All Forum Posts by: William R Johnson

Jon There are three units in the building.

I haven't yet purchased the building but the current owner shared the last year of expenses with me so I am confident the utilities costs are accurate. The owner pays electric for the common space, water, gas for heating and hot water, and garbage. Each unit has it's own separate electric meter so they pay for that but everything else is shared. Gas is the big one that fluctuates in Michigan so I calculated the average. It seems like a good buy to me but if anyone else has a different opinion,  I'd be happy to hear it. 

Great. Thanks so much for the responses. There seems to be varying opinions on this but I think this deal will have enough meat on the bone to work

Actually the taxes on the building are about $175/month and the insurance is about $100/month So the total monthly known expenditures would be about $925

I have a question regarding the 50% rule. I am looking at buying a three flat and I want advice about how to run the numbers on this building. I understand that the 50% rule is a very good conservative way to evaluate properties. I believe that it says 50% of gross monthly income should be set aside for expenses separate from the mortgage. Can the monthly utilities charges be paid from that first 50% then, or should it be saved for emergency maintenance? Here's my numbers for clarification. Purchase price $85000 Monthly gross income from rent $1925 Mortgage $350/month Taxes $100/month Utilities averaged for the year $300/month Any advice is welcome. This will be the first multi family property so I want to make sure it's a great deal. Thanks.

Thanks for the replies Dave and Mike, and for the advice about the 1031.  I will definitely keep it in mind going forward.  Right now, I am looking to just buy and hold but I would not be opposed to selling and upgrading to a larger place with more units in the future so that 1031 seems like the logical option to keep the profits and roll them into a new purchase.  

Hello BP,

   My name is Will Johnson.  I live in DuPage County IL (just outside Chicago).  I joined BP because I am just getting into the real estate investing game and I want to learn as much as I can.  I have some very basic knowledge and minimal experience, but I am looking to change that soon.

   My wife and I bought a foreclosure ( read… huge dump that needed tons of work) for our first house.  Even though the house had no heat, no plumbing and big holes in the roof… we persevered and made it work.  We got it for a steal and spent 3 years renovating it.  We eventually sold that house for a healthy profit last year and bought a place that we really love with a huge down payment.  That experience has really got me excited about the possibility of future success. 

   We own another house in SW Michigan that we bought a few years back for cash.  At the time, I had planned on renting that house out but I got sidetracked with my primary residence and having babies.  Now I really begun to rehab that place and hope to be done next month and get some renters generating some cash flow for us.  We are also hoping to buy an additional 3 unit building in the next month or two.   We are looking in the SW Michigan region for this next purchase as well because Dupage County, where we actually live, is so expensive. We need immediate positive cash flow, so we need to look elsewhere.  We chose this area in Michigan because it's about a 2 hour drive and our parents own property there.      

   Our goal is simple.  We'd like to build a portfolio of rentals that includes both single family and multifamily buildings that will cash-flow enough to double our income.  We both work right now and enjoy our jobs… but we'd like to build our wealth and the extra income (not to mention ownership of assets) will help us out.  

   I would be very in connecting with BP users that are in Dupage County IL or out in Southwest Michigan (Niles, Berrien Springs, Buchanan, Cassopolis, Edwardsburg, etc…)  Thanks and hope to hear from and network with as many as we can.  We've got lots to learn.