All Forum Posts by: Brandyn Collins

@Jack Smith

Thank you very much for the information, we will absolutely look into Barry and make sure he knows you referred him!

@Ryan Arth

Thanks for the insight, I do wonder what the long term affects will be on home owners and land lords if they continue to rise. There may come a time where the costs are too great for either the land lord or even tenant to be able to pay for the expense... I guess we will have to find out together.

My wife and I may be going under contract on a property soon in Akron. We are wondering if anyone has Home Inspectors and General Contractors that they have used and that you would recommend. We would like them to be independent from our Realtor to ensure that we get (hopefully) a good quality inspection that is not biased towards any party other than what is in our best interest as buyers.

Any recommendations we would greatly appreciate and we would happily inform the HI and GC who referred us to them. Thank you in advance!!

(This will be our first deal and we are very excited to finally make the plunge!)

Nicole we are looking in Cuyahoga Falls, Akron, Stow,  Fairlawn, and Barberton. It seems the sewage fees are exorbitant. So I am trying to figure out what to do with those costs to increase cash flow while still paying for the mortgage and PM fees, which are a decent amount as well. They in general are charging first months rent to place tenants and then 10% thereafter.

First and foremost thank you very much for all of your responses, they have helped me understand the additional costs that it would take to accomplish what I was asking.

@John Warren

Approximately 60% of Landlords in my area charge some form of utilities back onto the tenants, and approximately 20% charge all utilities back onto the tenants. We are currently looking at duplexes with 4br 2ba, and it seems that historical utilities combined for these if the owner pays are in the neighborhood of 300-400$ a month.

It definitely is a gamble in Northeast Ohio to take the time to install additional meters to pass on the fees to the tenant, but you are right that if it means I have to lower rents to compensate its a wash on income and a negative on the expense I accrued due to metering.

@Ben McMahon

That is what we are trying to do. We have some deals that would cash flow 150-200 per door in our area, but if we have to pay water and sewer in our area it costs near 200/mo because of a sewer revitalization fee that they added a few years ago that is about 100-150 per month fee (that has nothing to do with the amount you are using the sewer). This was due to the cities having to replace very old piping and a ton of EPA fines they accrued before they actually fixed it, and they just passed the bill onto home owners.

@Frank Chin

Thinking on what you've said it may just be more beneficial to possibly increase rents comparable with what the utilities would average out to be and not take on the considerable cost of dealing with the piping.

To be honest when I first asked the question I did not even consider the fact that it would be likely to have to repipe entire portions of the home. I greatly appreciate your insight and experience in this as I think it will help me avoid spending even more time looking into it to find that it isn't a worthwhile endeavor.

@Peter M.

As much as I don't want to accept that you're right, I know that you're right. We are fairly new at this so we are trying to figure out our numbers and find deals where we get 150-200/door, but if we have to take on utilities we automatically drop from cash flowing 350 on a duplex to 50 because our water, electric, etc is about 300-400 a month between the two.

Not sure what to do about it, or if maybe we need to just look into a different area...

Again thank you everyone for your feedback, your insight has given me a lot to think about and brought up some good information that I will need to figure out what my course of action should be.

I am looking at properties and have found a few deals that I would be interested in if I were able to install separate metering on a duplex. I was wondering if anyone has had any experience with how much this may cost?

One of the biggest things that I've been finding that kills my numbers is it seems about half or so of the current Owners are paying atleast water/sewage (not passing it onto tenants) and in some cases all utilities. This seems to be due to not having metering separated on their properties. I am interested in seeing if it would be cost-effective to have meters installed so that we could pass these expenses onto the tenants...

Any advice would be greatly appreciated! Thank you very much!

My wife and I are currently looking at lenders and are waiting to hear back on what our numbers will be. But something that you will need to know is that we are being told that a standard 20% down is not enough for a real estate investment property. The lenders that we have applied with are requiring 25% down, which depending on how much the property is that you're buying and what rehab costs may be could push you over the amount of money that you have to put down.

When we get some numbers I will reference you to the company that gave us the best interest rate, and possibly if I learn more I will share with you what I have found.

Another thing to take into consideration is that when you are beginning to apply for mortgage loans to get pre-approved, you have a short window of approximately 14 days according to most Credit Score companies to get several quotes. This first inquiry will cost you in points as a hard inquiry, but after that first one supposedly the rest will not adversely affect your score. If you apply for more after that point I believe that it will count as an additional hard inquiry and then lower your score again. So just be prepared to dive in once you apply for that first loan so that you only get dinged once on your credit score.

My wife and I are currently looking at some properties and are trying to find deals that are atleast 100$ per door if not more. After doing a lot of research we have decided to put 50% of our gross income from rent towards expenses. Then after factoring in paying the mortgage we want atleast $100+ per door. We calculate using the BP Rental Tool putting maintenance and cap ex at 10% per and to be safe calculate Property Managers at 10-12%.

Places you can save money are having the tenants pay for all utilities. Depending on location that can be a considerable cash flow opportunity. Where we are looking to invest the water and sewage is estimated at 100$ a month for a 2 bedroom 1 bath duplex. If we can pass that onto the tenant instead that means an extra 50$ per door we will make.

A lot of people have suggested that we only put maintenance and cap ex at 5% per and PM at 8-10%, but that doesn't make us feel like we are being prudent enough with our first investment property and setting ourselves up for success. That is my personal suggestion, be on the safe side and if you find that you can get away with lower numbers then you do nothing but gain more income. If you underestimate it could cost you (and us - we are investing our own money just like Adam is)  significantly.

In our situation if our costs are less than we expect we will end up gaining an estimated additional 100$ per door, if not, we will be able to say with some peace of mind that we will make atleast 100$ per door.

I also agree with Adam that the amount that you invest and what you get out of the investment is important. You can calculate your cash on cash % using the BP rental tool as well. We have been using it to analyze every property we are looking at so far and it saves us a lot of time and you can run best and worst case scenarios just by editing the report that you generated for the property. 

Hope this helps.

Good luck @James Phan! My wife and I are doing the same thing and we also live in California. Once we get to know some people and have credible and reliable contacts I will happily share our contacts!