All Forum Posts by: Bily Elliott

I bought my first (and still only) rental property in Feb of 2009 for $19,000 cash that I had been saving up for a while.  A small 700ish sq ft 2 bed one bath house that I rented out 2 weeks later for $450 a month and have had the same tenant in there since.  I had unfortunately, not been able to build up much savings since then, but I hope to have enough to buy a second similar property by the end of this year.  Hopefully with two rentals in my portfolio I will be able to buy a third one sooner than 6 years lol.   

So, a little more information about this deal. It is in fact a 10 unit (2 more 1 bed 1 bath, but they are in the basement and have seepage when it rains heavy) not an 8 unit. Utilities for gas, water, trash, sewer average $770.00 per month for 2013 according to the realtor (she included a copy of tax returns showing almost 24K income and almost 10K of utilities) the last three years have been 10K, 9K and 9K reported utilities costs. They have also considered owner financing @ 6% with 25% down and a 10-15 year term.

@Joe Fairless

That was my initial thought! I still want to get some numbers so I can run them so I am more comfortable that when I do find a good deal I am confident it is a good deal.

@Joel Owens

It is listed at less than that, by quite a bit actually. It is listed at 99K, I would be making a cash offer. I would like to have a PM take care of it which would take away some of the profit but hopefully most of the headaches too! There are a few pictures online, and it is an older place but does not appear to be falling down anywhere, which is a good sign! I will get some utility statements (I think they will be very high, I don't even want to guess) and do a drive by and see what my gut is telling me.

So I have a piece of industrial property set to close on August 4th that I will walk away from with a good chunk of change. I have one SFR and have been saving and wanting to jump into small apartment buildings. There is a local 8 unit (two separate buildings, I am not sure of the exact layout yet) 7 are 1 bed 1 bath and the last is a 2 bed 1 bath unit. The smaller ones rent for $399, the lager for $599. This was built in the 20's and is not brick, it is a wood frame building. It is not in a horrible area, but not great either. I need to see insurance, utility bills, bank deposits (to make sure rents are being paid), any other bills for the property (trash, lawn care...). Am I missing anything? Should I be running for the hills or do some digging on it?

@Giovanni Isaksen

that screen shot looks like its is some helpful software. Is it a one time charge to download and use?

So my wife has been bugging me to give her a list of what I want for Christmas, I don't NEED a single thing, and I guess the only things I want are some GOOD books about real estate. I would like to get into multifamily properties, 2-4 units and small (12 unit) apartment complexes. Can anyone recommend any good books that I can have her get for me?

@Michael Seeker I am going to do a drive by tonight and check it out, I also plan to call the realtor later today to find out why the owner is selling. According to county records it has been owned by the same trust since 1997.

@Troy Fisher Your debt service number of $521 is correct, when I punched in a loan of 130K with a 20% down payment it gave me the $630 per month number I used, I am not quite sure why though, but I have found a different calculator that seems to be working. All four units are 1/1, I am not sure how nice they are inside, but the outside of the building looks to be in good shape. They might be able to be raised some, but I think even $450 would be a little above market rent from what I have seen.

So using the 50% rule with the proper debt service numbers, each unit still only cash flows $70 per month. Even bumping the rent up to $450 each that still keeps the cash flow at under $100 per unit, $94.75 to be exact. I do realize these rules are just guidelines and they are not set in stone, what else do I need to find out from the realtor to see if this is worth pursuing?

OK, after using the 50% rule this property is WAY overpriced correct?

$1600 gross rent / 2 = $800

130K mortgage, 30 year fixed @ 4.25% has a payment of $630 per month

$800 - $630 = $170/4 = $42.50 cash flow per unit per month right?

It looks like it should be 80K tops, and that only cash flows $100 per unit per month which is lower than I want to have. An 80K mortgage has a monthly payment of $400

I am looking at a 4plex for sale, here are the numbers I have, can someone look at them, crunch them and let me know what else I need to find out about this property?

1920 SQ Ft
Built in 1940, cinder block construction
All units one bed one bath
$400 per unit
tenant pays all utilities
Taxes of $1000 per year
Asking price 130k
Close to a college in a good neighborhood

What else do I need to find out?