All Forum Posts by: Account Closed

Thanks, Rodney.  That is helpful. 

I wish I was able to get a 28% return.  The 28% actually represents the percentage of the rent that is left over after allocating 72% of the monthly rent for expenses.  using the 50% rule, I'm way off and wonder whether its because I'm playing it too safe. 

[Originally posted in the wrong forum]

I've found that after I take into consideration my contingencies seemingly good deals on the surface don't look so attractive any more. I wonder whether my assumptions/budget is too conservative.

I generally use the following assumptions:

[Based on a SFR: 1500 sq. ft./$850 Rent]

10% vacancy

$1000/yr Cap Ex Reserve

$100/mnth maintenance/landscaping/etc.

$1200 annual turnover cost (Breakdown: 1 turnover per year; Repairs: $100; Painting: $375 ($0.25/sq ft); Cleaning: $150; Management Fee: $850 (1 mth rent); Flooring: $375 ($0.25/sq ft); LESS Deposit: $850 (deposit) PLUS Evictions: $100/yr (using 10% eviction rate/$1000 eviction cost); Marketing: $100)

For example, for an Indianapolis - SFR (3bd/1bth; $65K purchase; $850 rent; $600 Insurance; $0 Utilities Paid by Owner; Tax: $1900) the Cash On Cash is about 4% / $240/mth.

Using the 50% rule, $425 would be leftover per month. With my numbers, I'm calculating 72% Expenses & 28% NOI.

I'm eager to get my first property but don't want to be blind-sided by foreseeable expenses; however, if I play it too safe then I'll never get in the game. Are my numbers off?

I've found that after I take into consideration my contingencies seemingly good deals on the surface don't look so attractive any more.  I wonder whether my assumptions/budget is too conservative.

I generally use the following assumptions:

[Based on a SFR: 1500 sq. ft./$850 Rent]

10% vacancy

$1000/yr Cap Ex Reserve

$100/mnth maintenance/landscaping/etc.

$1200 annual turnover cost (Breakdown: 1 turnover per year; Repairs: $100; Painting: $375 ($0.25/sq ft); Cleaning: $150; Management Fee: $850 (1 mth rent); Flooring: $375 ($0.25/sq ft); LESS Deposit: $850 (deposit) PLUS Evictions: $100/yr (using 10% eviction rate/$1000 eviction cost); Marketing: $100)

For example, for an Indianapolis - SFR (3bd/1bth; $65K purchase; $850 rent; $600 Insurance; $0 Utilities Paid by Owner; Tax: $1900) the Cash On Cash is about 4% / $240/mth.

Using the 50% rule, $425 would be leftover per month. With my numbers, I'm calculating 72% Expenses & 28% NOI.

I'm eager to get my first property but don't want to be blind-sided by foreseeable expenses; however, if I play it too safe then I'll never get in the game.  Are my numbers off?

I'm from California and I've been turned onto Milwaukee myself.  I echo the other comments, there is A LOT you can learn here for free.  I'd also highly recommend listening to the BP podcast. Once you go through all the episodes I'd recommend listening to the Epic Real Estate podcast too.  Both are excellent sources of inspiration and information.  

Best of luck!

Thanks, Pyrrha.  Hope your new ventures this year have been prosperous.

Hi Vala.  Turn-key plus great returns would be great.  I'm very aware that I probably know just enough to make myself very dangerous.  Learning from other's mistakes would help me a lot. 

Unfortunately, the time when SoCal prices were in my range have long gone.  I hope to become an appreciate investor in the near future but until then I'm focused on the cashflow benefits of the Midwest.

Thanks for your sharing.

Thanks, Joel.  I have read a bunch of her posts and hope to connect with her.

Hi,

I'm another SoCal resident looking for my first investment.  During the day I'm an entertainment attorney but at night the entrepreneurial itch gets to me.  Sometimes it won't let go and stays with me through the day.  It's been getting really bad lately.  I've pursued non-real estate ventures in the past but I've always been drawn to real estate.  For the past several years I've been on the sidelines researching, saving and planning and am now ready to take the plunge as a buy and hold investor.

I've recently located a couple properties in the Milwaukee area that I would like to aggressively pursue.  I would very much appreciate any referrals for agents and property managers with local insight and the willingness to point out the negatives of a particular property. 

As you are well aware, your conversations on BP have been a great source of encouragement, inspiration and real-world education for those of us on the sidelines.  I am grateful for everyone's willingness to share, advise and teach and look forward to contributing.

Talk to you soon,

Arash