Investor · El Paso, TX · Member since 2016 · 22 posts · 7 votes
Hello guys, I'm fairly new to the forum. I Live in El Paso Texas and I'm interested in a 4Plex in Las Cruces NM. That is about a 45 min. drive. Ill be using my VA loan since I already have my preapproval letter. The property is priced ok and seems to cash flow pretty good according to my calculations. The only thing that concerns me is that it has been on the market for 206 days. Its located in an Ok neighborhood.
Also, is there any thing I should know about purchasing in a different state besides taking into consideration property management.
Id appreciate some advice on this deal (my first one). Thanks
Investor · Las Cruces, NM · Member since 2012 · 1 post · 4 votes
10y
Hi Carlos,
My wife and I are seasoned investor over in Las Cruces and like helping new investors out where we can. I know it's short notice but the Las Cruces Real Estate Investors club meets tonight at 7:00 at 205 W Boutz Road, Building 6. The building is located in the Northwest corner of Boutz Plaza across from the Borman Autoplex, We meet in the offices of Property Management & Investments (PMI) of NM. Tonight's meeting is an open discussion of various investment topics - so if you could make it myself, as well as others would be more than happy to try to answer questions you may have.
Investor · NW Indiana · Member since 2012 · 833 posts · 197 votes
10y
Hi @Carlos Martinez welcome to BP and thank you for your service. I have brought/offered on properties that have sat for a while and they were good deals. Sometimes it is just that they want too much for the property or the realtors didn't do a good job at trying to sell the property. For example bad or hardly any pictures. Of course when a property sits at a good price, you do wonder what you could be missing that made other investors pass on the deal, but sometimes it is a good deal you just happened to find. If it has tenants, this sometimes causes the property to sit since they can make it difficult to set up a time to see all the units. Just make sure you get a good inspection done.
Investor · El Paso, TX · Member since 2016 · 22 posts · 7 votes
10y
@Carolina E. Thank You and its my pleasure! And yes it does have tenants and the realtor said it might be because of the price. So in this case, would it be a good idea to check the property out, make a reasonable offer and If accepted, put it under contract, do the inspection and see what the results are, correct?
Investor · NW Indiana · Member since 2012 · 833 posts · 197 votes
10y
@Carlos Martinez I would do a little more homework on it. Make sure you know the numbers (taxes, rents, insurance etc.), don't just rely on the selling agents numbers they have on the ad. I would go see it if the numbers work for you. You can at least see if it needs any major work that could help you establish an offer, take a notepad. See if you can get any rental history on the units, making sure if they are paying on time and if they are paying market rent, being new to RE you might not want to have to handle problem tenants from the start either. Also, I like when tenants are there when doing a walk thru, I like to see if they talk about their landlord, it says a lot about them. They spill info on their own about the property too.
Investor · Las Cruces, NM · Member since 2012 · 1 post · 4 votes
10y
Hi Carlos,
My wife and I are seasoned investor over in Las Cruces and like helping new investors out where we can. I know it's short notice but the Las Cruces Real Estate Investors club meets tonight at 7:00 at 205 W Boutz Road, Building 6. The building is located in the Northwest corner of Boutz Plaza across from the Borman Autoplex, We meet in the offices of Property Management & Investments (PMI) of NM. Tonight's meeting is an open discussion of various investment topics - so if you could make it myself, as well as others would be more than happy to try to answer questions you may have.
@Robert Cruise invitation to an Investor Club is a great way to start. As we all know, REI is an art which is different in every location.
Let's pick a similar property from Zillow in Las Cruces and provide a basic analysis hoping that our friends from Las Cruces help us with our analysis:
The last unit putting in rent was listed for $375/mo (that looks a little bit low but it is probably normal for LC). Let's rounded to $400/mo/unit to simplify the numbers.
That is an income of $1600*12/yr from rent ~= $19,200
Possible Cashflow per Year: 19200 - 9600 - 1700 - 9150 - 1000 = (-$2,250)
A negative cashflow does not look so good, but here are 2 opportunities to increment it:
1) Increase rents. If you are able to increase rents for just $50/mo/unit, that is an extra income of $2,400. Now you are positive :)
2) Decrease Maintenance. 9.6k looks like too much, probably I am going a little bit high in this number. If you can decide to go with 7k, now you have positive cashflow.
I hope this oversimplified example helps you to start asking question to other REI in Las Cruces.
Investor · Cincinnati, OH · Member since 2014 · 538 posts · 432 votes
10y
You were asking what else should you be aware off buying out of state. This one is pretty obvious but make sure you verify closing costs. Some states have transfer fees, etc. that you may not be accustomed too.
Rental Property Investor · El Paso, TX · Member since 2016 · 11 posts · 1 vote
10y
@Carlos Martinez always good to see fellow El Pasoans on BP! Just one thing to keep in mind on using your VA loan, it must be used on your primary residence. You could use it on a property with up to four units where you live in one unit and rent out the other ones. VA loans are great no down payment loans with no PMI, but their is a funding fee associated with them. I think it's a one time fee roughly 2.15% of the loan, but you are exempt from the funding fee if you have VA service connect disability (10% or more). Just a few things to consider. As far as the time on market for the Las Cruces 4Plex, that could provide your some leverage to come in below asking price. Just remember to use your estimated expenses (not the advertised expenses). Best of Luck!
Investor · Pacific City, OR · Member since 2016 · 174 posts · 123 votes
10y
If you do make an offer, add a condition that the seller furnish the last two years of Schedule Es for the property from their tax returns. That will show you income and expenses for the property.
...Ill be using my VA loan.. ..purchasing in a different state ..
Hello Carlos! I'll admit, I didn't read the whole thread here, but one thing I noticed is the VA loan. I'd double check, but I'm not sure you can buy an 'investment only' property with the VA loans, I think you need to occupy it.
Granted, if you live close to the state line and plan on living there, forget all of this..
Investor · El Paso, TX · Member since 2016 · 22 posts · 7 votes
10y
@Jaime Barragan Thank you for the numbers and explination. Yes I did estimate a little bit of a negative cashflow at the beggining but I also found out that the leases are up very with in the next 3 months. I also got the opportunity to look at 3 of the units and I can definitely upgrade them with simple cosmetic upgrades. I can definitely increase rents by at least 100.
@Lee Greene Yes, I'm glad there's people from EP on here Too! Thank you. I am aware of it having to be my residence for at least 12 mths and of the funding fee. I am glad you mention the price and days on the market. Do you have any advice on what I should consider when making an offer? I was thinking on calculating the cost of what it will take me to actually be able to raise rents and subtracting that to the actual asking price. Mind you, I'm new to this so is that kind of how that works? I was able to view 3 of the 4 units so I know what I will need to update. Any further help will be greatly appreciated. Thank You