New Member Introductions
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated about 9 years ago, 10/15/2015
New Member in Tallahasse
Hello All!
I am a new member from Tallahassee that is (obviously) interested in Real Estate Investing. Since Tallahassee is a college town, I am planning to acquire some single family homes for rental to students but I hope to start with the purchase of my first home.I look forward to learning from everyone in this community!
Best,
Jennings
Hey @Jennings DePriest! Welcome! I'm from Tally as well and purchased my first property (a four plex) back in May.
Please feel free to reach out at any point if you have any questions. BP is a great resource.
-Mike Walton
Originally posted by @Michael Walton:
Hey @Jennings DePriest! Welcome! I'm from Tally as well and purchased my first property (a four plex) back in May.
Please feel free to reach out at any point if you have any questions. BP is a great resource.
-Mike Walton
Hi Mike! It's great to hear from someone else in town. How is renting the four plex going? Are you using a property management company? Is the property near campus or towards midtown (or somewhere else entirely)? I've heard warnings against purchasing near campus due to the large number of student housing developments of late.
Mine is near campus. That's not bad advice per se as I see a lot of overpriced SFs and multis selling around campus, but that's kinda a sweeping judgement to make just bc there's a lot of new student apartments going up. You'd just need to buy something right.
I'm curious to see what multi opportunities are available in the midtown area (I live there and I think it's the best part of town).
As for my 4 plex, I got what I feel is a good deal (using the 1%/2% rule, I got it at 1.6x). I was able to buy, renovate and increase my total gross rents around $230/month. I basically turned it around from a quasi section 8 housing to student rentals as the units are all newly renovated inside and easy to show. Aside from the inside looking nice and the proximity to campus, because I bought it right, I can keep my prices attractive yet profitable compared to the new builds.
If you're looking for stats, I'm making around an 18% cash on cash return, and I have room to increase total monthly gross rent prob around $10-20/unit next year (despite increasing rent, my rents are still under market). That's assuming a conservative 15% Cap Ex reserve (it has a new roof and 3 of the 4 a/cs are 2 years old) and 10% maintenance reserve. I also netted around $15-$20k in forced appreciation based on renovating that last unit, doing a little landscaping, and increasing the NOI.
There were definitely A LOT of headaches and challenges along the way (which I won't go into because this post is already too too long) - but after total tenant turnover in the first month, I've got all 4 units rented to properly screened tenants. I learned a lot and got a chance to be exposed to several local vendors along the way - some very good and reliable that I'll be able to leverage for next time.
The renovations ended up being $7k more than I thought they would, but because I bought it right from the get-go, I was able to more easily absorb those "first-time lessons learned". I guess that's the main take-away from this post - buy it right/make sure the numbers work for you. I prob screened around 30-40 properties before this one. I even put a property before my 4 plex under contract and burned $400 on an inspection, but walked away after realizing the renovations would make it a bad deal.
@Jennings DePriest Also, I'm not using a property management company, but I made sure to run the numbers as if I was going to use one. I wanted to know what goes into property / tenant management by doing it myself. It's challenging at first as you develop "systems" and training your tenants, but I'm starting to get out of the weeds now. You'll learn a lot about how to manage tenants, as well as learn more about your property.
Eventually as I grow and obtain more properties, I'll prob eventually hand it over to PM - but we'll see.
Michael,
Thank you so much for taking the time to walk me through the details, it's nice to see principles carry over into real life. I have just started talking with a REALTOR through USAA, and I hope to talk with you more as I move along with this process.
Hey Guys Tim Hall here from Tallahassee too. We are having a reia meeting on Thursday 22nd of october at Leroy Collins Library at 6:30 in room B. Its a gathering of like minded people who are active or just started in the real estate industry in or around tallahassee. It is a networking group. People can talk about different experience, whats deals they're working on now, pitfalls and successes.
Hope to see you there.
Thanks
Originally posted by @Jennings DePriest:
Michael,
Thank you so much for taking the time to walk me through the details, it's nice to see principles carry over into real life. I have just started talking with a REALTOR through USAA, and I hope to talk with you more as I move along with this process.
Definitely man - I certainly don't know everything, but feel free to reach out to me.