and running, it will make it an even better buy. We must acquire more properties like this as well as follow the other game plan of renting places out for 1-10 years and then selling it for a gain. Basically we need to keep “moving up” in properties and not stay at these cheap-o levels. I am very excited for what the future holds.

I wish everyone a very happy holiday and new year. May 2017 be your breakout year! Keep up dat hustle and I know it will be! 🙂

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