All Forum Posts by: Austin Weber

@Gregory Schwartz

Hi Gregory!

A couple people have mentioned the water being high so that’s definitely worth looking into. I didn’t realize it was so out of whack.

I plugged in 5% for maintenance for simple numbers, is there another way you would suggest projecting that? Or just adjust it up based on age? It’s a 1982 build.

Rents could probably be around $1300 with those updates once leases renew, or around $1200 with some minor cleanup. I assume you would simply take the difference in rent price / the cost of those upgrades to determine if the return to do it makes sense?

Regarding the location, I could definitely see keeping it a while and it’s only a few minutes from where my wife and I live now which is a comfortable area.

@Brad S.

Hi Brad,

I appreciate your perspective. Not every property for sale is a good deal and I think that has to stay top of mind. It’s easy to see a property and want to make it a good deal but if it doesn’t work that needs to be respected instead of trying to force it like you said.

I think there’s a price at which it could work but I also understand that price is pretty far off of the asking price/value and to the seller it likely wouldn’t make sense to sell at that price.

@Brian Adams

Hi Brian!

That’s a great resource, thank you for sharing it.

Changing just the utilities and bumping rents really would change the whole picture, creating roughly a $600/month swing. I do plan to manage it myself, at least to start. It would be my first investment property and I’d like to get a feel for it before handing it to somebody else.

I agree with you, I don’t feel like their price is unreasonable but I couldn’t figure out how to make it make sense. The interest rate I was quoted was 7.5% but I’ve also reached out to another lender just to compare. Would you expect a 6.5% rate to be available currently for a non-owner occupied property?

Knowing you wouldn’t expect year 1 cash flow makes me feel a little better. I know it’s about the long game but I hate to sign up to lose money on my first property. I guess if I can manage it until I can adjust rents and flip utilities it still has potential to be a good investment over the next decade.

I really appreciate your insight!

@Jay Hurst

Hi Jay,

I believe the electric is being paid by tenants as the financial sheet only showed about $15-20/month for electric. The other $375/month appears to be water and I’m not sure if it is metered separately.

Rents are a little low but on par with current conditions. Minor cleanup could probably get them up to $1200-1225, and some larger updates could get it close $1300.

Looking for some more experienced advice/perspective on a quadplex I want to make an offer on. I'm new to this and looking to make this my first deal. This property is on the MLS currently listed at $540k. It fell out of contract a couple months ago but it had an inspection and appraisal done at that time. It appraised at $553k and the inspection showed lots of minor to moderate deferred maintenance, mainly needing a roof and some foundation repairs and a few water leaks inside that need addressed. It has tenants in place until 2025 paying $1150/unit. I've been trying to wrap my head around what an appropriate offer would be and the numbers just don't seem reasonable.
I’m coming up with: 

$4600 monthly rents

$450 insurance 
$950 taxes 
$690 Cap ex, Maintenance and Vacancy 5% each
$400 water/electric from current financials 
$130 landscaping from current 

Which leaves me right under $2000 for a mortgage payment just to break even, which is a purchase price of $375k with 25% down. Not including any repairs or renovations that’ll be necessary. I know I’d be able to adjust rents and/or pass on at least water and electric expenses down the road. 

My questions are: 

Does offering $375k to break even but cash in on equity make sense? It’s hard for me to think someone would consider an offer at this price but I’m not in their shoes. 
Would you offer higher, like $450k, and just eat the water and electric until the leases renew and you can adjust that out? 
Is this a deal that really just needs a large down payment to make sense? 

Any other thoughts are greatly appreciated!! 

- Austin