All Forum Posts by: Brady Tome

Quote from @Brady Tome:

Hello all,

I am currently searching for my first multi-family investment property. I've been using the basic Google mortgage calculator, but I want to know if there are any other tools I can use to get a more detailed assessment of the deal or the maximum amount I can pay. Thanks.

I’ll send you a multifamily underwriting model I created for free. Let me know if you want it!

Oops, doens't look like the video is able to upload. Type in "Brandon Turner 4 Square Method' in youtube, that should pull up a video that goes through a nice easy way to run the numbers on a potential deal.

There are free tools online everywhere, but basically you want to do the following:
Gross Potential Income
Less Vacancy
= Gross Income

Subtract the following expenses:
Real Estate Taxes
Hazard Insurance
Liability Insurance
Maintenance (yes, even if you plan to DIY)
Supplies
Property Management (yes, even if you plan to DIY)
Utilities
Lawncare/Snow removal
Legal Costs (evictions, LLC formation/maintenance)
Bad Debt (non-paying residents)
City Occupancy Licenses
Payment processing fees (for debit/credit cards)

This will get your Net Operating Income.

Then subtract debt service. 
1st mortgage
2nd mortgage (if applies)
Line of Credit (if applies)

This leaves you your free cash flow. That's what you get to keep in your pocket... pre-tax. Fortunately, it is going to be rental income which the IRS considers "passive", so it gets taxed at a different rate. It also doesn't have Social Security or Medicare taken out of it like W-2 income.

Now that's not the only thing to consider. There's also tax savings from depreciation, loan amortization (i.e. paying off the loan principle), and appreciation in the value of the asset.  Those vary widely, so you just have to crunch the numbers when the time comes.

I have spreadsheets I've created myself to do all this for me by just plugging in numbers. No one's situation is going to be the same though. I've just given you a basic road map.

Quote from @Brady Tome:

Quote from @Chris Allen:

Quote from @Brady Tome:

Quote from @Chris Allen:

Quote from @Brady Tome:

Greetings all,

I am new to REI and actively searching for my first multi-family investment property, whether that would be a duplex or quadplex. I am open to either. I currently live outside of Austin, Texas in Georgetown, and would like to purchase something within a 1-2 hour radius of me. Is there a way to analyze the market of growing areas? I've begun to look at Killeen, Kyle, and Taylor areas. But am unsure how to know which would be the best to prioritize my search based on market analysis.

 What price point are you looking at? And what class of property are you looking for? 

 550k & under. I'm not to familiar with the "class of property" care to shed some light on this?

 So with a $550k budget, you have a pretty decent option (at least in my area in Killeen/Temple). 

"Class" is basically "how nice" the property and/or neighborhood is. No hard fast lines, but think C class is more Section 8/low income housing and A is more New, luxury type housing. B is somewhere in the middle. 

$550k can get you a lot in Temple and Killeen, there are several really nice new build duplexes in Temple/Belton, and plenty of duplexes and 4-plexes in Killeen. Hard thing is having them cash flow as LTR's. Killeen you have to be careful and would recommend checking out the area before you buy.

 From the quadplexes I've seen most already have Long-term tenants in them & are cash-flowing. What do you mean by "have to be careful" what should be on the radar for that area?

How much do you plan to put down? What I've seen is borderline cash flow to negative cash flow. Or just a poor ROI. 
4 unit listed at $405k looks okay. All 3:2, similar property is listed for rent down the street for $950. If you put down 20%, after taxes and everything, you might be cashflowing a few hundred dollars, but that's only before expenses and repairs. 

What I mean by careful is that the closer you get to Downtown and/or base, the rougher the neighborhoods get. South Killeen and closer to Heights is pretty nice. We could jump on a call I'd you want sometime.

Quote from @Brady Tome:

Quote from @Chris Allen:

Quote from @Brady Tome:

Greetings all,

I am new to REI and actively searching for my first multi-family investment property, whether that would be a duplex or quadplex. I am open to either. I currently live outside of Austin, Texas in Georgetown, and would like to purchase something within a 1-2 hour radius of me. Is there a way to analyze the market of growing areas? I've begun to look at Killeen, Kyle, and Taylor areas. But am unsure how to know which would be the best to prioritize my search based on market analysis.

 What price point are you looking at? And what class of property are you looking for? 

 550k & under. I'm not to familiar with the "class of property" care to shed some light on this?

 So with a $550k budget, you have a pretty decent option (at least in my area in Killeen/Temple). 

"Class" is basically "how nice" the property and/or neighborhood is. No hard fast lines, but think C class is more Section 8/low income housing and A is more New, luxury type housing. B is somewhere in the middle. 

$550k can get you a lot in Temple and Killeen, there are several really nice new build duplexes in Temple/Belton, and plenty of duplexes and 4-plexes in Killeen. Hard thing is having them cash flow as LTR's. Killeen you have to be careful and would recommend checking out the area before you buy.

Quote from @Brady Tome:

Greetings all,

I am new to REI and actively searching for my first multi-family investment property, whether that would be a duplex or quadplex. I am open to either. I currently live outside of Austin, Texas in Georgetown, and would like to purchase something within a 1-2 hour radius of me. Is there a way to analyze the market of growing areas? I've begun to look at Killeen, Kyle, and Taylor areas. But am unsure how to know which would be the best to prioritize my search based on market analysis.

 What price point are you looking at? And what class of property are you looking for? 

Hey Brady,

The good news is the best advice I can give you? You're already doing it. Get started! Congrats on the purchase. I house hacked back in the day myself. You'll have challenges but you'll learn from all of them, and soon you'll be ready to invest in something else. 

The advice I will give is make sure you are in some sort of network where you can have conversations with like-minded people. Bigger Pockets is great for that, but poke around and try to tap in to some local real estate investment groups in your area. If there isn't one, start one of your own. The fastest way to get ahead in this space is in community.