All Forum Posts by: Alex SImon

I've been lurking about for quite some time and now I think I've finally got my first deal in the works.  Nothing is final yet,  but the initial offer is being submitted and we'll go back and forth a bit on the price.  The property is a triplex in Leesburg, FL, fully rented and in good condition after the initial inspection, no big maintenance issues that need to be addressed besides some fresh paint.  The neighborhood is good, and the renters in that building have been there a good long while.  While the house was being shown, a neighbor came up unsolicited and asked if there was a vacancy because he had a couple friends who'd be interested.  So provided he's not a shill, that's a pretty good sign that vacancy won't be an issue here.

Numbers!

Price:  100k, which is the highest I'm willing to go on this particular deal.  Asking price is 120k, I'd like to get it for 90k.  I've put together a set of figures for 90 and 100, but I'll just post the 100k figures for now in case I can't get it any lower.  As you can see, the initial numbers for this house are pretty modest.

Gross Rent:  1200 (Way below market value for the area, over a few years we can easily increase this to 1600)

Monthly expenses (Taxes,  10%Property Manager, Insurance, and 10% Repair estimate): 600

20k down payment (not including closing costs in this calculation)

Annual NOI excluding mortgage: 7200

Cap Rate: 7.2%

Monthly mortgage: $382

Cash on cash return: 13.08%

Fast forward two or three years, rent increases to 1600 a month. Now the monthly NOI is $1000, a cap rate of 12% annually with the annual cash on cash return jumping up to 37%. Sounds very good on paper, and everything I've seen of the unit is very promising.

Speaking of which, I'm sure we'd all like to know the specific company policy regarding beers and barbecue when an investor is passing through town :P

Well there's a good point.  But how would I go about getting in touch with existing owners at that resort?  I'm drawing a blank.

@zach liu (can't tag on mobile)

I wasn't really planning to use these units myself.  There's nothing to this besides the investment aspect for me.  I mean hell, maybe in the off season or something.

The 35k ones are just small studios. Nothing fancy but I figure they'd offer the best ROI since this sort of destination is about everything except the room. The fancier ones (scaling all the way up to half million dollar slope side mansions) are the sort of thing people would buy if they wanted to use it a lot, and rent it out part time. For me this just seems like a good source of full time rentals.

I've recently been turned onto a possible source of passive income properties.  There's a mountaintop ski resort in West Virginia that sells condominiums within the resort and then has in-house property managers that run the unit as a rental property whenever it's not in use by the owner (in my case, that would mean always).  At first I thought that a ski resort would be a poor choice because of high vacancy in summer months, but apparently the resort manages to stay mostly booked year round with golf and mountain biking bringing in visitors in the warm months.  The lower end of the price range has units at around the 35k mark in listing price.  While there is never any guarantee that the unit would produce consistently, it would only need to be rented a few days per month to cover operating expenses.  I'm still waiting on some numbers on a couple of properties, but I thought I'd reach out here in the mean time.  

Has anyone ever bought properties in a setup like this?  Experiences, thoughts, potential pitfalls?

I'm currently overseas myself. It makes the REI process a little problematic since I can't be there to do anything in person. But if your wife stays then she can be your boots on the ground (mine is my mother) and that can help a lot.

Multifamily is what I'm doing right now. You might consider looking for a 4plex or something, and try and get the largest property you can with a 3%FHA loan since your family would occupy one unit. Since it's just me I don't have as much benefit from doing one of those.

@wontletmetagonmobile

Welcome to the forum.  I'm a newbie like you but I've been studying for a couple months now and will be closing my first deal soon.  Like you I am from the central FL area and one of the best pieces of advice I can give you is to get off the beaten path a bit.  All the areas that are nice and touristy are going to have huge bloated costs that will negate a lot of your profits.  Don't be afraid to look in the slummier areas.

Okay, that's very interesting.  Thanks for chiming in with that explanation.  So from what I'm seeing so far it seems like a lot of people put the responsibility on the tenant to get it done.  I'm sure my property management company will have a preferred method of doing things when the time comes, also.  But this is very enlightening.

Thanks for the input.  I'm primarily focusing on MFH for the moment.  Anyone have any experience they're willing to share in that department?

I haven't seen this discussed at all, so I figured I'd just come out and ask this.  Where does lawn care and landscaping factor into the rental property equation?  Is it usually included in the monthly charge for a property manager, or will I need to get a local landscaper involved?

I am stuck overseas, so I obviously can't go and mow the lawns myself (and who would really want to spend all their free time mowing other people's lawns?)