All Forum Posts by: Trey Leigh

Dion, thank for taking the time to read and post. No I didn't apply the 50% rule because I didn't know it even existed. Actually I just estimated rent, expenses, called my insurance agent for an approximate price, and looked up taxes at the appraisal office. I calculated everything on 11 months occupancy and got a 12% COC renturn and as you said it goes to 16% on a full year occupancy. Now with the increase in my actual expenses, my return will decrease, I have yet to calculate how much. I just thought this was a good deal until I read all the 2% and 50% ratios people are using.
Thanks for the advice, I appreciate it.

If I understand the 50% rule correctly, half of your gross rents goes to expenses including a vacancy allowance, and the other half goes to P&I and cash flow.

Using this rule, what minimum cash flow do look for on top of P&I on:

1. A property you believe will appreciate.
2. A property you believe will not appreciate.

Also do you have a sliding scale of cash flow you want to see based on the lenght of financing?

I'm just looking for a conservative way to evauate properties.

p.s.
I have yet to find a house around here that will go 2%, but constantly looking.

I thought I was doing ok with this, but after reading on here, everyone seems to be doing much better. Heres the deal:
Purchase Price 38000
Mortgage 29000 = 253/month on 15 years @ 6% ($16500 out of pocket down payment and rehab expenses)

Taxes 1000
Insurance 600.00
Currently rented for 650/month (could of probably went 700)
My assessment of sale value of home would be around 65000.00

So using the cashflow analyzer I estimated maintenance expenses at 50/month (which I already found out is very low). Tax and Ins are actual.

According to it I was getting $1915 a year cash flow at 12% COC return.
I have already had to put in a new septic line that cost $800 so my maintenance expense is already shot.

Using the 50% rule it cash flows $72/month for a 5% return.

So, do I refinance longer term to improve cash flow? (I think the closing cost on a refi might offset the increase in cash flow), Sell the property and leverage the money into others? Any ideas. I really like the house and it will likely appreciate in the neighborhood it's in. I also have replaced most major maintenance problems I can think of, hopefully no new suprises.

Thanks Carlos

Thanks Kevin and Charles, appreciate the welcome

Andy, is the $175 average at 12 month occupancy or 11?

I am new to this but I have been getting an average of 150-187 a month over all costs per home including maintenance reserve based on 11 month occupancy, and that goes up to $216 to 262 per home if rented the full 12 months.
The COC return is between 12 and 25% on the the three properties, two are financed for 15 years and one is financed at 20.
I too would like to to see more cash flow margin and am hoping to hit a 'home run' on the next deal.

Rich, hello. Thanks for the encouragement. I have read and learned from many of your posts, thanks for sharing your knowledge and experience!

As soon as i can save some more money I hope to find another deal, it's addicting!

Tod, yes Vanderpool is beautiful, nice area to take a ride through.

Im not banking on the oil boom, although it's supposed to be a 20+ year drilling plan for the area. Luckily Uvalde is surrounded by 4 Border Patrol stations in towns that are less desirable to most but are still commutable from here, so that helps a lot. The smallest one is probably a 100 man station and the largest is 250+.
I spoke with a guy here that has 19 properties he rents and according to him he has never had a problem finding tenants....we'll see.

Thanks Dan, we're neighbors. My wife is from SA and i used to live and work there myself. Great town.

My old boss had many rental units there back in the early 90's, not sure if he still does or not.