First REI Property

[V.G Jason]

Investment Info:
Dallas, TX quad-plex that needs reno on two of the units. Units A&B are 2br,1.5ba. Units C&D are 1br,1 ba. I believe this will be $750k+ property in the short term, at minimum.

List Price: $645,000
Purchase Price: $555,000 with incentives listed below
Value Add Levels: $52,500(rehab +furnishing)
Financing: Cash

Units A is occupied until July 2023 at $1,450/mo.
Unit B is occupied until October 2023, at $1,465/mo.
Unit C & D are vacant and need rehab. I estimate each need about $20,000 in rehab with new floors, new countertops and new paint. I have already priced the materials and have gotten 3 quotes, searching for about 2-3 more. I will hire two different contractors one for the floors or countertops, and give the one I trust more the painting job.

Among the incentives of the property, seller agrees to supply two stackable Washer/Dryers in common room, electronic metal gated fence around lot, and full security camera system in public areas.  All but the metal gate has been completed, should be done by EOM. I will take official ownership once that is done. The main capex items have been recently updated with proof(Roof 2018, Hvac/water Heaters in 2017-2019).

I will provide furnishing in Unit C or D and have it serve as an STR*. The other will be leased and I believe I can attain $1,200 in rent. Unit A & B I believe I can rent at $1,525 comfortably on the extension.

Expected gross revenue:
$5,000 in rent conservatively(STR is hard to factor)
Expected Expenses:
$540/mo in Property Management
$480/mo in Landlord Insurance
$1,050/mo in Property Taxes
$480/mo in Vacancy
$480/mo in Capex reserves
Net Revenue:
Just under $2k a month

*Still contemplating, will reserve judgement until reno is done. I intend to re-fi this in the near future, but will decide that depending on how the portfolio construction goes, and economy goes. Intentions are a DSCR loan as this will be in an LLC. I am closing in on a second house and will update with that here soon.

[Joe Villeneuve]

Leverage on cash flow properties isn't speculating, and it is far less risky than all cash deals.

Here's what you need to think about here:

1 - Spending cash on a property and paying all cash means you're taking the maximum risk.  In this case, your $600k in cash is worth $600k in property value...and you're risking $600k in cash.

2 - That same $600k in cash leveraged at 20% (DP) would equal $3M in property value...with the same $600k at risk...and, with 5 properties, or at least 5 times the properties, in cash flow to repay the same $600k in cash spent in option #1.