Another Spartan Invest Turnkey Case Study

[Rob Hakes]

I recently purchased a property from Spartan Invest and wanted to post the details and make it an ongoing case study solely for the benefit of those looking into the company.  I really appreciated others doing this as I was vetting the company so i wanted to return the favor.  Though I am hesitant, will give some of the nitty gritty actually numbers of loan costs etc, just to show the true cost of what to actually expect

After a while if you don't see updates on the property's performance give me a bump and i will update with some details on actual returns

Property - 3/2 1250 sf in Birmingham.  $97,500

Projected Rent $925

Put under contract in July 2017 - This was an extensive rehab and took a while.  I don't think rehabs are usually this extensive

Rehab included new roof, windows, all new HVAC.  Interior was basically stripped to the studs and all new interior with the granite countertops and tile shower.  It even appeared that they had to run some new electrical and plumbing.  Basically as close to a brand new house without it being brand new. (i will post pictures soon)

We didn't close until Dec 1 2017 at which time there was already tenants in the house with a 2 year lease at $950/mo ($25 more than projected)!!!

The tenanting fee is one months rent, but it didn't sting to bad because the first mortgage payment was not due until Jan 1 2018.

Now the nitty gritty numbers

Down Payment $19,500 Loan amount $78,000

Loan Costs, Origination Fees Etc $2692.00

Govt Fees $204.50

Initial Insurance premium $757

Prepaid Escrow $425 (not a deductible expense, but still out of pocket)

Elective inspections: Home, Termite etc $592.00

TOTAL OUT OF POCKET: $24,170.50

PLUS legal, accounting, and title transfer fees: ++++ ongoing and pending

For the first year or so i plan on making a decent return as vacancy and maintenance will be low

MONTHLY INCOME 

$950

EXPENSES

$578 PITI (taxes are 945/yr, insurance is 757/yr)

$85 Property Management

This will leave $287 for me as cash flow.  An undetermined amount will be set aside for future vacancy and maintenance.

Overall, Spartan has been good to work with and have delivered as advertised.  There were always times it took a few days to return emails, but nothing totally unreasonable.  There was one week that emails had zero response, but found out later that the hurricane in Florida took out their server for a bit.

I got my second property under contract with them this month so hopefully things continue to roll!!

I do realized that i am a bit spoiled on my first property to have things go pretty well with such a good rehab, and having the place already rented out for more than projected.

If you want more specific details feel free to PM me.

PICTURES FORTHCOMING

[Jay Hinrichs]

Rob now that U have some experience here is some general advice that is germane in any real estate market.

1. Always get a sewer scope as part of your home inspection. Sewer problems are almost # 1 for landlords and if the waste line is old it should be replaced by the seller prior to you closing.. My buyers of my new construction homes even get sewer scopes to make sure the line was put in without any belly's. Never buy a house without a sewer scope bottom line.

2. Vacancy be sure to read the fine print of your insurance policy.. many policies have a 60 or 90 day vacancy clause .. IE your home is vacant over 60 days they are not going to insure you for a fire loss or other loss's. As they know the risk inherent to vacant homes.. So you would then buy a vacant home rider to protect yourself. Ask me how I know this.. I have had a few fires and the first thing adjuster did was query the neighbors to see how long the home was vacant.  devious those guys are  :)  but better safe than sorry.. So pull your policy and read it .. no one does LOL  

3. on Tax's in many areas there is owner occ exemptions.. So when you check into the tax's and see they are 800 a year.. then the property loses its owner occ exemption and it jumps up double.. that's what can bit you. So be cognizant of that.. ask that question..  Tax's are pretty important to the cash flow investor.  That's why Vegas even though you don't hit the 1% rule vis a vi rent and purchase price.. Tax's are 1/3rd as high based on value as most other areas of the county.. IE a 300k house will have tax's at 1200 to 1500 a year.. were in Texas that tax could be 6 to 7k a year HUGE cash flow difference. Granted price of entry is higher . but when you really run the numbers the 300k home with 2k rent will cash flow as good if not better than many of the so called cash flow markets. Also really low cap ex as these are 10 to 20 year old homes that are stucco and tile roofs. Etc.. I just mention because of was shopping this week. And was pleasantly surprised at what I saw. and Man those that bought in Vegas in 2010 to 2015 or so.. they just have to be smiling.   Just an aside.. because I know many investors just discount properties out of hand if they don't come close to the 1% rule.

@Caleb Heimsoth  I think that light bulb finally went off with Caleb that's why you see his posts these days to be a little different slant than in years past.