Hello BP! I’m pretty new to Bigger Pockets and the real estate investment world but eager to learn and get more experience under my belt. My name is Brent and I am 29 years old. I’m married to my beautiful wife Ashli and I have 2 amazing children, Liam (4) & Jovie (5 months). I am from Fairfield, IL and I, along with two other guys, own a photography business. Due to some changes we are making in the business, I am now a landlord. The reason I that is because the building I own in Fairfield is a $10,000 sq ft commercial building that I use for my photography business. We are changing our business model and focusing more on school and sports photography, which means we do not need all of the space we currently have. Because of that, we are turning our 5,000 sq ft camera room into commercial rental spaces. We are putting in 3-1000 sq ft office spaces that will be renting out for $1000 a month. We have 1 office that is already filled and we are waiting on signed leases before we build the other two. We will put around $20,000 cash into each unit ($60,000 total) and bring in $36,000 annually off the three units (not figuring in vacancy, capex, maintenance, etc.)

We have a two story town house attached to the business (included in the 10,000 sq ft.) that has 5 bedrooms and 3 baths that we will be renting out to college students this next fall. 2 students have already put down deposits and should have 6-8 more coming to put us around $2000-$2400 a month in rental income. That number does include their utilities.

We also just bought our competitors 7500 sq ft turnkey commercial building. Due to some unfortunate life events, he had to sell the building. This building is in a town that’s about 30-45 min away from my hometown. That building has 4 commercial spaces and a 2500 sq ft loft apartment upstairs that he is currently renting. I think we got a great deal on this property at $185,000 (appraised for $225,000 two years ago). Current rents are far below market which leaves a lot of room for extra cash flow. He is currently getting $3,000 a month in rent. After all expenses, we are at a 10.4% cap rate. I think the rental income could easily get to $4,000-$5,000 a month given the location and how well the building has been maintained.

I do have one flip under my belt. My brother I are getting ready to close on the sale of our first flip house (separate from my business and business partners). That was definitely a learning experience! We’ve had that house for well over a year and learned a lot about what not to do! Definitely need to screen and manage contractors far better than I did. We still ended up making money, which is nice.

My new investment I’m hoping to purchase within the next couple months are multi-unit apartment buildings. I would be buying these by myself, possibly with a partner, but still separate from my other business and business partners. I would be buying the entire corporation, which consists of 18 units and 3 lots of land. The 18 units are broken down into 4 different buildings. 14 units at $350/month and 4 units at $250/month. The woman inherited all of this from her family. She is nearing retirement and she wants to sell everything. I think I would sell the lots of land and put that towards the mortgage. I negotiated the purchase price down to $290,000 (originally $325,000) and the land is worth $40,000. So essentially I’d be paying $250,000 for apartments. I will use the equity in other assets as collateral for the down payment. Keep in mind, the rent is far below market and hasn’t been raised at all in 10-12 years (I know this because a friend of mine lived in them over a decade ago). Every unit should go up by $100 a month minimum and that’s without putting any money into them. They are pretty much turnkey apartments. If I end up buying this corporation (which I am very much leaning towards), I will change the name and make this my new real estate investment business. Once that happens, I plan to start buying more apartment units and single family homes. Here are some numbers on the apartments. This is with no money down on a 30 year fixed mortgage and I will be managing them myself as of now. I know that was a lot of info so if you have any questions or comments about any of this, please feel free to comment or msg me. I can’t say enough great things about BP and I look forward to learning from you all!

Financial Analysis on Apartment Units

Current Monthly Income: $5,900.00

Monthly Expenses: $4,772.05

Monthly Cashflow: $1,127.95

Purchase Cap Rate: 11.86%

Total operating expenses: $3,430.00

Mortgage expenses: $1,342.05

Vacancy: $590.00

Repairs: $295.00

CapEx: $295.00

P&I: $1,342.05

Property Taxes & Insurance: $2,250.00

Adjusted numbers if all the apartments are raised by $100 a month to current market value.

Adjusted Monthly Income: $7,700.00

Monthly Expenses: $5,132.05

Monthly Cashflow: $2,567.95

Purchase Cap Rate: 18.77%

Mortgage expenses: $1,342.05

Vacancy: $770.00

Repairs: $385.00

CapEx: $385.00

P&I: $1,342.05

Total operating expenses: $3,430.00

1 Vote

6 Replies

Jump to Last Reply

New to BP! A little about me and the new deal I'm analyzing!

Most Popular Reply