All Forum Posts by: Brett Pirie

@Jim S. I'm a Colorado native currently living in Denver and moving to Troy this summer and am trying to learn as much about Troy as I can.  I've visited RPI many times, but have only been to downtown Troy a handful of times.  It does seem quite vibrant with a nice mix of restaurants/bars and shops.  

One thing that's popped up is flood insurance. Apparently Troy is in a FEMA flood zone and lenders are requiring flood insurance. There have been some articles in the Timesunion about the rising premiums. Just something that was brought to my attention and thought I'd pass along.

Unfortunately I can't help you with your real question of which market looks the most promising in the long term and I look forward to hearing other responses.  

@Hiro Kitagawa my first thought is that cash flow seems a little high, unless you're paying cash or a high downpayment.  Are you including insurance, property taxes, and any building utilities not covered by the tenants?  

@John Bower I'm moving to Troy this summer for my wife's masters program at RPI and am trying to get a lay of the land. My goals are similar, house hack and buy and hold rentals. I also enjoy fixing up places and want to find some properties for the BRRRR strategy. It sounds like downtown Troy is coming back, do you know much about what's going on there?

I'm sure that PM experience will be a huge benefit as you acquire rentals!  

The common wisdom is that the closer you know you market the better your results will be.  The obvious ones come to mind first, talking people in the community, reading the local news papers and of course BP.  What other methods do you have?  What information are you looking for?  Are you meeting with certain people on a regular basis?  Are there publications or websites you visit frequently?  

@Avi Garg awesome, thanks!  

What drives the value of these types of 5 unit places in Troy?  Is it the rent?  The comps? Cap rate?  Combination?  

@Stephanie P. do you why you can't live 5 unit property?  Is it due to the commercial financing?  I'm currently running the numbers on a 5 unit that we plan to live in for one year while my wife goes to grad school.  The long term plan is to hold it, but not being able to live in it for a year could put a kink in our plans.  

@Phil Farinacci the building has separated the utilities so the tenants pay their own.  According the owner's numbers, the building utilities average out to $134/mo for electric/gas, sewer/water and trash.  Do you think $200k is high or low for this area?  It looks close enough to RPI and is on a bus line that we might get student tenants.  

What do you see as the hot rental markets in Troy?  The downtown area seems to rebuilding.  

@Josh Robbins and @Phil Farinacci thanks for your feedback. The property is on Pawling Ave just north of the Emma Willard School.  My wife went to RPI for her undergrad and is going back this fall for her Masters, so we're moving from Colorado to Troy this summer.  She has tons of family in the surrounding areas.  Her brother-in-law lives in a nearby town and works for the current owner.  He said if he were to live in the city limits of Troy, this is the area he would want to be.  I have not lived in Troy and understand it varies greatly, but this area sounds good form the several people I've talked to. 

The plan is house hack it for a year while my wife gets her masters and then hold it.  We're not sure yet where we'll end up after the program, maybe move back to CO or stay in the area.  Our long term plan has to own several rental properties such as this, but haven't had the money to do it here in Denver.  By selling our house we are freeing up more than enough money to do a deal like this.  

What do you think?  Is this section of Pawling descent?  Are my numbers in line with this area?  Thanks for you help!  

The owner has told us to make an offer as the property is not listed.  I'm working on figuring out the numbers that will make this work and I'd like some help looking them over to point out what I'm missing; I fee like I'm missing something huge.  

The building has 5 units, (4x - 2BR and 1x - 1BR), separated utilities and a basement with coin laundry.  I have not seen the building in person yet, just pictures.  It will need exterior paint very soon.  As this deal progresses I will fly out to Troy to check everything out in person.  

Income:

Rent = $3570/mo (from the owner)

Laundry = $40/mo (my estimate)

Total Income = $3610/mo

Expenses:

Operation = $1017/mo (Vacancy 5%, Maintenance 5%, PM 10%, CapEx $295/mo)

Fixed = $1047/mo (Taxes $8300/yr, Insurance $2000/yr, Utilities $134/mo, Lawn/Snow $60/mo)

Total Expenses = $2064/mo

NOI = $1505/mo

CapEx is based on my spreadsheet adding roof, paint, HVAC, water heaters, etc, taking into account the estimated life span and replacement cost of each. The taxes are estimated based on a $200k purchase price. The insurance is an estimate; I will have a quote in the next day or two. The utilities were supplied by the owner. Lawn/snow is an estimate.

From my understanding, 5+ units require a commercial loan. I am working with a lender now, but for starters I'm using 6%, 20 years and 30% down for my calculations.  

I am also estimating $20k in repair costs ($10k for exterior paint plus $10k for unknowns).  

Purchase price $175k:

Cash Flow = $713/mo

Cash on Cash ROI = 11%

Cap Rate = 11%

Purchase price $200k:

Cash Flow = $502/mo

Cash on Cash ROI = 7%

Cap Rate = 9%

My goal is to live in one of the units for year and then hold the property to generate cash flow that can be reinvested (either in this place by paying off the loan early or in a new investment).  

To me, $175k seems like a good deal.  Where are my holes?  What am I missing?  At what point can I ask to see the sellers vacancy and maintenance costs?  

I'm new at this and learning as fast as I can, does anyone have any recommendations for books or other resources on learning more about how to proceed?