All Forum Posts by: Anthony Vespa

One thing I did not mention was that we are about 3 weeks into this contract. I have not contacted my broker in Florida with the possibility of pulling out because of these costs. It really comes down if the escalation costs out run the rent increases. That is the only sticking point. We are ok with 8.8% cash on cash return.

Just on the flood zone map

we got into contract recently on a 14 unit property and go to find out its in a flood zone area (elevation cert. 22 feet). we finally received the ins. cost and flood cost on the property which came in at around  $ 19,500.00- double my estimate, so my bottom line got hurt by another 10K. Here is the real worry i have, 

Will the escalation cost of insurance out perform the rent increases of 3%? If so, my bottom line loses every year. I don't want to consider appreciation because we believe we purchased mid to high for the clearwater area. 

Here are the numbers: 

purchase price $ 900,000

25% down $ 250,000

leverage $ 650,000 = $ 4085.00 a month on a 5/25 amortization ballon. 

gross income $ 135,000.00

operating cost $ 64,000.00

net $ 71,000.00

less loan payments $ 49,020.00

net cash on cash return $ 21,980.00 8.8%

any advice would be greatly appreciated 

Hi John, i too rushed into why i thought was a great deal, only to find out after $9000 in flood ins. and another $10,600 in liability insurance the deal went from a 14% cash on cash return to 8.5% (not factoring 5% vacant) which would make it worse. I do agree with some of the replies that the due diligence needs to be done by the buyer. What worries me the most is not the current situation but long term, will the rise of insurance rates out number the increases in rent roll. If your not happy $1000.00 loss will be a drop in the bucket if the numbers don't make sense. My deposit is $50,000.00, so i really am undecided and pretty nervous, not about this year or following, but the next five years to see where the numbers fall. i am not counting on appreciation because i fell we are very close to the top of the market. 

Hi Jay I finally was able to get two quotes on the last two days. wow not fun when you are in a flood zone area. But I hope the property will do well in appreciation and rent hikes in the next coming years.

Hi Branden how do I PM you?

Good Afternoon Bigger pockets team. I am in contract with a 14 unit multifamily property and have been approved for lending. I am struggling to get a company to give me quote for this property. The property is located in Clearwater Florida off 60 near alt 19. Any recommendations will be appreciated. Thank you.

Yep I Think it's best to move that direction. There is a few good deals in New Jersey that may make worth while. Thank you 

Hi Mark, I too am from the tri-state area. My office is in the Bronx, Hunts point area and i can tell you there is a lot of buzz going in the area. the developers are spilling into the Bronx sections with a 15 to 20 minute train ride into the city. Mark keep in mind any property close to transportation is a valuable piece of property, especially in NewYork. Good Luck...  

Hi Travis Thank you for the input. 

We have to deliver the property vacant at closing. I did draft a letter and sent it to my attorney for his input, which he will most likely tell me the same thing. Well i guess i have to go through this heartache process.