All Forum Posts by: Braden J.

@Matt Morgan thanks very much for the insight! All of that makes a lot of sense, especially saving for the roof. I'm adjusting my numbers to account for everything you mentioned. Thanks!! 

@Jeff Formeller I personally wanted a 4 unit all brick ranch property that consisted of 2 bedroom apartments that rented for approximately $500 each.  That's rather specific for my area, so I didn't have too many properties that fit those criteria.  I looked at a ton of properties and just happened upon this. Other than that, there was nothing else I did in order to find it. I just got lucky I think with the condition of the property and everything. The last owner bought it as his first investment property and way over improved the place, he didn't enjoy being a landlord so he sold it 3 years later. 

@Matt Morgan NOI is technically $19,095 as I currently have it projected (NOI doesn't include Debt Service). $24,150 (gross rent) - $1,250 (5% Vacancy) - $4,655 (total operating expenses, including taxes, insurance and maintenance) = $19,095 (NOI) -$5,244 (debt service) = $13,851 Cash Flow.

@Josip Galic Thanks! Rents are currently 6% below what I'm seeing as average. I haven't decided if I will raise rents. 

@Matt Morgan Debt was included in my Cash flow calculations. Here's how I broke it down. 

$24.5k Gross Rents

5% vacancy rate

$5,244 Annual Debt service

$3,155 Taxes + Insurance

Self Managed

ZERO utilities. All utilities including water and trash are paid by the tenant. Separate meters for everything. 

Considering the property was fully renovated with all new appliances and utilities only 3 years ago, I'm factoring $1500/yr for maintenance, only time will tell if more is needed.

This leaves me with $13,043 Cash Flow. 

If I raise rents to at market rate, then I will be at $14k Cash flow after all debt service, expenses, vacancy rates, taxes and maintenance. That would be a 16.7 cap rate. 

Obviously this is my first property, so if I'm missing any numbers I would greatly appreciate the insight! 

Thanks!

On the MLS actually. I spent 6 months looking for a property and this was the best deal I found that was still in a safe town. I still have a lot to learn for sourcing properties using more creative methods.

My first property and first post. 

Just closed on a brick 4-plex ranch, two bedrooms each, fully rented with good tenants. 

Paid $115,000 with a 4.5% 30 year loan. 

Gross Schedule Income is $24,500 with rents currently below market and tenants pay all utilities. 

With healthy reserves set aside for maintenance, I'm projecting cash flow of over $13,000 per year. That leaves me with a project 16% cap rate and 60% COC (by asking the previous owner to bring a large chunk to closing)

That cashflow would allow me to pay off the property in 5 years flat, but I plan to roll those profits into downpayment for more properties just like it. My goal is to get to 20 units within the next 3-4 years, which should provide the start for a "early" retirement at age 30 ;) 

This blog and website has been a HUGE source for my inspiration. Thank you all for your contribution.