All Forum Posts by: Andrew Auger

@Mike Hurney

Hi Mike,

My goal is positive cash flow, but at the same time I understand with us living in the property, it is highly unlikely to be found in the area I can commute to work from and find a property that I and more importantly the fiance find livable.  This particular property, although with us paying nothing, is technically cash flow negative. However, if you take into account that in order to live in the property, it would cost us a measly $300 ish dollars to break even, or roughly $750 less than I am paying in rent, my personal cash flow goes up by that much each month. That's money in my pocket I can turn around and reinvest in a property that does truly cash flow since we wont be living in it. Also, if we are not living in the property, and is rented out, it is cash flow positive as far as I can tell.

Don't know if that is what you were looking for in your question, but there it is. :)

Let me know what you think.

Andrew

@Rob Beland How does that look? 

 https://docs.google.com/spreadsheets/d/1OZWj-NXE4F...

@Rob L. I will definitely look into that further, the dishwashers are half sized, and I only got into 2 of the units, both had washer/dryers in them.

Thanks for your input!

@Rob Beland Can you also deduct depreciation for the building at the same 75% rate? I have never been able to get a solid answer on that, no matter how much searching I have done...

Six months reserves, got it

When I get home from work today I will give the worksheet another work over to show cash flow then the NOI.

When doing the calculations, your taking the percentage off the gross rents... do you think I should add my "owner" portion as well? I don't intend on living here forever so this might give a better idea of how it will perform after we have moved on?

I never thought of asking for the sellers schedule E before. That's an amazing tip! I am adding that to my list of things to ask for right now!

Thank you for your input!

@Devan Mcclish, the unit is a 4 plex. The units are separated for electricity, but it has a separate meter for outdoor security lighting and indoor hallway lighting which I see as a very good thing as in Massachusetts the Tenant/Landlord laws are incredibly strict and tenants paying for common space utilities is a big no no. The heating is partially separate. The largest unit, 3BR 2Bath, is completely separate and paid by the tenant, but the three 1BR units are owner paid and we would be in one of them, but they have a very new efficient gas heater which is by far the cheapest heating source up in our area. That is where most of that cost comes from, so it is not as bad as you thought. 

As for the cap rate, as you can tell by the price, Massachusetts is pretty expensive and the properties that might produce a higher cap rate are in an area I can't commute to work from and this is the best I have found in our commutable radius thus far. Even though its technically negative cash flow with me paying nothing, I would be paying way less than my current rent, so its additional money in my pocket every month.

Thank you for your input!

Hello Everyone,

I was hoping you all could take a look at this deal that I am looking at for a second time. We are not under contract and I want to make sure my math and my estimates make sense so I can go in with a strong position as what to offer. 

I put the details in the google doc as its easier to display than in the posting section.

https://docs.google.com/spreadsheets/d/1Gi7HweJKvb...

Additional Non numbers information

• This would be my first property
• Yes there are cheaper places
• No I can't buy those as they are too far from my and my fiances places of employment (this one is already on the edge)
• Owner Revenue is us paying ourselves our current rent
• Would consider this a B property in C neighborhood 
• Each unit has central air, W/D, & Dishwasher, all of which are considered luxury items in an apartment. Means premium rents for the unit sizes.

Facts & Assumptions

• Owner did major renovation approximately 5-8 years ago including roof, heating systems, water tanks, windows, and central air. 
• 1BR units Heat is not separate, but has new energy efficient gas heater.
• No Comps are available
• In my opinion it is priced too high as if it was priced correctly, it would have sold, will attempt to push price down as I doubt it will appraise
• I believe the maintenance amount provided is artificially high due to inclement winter weather, we had record snow this year. Being a owner occupant means that I would do my own snow removal vs paying for it.
• House is over 100 years old
• First house I have found to cash flow in my search radius
• Using FHA or Mass Housing (similar to FHA) loan with a 3.5% or 5% cash down
• Have cash reserves above and beyond down payment

What do you guys think? Would you do this deal? Am I forgetting anything major in my cash flow calculations? My biggest concern with this property is that I don't believe the seller will budge on the price, which means it won't appraise, which means I don't qualify for the loan.

Thanks in advance!

Andrew

Hi Dwayne,

The easy way would be to go to the podcast section, and look in the show notes of each podcast where the interviewee gives there favorite REI Book and favorite Business book. The hard way would be to listen to them all and get them all that way. I would vote the hard way as your getting the added bonus of all the knowledge from the podcasts...

just a thought

Brandon in the corner :D

It has nothing to do with the lease. In MA if a child under the age of 6 lives in the Unit, it must be completely deleaded. You cannot reject an applicant because they have kids because there  is lead paint present. If you you haven't signed a lease you can delay start of tenancy up to 30 days to delead. If you have a lease already signed, the landlord is responsible for providing alternative housing during the deleading process. 

*Disclaimer* *Source is a MA tenant class I took, taken right off the instructors slide sheet, instructor is an attorney, I am not, please seek legal advice when dealing with this topic*

Hi Tracy,

I would HIGHLY suggest listening to the Podcasts on BP. You don't need to start with #1 and go through them all, but find what you are or think you are interested in and start there. To help get an idea about each podcast is going to cover beyond just the title, I look at the show notes. In these podcast's they ask at the end the famous four questions, of which one is the guest's favorite real estate book and another their favorite business book. Those could be some great places to start with reading.

Hope this helps!