All Forum Posts by: Caleb Heimsoth

@Stephen Akindona I think that's completely fine for Turnkey Providers to do that. I am just trying to narrow down what I should be using for vacancy, maintenance and CapEx. You didn't mention maintenance, do you think 5 percent for that is reasonable, given it would be a completely newly renovated property?

Hi @Hadar Orkibi,

Thanks for the reply! I just want to make sure I'm understanding you correctly. Are you saying you use 8 percent of monthly rent for CapEx, Maintenance and vacancy combined or 8 percent each? Is that for in Memphis or do you just use those numbers in general?

Hi Everyone,

I am looking at investing in Memphis through a turnkey provider. I am wondering what local investors use for Maintenance and CapEX rates for Memphis? From what I've seen so far, most Turnkey providers don't really account for maintenance or CapEX or they just group them together, which I disagree with. Roughly speaking, I am considering using 5% of monthly rent for CapEX and 6% for vacancy. Does that sound too low, or too high? This would be a fully rehabbed property, so I am expecting CapEx would be low, but I want to make sure I save up enough during say the initial 5 years so I don't lose money when say a roof needs to be replaced. If it helps more I would be looking at properties in a B neighborhood in the 90-100k range.

Please let me know if you need anymore information.

~ Caleb

Memphis invest is a good way to go too. They work in Dallas and Houston

Ray Lai I was contacted by the same turnkey company after I posted a couple times...not by one of their sales guys but two...and they didn't realize it. I had a phone call with one of them and it was average at best. Not super open to answering my questions and a lot of sales pitch and general answers. I live locally in Fort Worth and the Dallas area and I'm still very new but in this market 6 percent CoC is very low. Also even if it's rehabbed I would say that those mainence costs are very low. I usually use 10 percent of rent for CapEx and maintenance costs and I've heard that could be low. I did some digging online and I couldn't find much about the turnkey company you mentioned, which is puzzling consider they say they have a great reputation. Feel free to message me if you have any questions about them, turnkey or my local market and I can do my best to help. -Caleb

Shawn Ackerman I currently have no debt and make a middle class living. The investment property would be with traditional 20 percent down etc. I suppose it also depends on my risk tolerance as well.

Hello, I recently thought about this jdea. If for my first home I use a FHA loan and put down 3.5 percent or even slightly more and then turned around and bought an investment property a couple months later, would that be too much debt too quickly ? My FHA loan residence would probably cost 140k or less and my out of market investment would cost hopefully 120k or less. Please let me know your thoughts. Thanks, Caleb

Thanks for the reply. I am having a hard time reading your screenshot, but did you include an HOA fee? And how exactly did you calculate cap ex / maintenance? I wouldn't know abojt neighborhoods or age of house but I am learning how to find those out before purchase. I would probably talk to a local real estate agent or property manager. Based on more finalized numbers, I would probably pass on this specific property. But I don't think the numbers are so far off that I couldn't find a deal, eventually, that fits my criteria through a turnkey company. Finally, j would only go under contract with an appraisal contingency. I wouldn't pay above market value for a home. Paying market value for a newly renovated home and all the other things a good turnkey companies provides would probably be worth it for me. Just my opinion.

I didn't get size. I just know it's a SFH. What would you suggest as appropriate costs for maintance and cap ex?

Manish A. Sure here's an example of a property I was told is for sale right now. List price of 106,900. 20 percent down and 5000 in closing costs. This property is located in Memphis, with property taxes of 1.05 percent. Here is my cash flow break down. These numbers have been adjusted to fit my conservative style when doing this. The numbers provided for vacancy and capex cost were less conservative. Rent: 1100 Taxes: 93.75 Property management (10 percent of rent): 110 Repairs/CapEX (10 percent): 110 Vacancy (10 percent): 110 Mortgage (4.75 interest): 338.5 Insurance (estimated): 50 Total costs: 811 Cash flow: 290. C.o.C: 13 percent. I didn't include insurance in my previous comment. I was told average return is 10 to 14 percent. What do y'all think? Let me know if my numbers are off or I'm missing some sort of expense.