New investor but I’m lost

[Grace Popoola]

I’m a realtor in Houston and I’m really good at getting my investors deals but now that I want to start investing I’m seeing that it’s not just about getting great prices, I actually have to look at other factors. I’ve always thought as long as the rent can pay the mortgage then it’s a good deal. All my investors have been in the business for years and I’m afraid if I ask them for help they might think I’ll try getting deals for myself. I’m very loyal to them so I don’t want them doubting my intentions.

Please advice.

[Tim Herman]

@Grace Popoola Find a rental calculator and learn how to use it. BP has different kinds you can use for free times. Attend the webinar on Wednesday, also free. They will try to up sale you to pro. You can use spreadsheets and some are found in the files section of BP. All the calculators will be similar. Broken down into hard costs(known costs) and soft costs( variable costs). Hard costs include, Principal and interest, taxes, property management and insurance, If a multi then utilities might be included in the hard costs. Soft costs include vacancy, repairs and capex. You can talk to a PM and find out what the average vacancy factor is. Usually 5 - 8%. A 5% vacancy is your tenant staying a an average of 20 months. 5/100=1/20. In my area it cost me an average of $150 per service call. I figure 1 service call per year and build up the reserve to paint during tenant turnovers. Minimum of $50 per month and/or 5%. Capex(Capital Expenditures) Everything has a finite life, even new construction. A bare bones capex budget needs to include roof 25 year life span, floors 10 year life span, appliances and hot water heater 12 year life span, hvac 20 year life span, bath and kitchen remodel 20 year life span, etc. Take floors for example. 1000 sf of flooring. My area it is $6 sf to replace with a moderate lvp. $6000/10 year life span/12 months in a year= $50 per month for just 1 item in a capex budget. I use 10% or $100 per month minimum.