All Forum Posts by: Aaron Brown

Additional Quick Info, the the owners advertised as fully rented and long-term tenants...  I am a little concerned because 

Number 1- I learned I will have  a vacancy of one of the $400 units  immediately.  trouble tenant is moving out before closing. Quick funny story, when viewing the apartment the tenant was supposed to have one dog. We saw the apartment and it had 1 dog, several kittens(3 that we saw) and a cage of about seven or eight quail, or prairie chickens... LOL the place smelled like a BARNYARD, poop and pee. Haha

Number two, the $600 tenant came up to us when we were viewing property and said she was looking to move out and had already given notice. Asked if we had any other property for rent. LOL vacancy number two.

Gotta Love vacancies..., but right off that's $1,000 income of the 1775 that we are losing, and also of course turnover/make-ready costs.

Shameless tags for quick attention: Independence, Missouri Kansas City Oak Grove Grain Valley Blue Springs Lee's Summit Midwest multi-family fourplex

Okay, i need your help BP!  I have an older fourplex under contract  in Independence Missouri for 98k. I've done my due diligence and below are the actual numbers, or averages.

Monthly expenses:

96Ins

141tax

178Management

18trash

95water

70gas

178vacancy

178Maint

954total

Owner pays for water and sewer, and also gas for 1 water heater which is shared by upstairs two units

Monthly Income:

Unit 1.   600

Unit 2.   400

Unit 3.   400

Unit 4.   375

Total 1775

The way I have structured the deal is to close with only $10,000 down that I'm bringing to the table! I have a JV 50 50% partnership where the partner is bringing 50000 to the table. I also have a moneylender which I am borrowing 40,000 from with an interest only loan at 6.25%, making monthly payments of 208 per month. See numbers below. Also, as the active property manager, I will be receiving 10% management 178 per month off the top. The interest only loan I can pay down any time, and also down the road I can buy out the partner.

1775Gross Income

821Gross - Expenses

410.5 net income split with partner

208 interest-only mortg payment

202.5Cashflow

178 10% Mgmt.

380.5 CF + Mgmt

Questions, what are your thoughts on interest-only loans? I am at still my early investing stages and trying to build up cash flow for additional down payment as quickly as possible. 

Thoughts or advice on how to structure the deal? 

Thoughts on the numbers? Is this a good deal?

Some good and some bad in Independence. Independence varies greatly not just by neighborhood, but also street by street.  As Andrew mentioned Northwest and Sugar Creek is pretty rough, other streets and areas are also rough and will require hands on management.  I've seen and heard it time and time again regarding some neighborhoods that if a house sits vacant very long, copper, fixtures, air conditioners, wiring, and I've even seen toilets come up missing!  Lol

I'm not as familiar to Kansas City.  

Regarding du/tri/specifically in Independence, the MLS has dried up with any "great deals" ... Maybe some mediocre deals.

Thanks for putting the info out there Kim.  Very important to show up to this meeting. Not only if you are a landlord in Independence, but if you have rentals in Lee Summit, Blue Springs, and/or other neighboring cities in Kansas City. Everything I'm hearing is that they will be soon to follow with ordinances like this if it passes in Independence.

From the Landlord association, I've heard that if this passes for Independence, other cities around Kansas City including Blue Springs and Lee's Summit would be soon to follow...

im not a lender, but as far as I know, FHA loans are good for owner occupants( meaning you live in the property) for SFR, duPlex, triplex and 4plexes.

False, my very first property I bought was an owner occupied 4-plex that I purchased using a FHA-203K LOAN. (Must live in the property for at least one year)

Find a different lender who knows what they're talking about.

Nice!  Thanks a lot guys!

sounds like a great deal to me!

I'm SUPER excited! Had to share this with my BP community. First off, I'm getting married to the love of my life this July!  Woo hoo! What a great gal I've found too- God has really blessed me! 

Second, we just got a signed contract on an off market house in Independence today! (This will be #6, 9 units total!!!) Needs some work and lots of updating, but will make a great home-personal residence!

 It was about 2 years when I met my partner in crime, errr I mean partner in real estate, and I was soooo focused on Real Estate at the time. I had just bought my first property, a fourplex in need of lots of repairs. Well this girl came along and was more than happy to come over and help out with painting, stripping wall paper, and cleaning up the place while I was there every night after work rehabbing a couple of the units. (Two-1bed units, and two-2 bed units) She would even bring me over food, or fix me dinner, while I was working away. After rehab and turning over a couple tenants, I raised rents (up to market value) from 300 to 450 for 1 bed unit, 300 to 325 for 2nd 1 bed unit, and from 300 to 550 for the 2 bed unit!!!

 After 2 years of house hacking in this Fourplex and frugally saving money wherever possible, house hacking (and BP) has truly enabled me to jump start my Real Estate Investing Career! 

Thanks Bigger Pockets for All the support, FANTASTIC info, forums and podcasts.  BP is such a great community!