All Forum Posts by: Andrew Saquing

Hi everyone! Thank you in advance for your help. I am very new to investing so any criticism is appreciated. I will be a first time homebuyer trying to qualify for the FHA loan putting 3.5% down

Property is a fourplex in Southern California. The specs are:

$420,000 fourplex
3.5% down 5% interest 360 months
$14,700 down
monthly payments-$2,176

3 bd 2 bth- $1700/month
3 bd 2 bth- $1700
3 bd 2 bth- $1700
2 bd 1 bth- $1300

So gross rent income is $6400/month. However, I need to be living in a unit to comply with the FHA loan so effective gross income is $5100/month.

$5100 x 12 - 50% operating expense = $30,600 NOI

$30,600 NOI/ $420,000 price = 7.3% CAP

$30,600 NOI- $26112 mortgage = $4488 Cash flow in the first year, or $374/month

$4488/$14700 down payment= 30.5% return first year.

After the first year, however, I will be moving out so that will be an extra $1,300/month in rent so...

$6,400 x 12 = $76,800 gross income

$76,800 - 50% operating = $38,400 NOI

$38,400- $26,112 mortgage = $12,288 cash flow in the second year, or $1,024/month

$12,288 / $14,700 down payment = 84% return in second year.

Is this a good deal? What am I missing?

Like I said, I am very new to this so any help at all is appreciated. Thank you for your time

Terry- Thanks for the suggestion. I looked on amazon and they didn't have any for sale but I will keep looking.

Uwe- Thank you for your help in understanding cap rate. Is there some type of standard cap rate that you typically demand (like 10%)? Also, I was using cash flow return formula when looking at properties. Would you recommend any others that are important to consider as well?

Thanks for your reply, Uwe. I have a couple of questions.

- Should I apply 50% operating expense to all properties that I look at? Is this a standard rule?

- How did you arrive at $1.1 million as a good price? With a NOI of $31,404/year and 10% cap rate, isn't the value around $314,040?

Thank you for your help.
-Andy

That is definitely something I was looking for but couldn't find in this area. I will make sure to be there.
Thanks!

IMO = in my opinion
:wink:

Financeexaminer- Thank you for the encouragement. It can't hurt to start early!

Chris G.- That sounds like a good idea, I may take you up on that. Thank you as well for the encouragement.

Hello everyone,

Like my username states, my name is Andrew Saquing and I am from Camarillo, California. I am 19 years old and will be attending Arizona State University this coming fall as a junior.

I joined this site because I am interested in building wealth through real estate. I figure the earlier I start learning, the better. At this point in my life, I am basically just trying to read anything I can get my hands on, and BiggerPockets definitely has a large amount of information for me to go through.

I am also currently in the process of obtaining my real estate license. I am not sure what I plan to do with it, but I thought that it may be a good place to start in my RE education. If anyone has any help or suggestions in this area that would be great.

Looking forward to making some connections and becoming a contributing member of these forums.

-Andy

Hi everyone,

I am a beginner investor in every sense of the term. That being said, I would like any criticism and comments regarding this deal.

The specs are:

- $1,700,000 manufactured/mobile home park
- 63 units/spaces renting for average $305/month
- 4 houses renting for $600/month
- Parking income, $670/month
- Laundry Income, $330/month

These are estimates, of course, but assuming these numbers to be correct, monthly income would be $22,615.

If I put 10% down ($170,000), that leaves $1,530,000 to be financed. From here I see two possible financing options.

1. Finance $1,530,000 from a standard lender at 5.5%
2 Some combination of lender/seller financing

If I get a mortgage for $1,530,000 at 5.5% over 30 years, monthly payments would be $8687.17.

Monthly Income $22,615.00 - Mortgage Payment $8,687.17 = $13927.83

My questions:

- What other types of expenses should I account for along with property tax, insurance, maintenance, and property manager fees?

By my calculations, before accounting for any other expenses, I will be netting $167,133.96. This seems like a good deal as I will almost be making back my initial investment in cash flow in the first year. I realize that this number is way off because I have not accounted for all the other expense mentioned above. However, it seems after factoring in these extra expenses, there is still a good amount of money to be made. Am I way off in this assessment?

-Is this a good deal?

I realize this is a fairly long post so I would like to thank anyone who took the time to read it. Comments and criticism are also greatly appreciated because I am, after all, very new to this. Thank you.

:wink: