All Forum Posts by: Brad Klock

Thank you everyone for your replies! I am going to talk to the guy hopefully by the end of the week and see if he won't meet me in the middle somewhere on the price. My target price is $32K so we will see. I do have one more question that hopefully someone can help me with. I am going to have the tenant pay the utilities, however I was told that the water and sewage bills stay with the home and I should pay them to make sure they are getting paid. Does this mean I should charge more for rent then or just take a little loss on my cashflow each month? Also, both units use oil heat, should I put some kind of clause in rental contract saying that they must keep the tanks filled and that I will start them off with "X" amount of gallons. I live in PA and it's already getting cold and I am not sure how full the tanks are right now, but it would seem unfair to have someone move in, charge them a security deposit + first months rent, just to slap them in the face with a large oil heat bill that they need to fill the tanks? Thank you guys for the responses!

also, how do you figure out what the vacancey rent is for the area? I lived right behind this duplex for 5 years and it seemed like he kept it full most of the time, but obviously people come and go. Is there a place like Zillow or something that I can go to and check the vacancy rates for my location?

The 2nd unit has been vacant for about a month now. The girl that was in there was not paying her rent and the landlord uses a month to month lease, so at the end of august he asked her to leave. Everytime they have a tenant move out the landlord goes in and cleans the apartment and paints. When I went to talk to him the other day about the house he was painting the front porch. He did put a "for rent" sign on the door and a few people have came through already (I know my mom's friends son did). I don't believe that they stay vacant for too long. Maybe this is due to the low rent he charges. He only charges $325/side, however from looking in the paper and on craigslist I don't think it would be too difficult to get $375-$400/mth as most half of duplex's around here charge $400-$450/mth each side.

I really appreciate the response. I know there is a lot if work involved and in no way expect this to be easy. But nothing worth doing is easy so bring it on! Haha. I am just worried because I don't want to mess this up. I have been trying to read a lot of posts but all the numbers and their respective relevance confuses me. I can do simple math I just have a hard time figuring out what it actually means as if the deal is good or not. On another note. The area is really not bad. It's mostly older people and young families there is rarely any crime and its mostly just your blue collar working class.

I know I still need to figure a lot of things out and read a ton more on here but can someone please tell me how to determine if the cash on cash and cap rate are good rates. Obviously this is my first investment in real estate and in my "non real estate" mind a good investment would be something that allows me to build a nice reserve fund while covering all the mortgage payments which allows me to leverage more options for more property. Please don't think I am trying to be smart or anything cause I am not at all. I just don't understand how these figures relate to a good deal vs a bad one. Is there a place to find out what a good cap rate is in my area? And as far as the cash in cash number I am totally confused. Haha. Thank you for your replies!

Ok Brandon, I tried to run the numbers. I am sure I messed this up but I was reading the beginner's guide to real estate investing on BP and tried to do it while I was reading the example. So I changed the purchase price to 35K and used $350/side in rent just to be safe. I should get 8400/mth gross income. Then I used a vacancy rate of 12% which gave me $616 of Gross income/mth. I had the taxes at $385, insurance at $150 and $2000 worth of repairs per yr for a total expenses of $2535. With these figures I figured a payment of $300/mth which gave me a NOI of $4857/yr. The Cap rate would then be 13.8%. I am working on the next step now...haha am I doing this right?

I am getting the loan through my local bank. I have a great relationship with them and have always done all my business with them. They had my car loans (now paid off) and both my old house and my new house. I just went in and asked for 30K and she said that was fine and the interest was around 5%. This is on a 15 yr. mortgage though not a 30. I was told that I should try to extend it out for as long as possible and just pay extra once I built up a safety net, but they don't offer 30 yr. mortgages for this investment (maybe because it's not much money I am borrowing).

I actually misunderstood the guy as we were talking about other properties also. He wants 35K and the loan from the bank is a 15 yr loan not 30 years if that makes a difference in the numbers much. Either way I still feel it is a good investment and allows me to get my feet wet in this business without getting in too deep over my head. Also I tried to get the bank to extend the term if loan to 30 yrs but they wouldn't do that. She sai she might be able to go out to 20 years but no more. How much if a difference does that really make? I am trying to buy more properties later on (pending I like doing this) and have read a bit about "snowballing" however do I have to wait the 15 yrs til I pay off this loan or do I just have to wait til I get enough equity in this place before I could get another one? Not trying to put the horse before the artist just curious on how to do the best to build my portfolio. Thank you for the reples

I am new to the real estate game and am not really sure if I am making the correct decision or not. I am attempting to buy a duplex for $30,000. I personally know the owner of the duplex (friend of my grandfather) and he has 3 homes (all duplex's) side by side. Obviously he wants $30,000 each and I was attempting to buy one to get my feet wet before jumping in on all three. I walked through the one yesterday and it is in great shape. He is very good about upkeep and has the furnaces cleaned every year and paints and cleans after tenants leave. The entire house also has a new roof and new replacement windows. My real question I guess is, I went to the bank today and I can get the $30,000 but I need 20% down plus closing costs. I do have enough money in a savings account to cover this but I am trying to keep my personal assets out of this if that is even possible. Also, the bank said my interest would be around 5%, which puts the prinicipal and interest payment at about $250 + taxes and insurance. The one side of the duplex is currently rented at $325 and the guy has been there for about 6 years and is a great tenant. The other side is vacant at this time. I have been looking in the paper and on craigslist and most duplex's around the area rent for $350-$450/side plus utilities. I don't understand all the numbers and figures you guys use but the way I see it is that as long as I can keep one side rented all year long I should be good to go and everything else is profit to put back into a separate bank account for a rainy day (or another purchase down the road). I am looking for some guidance and is this a good deal or am I missing something. The taxes are extremely low I believe they are like 700/year. Please help!