All Forum Posts by: Adam Delort

Hey guys,

I am just curious what you guys think is a decent cap rate for a condo that i am interested in buying to rent out would be for the west suburbs of Chicago...

is 8% low?

Adam

I talked the broker of my real estate company who has some experience dealing with rentals as he owns 10 of them. He advised me to stay away from this.... Just curious on your thoughts as well. He said that due to the lower cost of the unit, the area is probably going to bring in clients that may not make enough money to buy the units and i could struggle with collecting rents. secondly, the appreciation on something that low is far less than say if i bought a single family home in a more profound area and spend say $200,000. the 2 bedrooms 1 bath set ups are more pronounced to bring in room mate situations and if something happens and one moves out and the other can not cover the rent by themselves, you could potentially loose that way as well. I am at a complete loss with all this. He said if he were to do this all over again he would buy multi units.... I have access to the MLS here in Illinois and cant find any decent ones for the life of me...

it is in a decent town in the suburbs of chicago. centrally located right off a major expressway, 5 miles in either direction to two other major expressways. They allow rentals. And the 2 bedrooms which this is rent for 1100-1175. I am not to sure how to rate areas A, B, or C yet.

@Patrick Liska thank you for the insight. I guess you are correct! I never thought about it that way. 

What exactly do management companies do? Do they field all calls? So i would give the tenant a phone number to call if they needed a lightbulb changed or something (as an example)...Or if something goes wrong with the exterior, the tenant would call the management company, which would then coordinate with the association???

If i can get a 7% return on this, and not have to deal with being bothered by anything, i guess it may be a worthwhile thing to look into considering the property is so cheap. Is my thought process accurate?

Adam

@Patrick Liska I was just planning on managing this one myself as its my first one. Its in a condo building so the exterior and common areas are covered by the association. 

How can anyone find deals that net over 10% return with taking into consideration all of that stuff (vacancy, repairs, management, taxes, etc.)?

@Joe Villeneuve how did you calculate that if you dont mind me asking?

Thank you for doing that!

Hey guys,

Just curious if you can help me analyze a deal. There is a condo that has been flipped nearby for sale at $78,000. Im going to offer 76,800. Below is my calculation. Is this accurate? 

Second question. there is an option for investors in my area that can get a rental loan with 15% down... This would save me $3,840 off my down payment but add $30 per month up to 20% equity then i can call to have it removed. Im trying to figure out how long it would take to get 20% equity with the 15% down / PMI option and if the CoC return would be greater... How do i calculate that out?

Also is 4% for vacancy and repairs average or should i increase?

Hello!!!!

I am curious how you all analyze properties... currently i am having an extremely hard time trying to find anything that gets over a 8% cash on cash return on any properties purchased for rentals.... I tend to take the following into consideration (all on a cost per monthly basis):

1) mortgage (principal and interest)

2) taxes (monthly)

3) Association dues if applicable

4) Repairs (5%)

5) Vacancy (7%)

6) Insurance ($45 for places with association or $85 without)

I can go get a 7% return on my money just investing it into mutual funds without the headanches of tenants. So how do you guys find deals that net you a 15% plus return?!?!?!? IM STRUGGLING!!!!

Adam

@Peter Tverdov

when calculating your CoC return, how do you analyze your deals? Here is what do i do, is yours similar? This is monthly

Mortgage (principal / interest)

Tax (monthly)

Association (if applicable)

Repairs @ 5%

Vacancy @ 7%

Insurance (roughly $45 for townhomes / $85 for single family)

I am having a hell of a time estimating repair costs, maybe this is my problem when first purchasing the house. I cant for the life of me find anything over 7.5% return.

Hey guys, im digging into annalying some deals. What is the typical cash on cash return that you would say is appealing enough to move forward with? Also what typically are you putting into your monthly expenses to calculate this all?

For not i am inputting the mortgage payment with interest, taxes, insurance, association dues if present, and vacancy (at 7%) and repairs at 5%.... are those percentages high?

Most of the deals im analying are coming in 6-7% cash on cash return (all my expenses including down payment, inital repairs, and closing costs)

Adam