All Forum Posts by: Adam Gerber

@John Petriccione II - Let me know if you want to connect. I'm looking to do the same in this area, and just sent you a personal message. Look forward to hearing from you!

How do you guys generally calculate what % of money should be set aside on a monthly basis to cover any unknown repairs? I've read metrics such as 1.5 - 3% of the value of the property?

Additionally, let's assume the property is fully rehabbed (3 units, now worth 1M) - gutted to the studs, new electric, new plumbing, new walls, new kitchens / baths... etc... would you still apply the same % or calculation on how much to set aside each month?

Thanks,

Hey guys,

I am new to the investment property world, and am currently investigating my first property in Portland, ME. I have identified a 3 unit, each 3 bed/1 bath. The listing price is 560k, but I believe I can get it for 515k. It will require 150k in rehab costs.

After expenses (mortgage, insurance, repairs, capex, taxes, city fees), I expect to make a minimum of $250 per unit, and build 7k in equity the first year, increasing year over year from there. 

The issue is, to make this deal happen, it would require 25% in + rehab costs, or around 295K stuck IN the property when complete. 

Does this deal make sense to anyone else? Assuming if purchased for 515k and 150k goes in, the property is worth 700k afterwords, what are the best options to recover my cash tied up in the property to work on project #2...? Refinancing leaves the mortgage payments a bit high and crushes cash flow. Would a HELOC be a reasonable alternative?

Thanks,
Adam