Originally posted by @Phil K.:
Hey Cameron,
Great job for starting to crunch the numbers! I'm still a new investor myself but I found a few things that I'd point out. I'm local to the area and have been looking at the city as well.
- I saw that you had put the price of 190k, this looks to be a short sale so you're going to be needing to get the short sale lenders approval on this. I'm not too sure what kind of financing you're going with but this might be important to point out.
- The units themselves actually look pretty decent, but without having pictures of the basement it is a bit tricky to tell, best would be to get a showing of this to see how it looks in person.
- I saw that you had the monthly rents at $5100. For this area I've seen rents range from 1200+, the nicer furnished and nicer area is on the higher end. I would check out sites like Zillow, craigslist, and rentometer to get the rents.
- As Aaron mentioned, your property taxes look a bit on the low side. I took a quick peek at the Redfin listing and it looks like it's at about $303/month. Also, he is correct in that you should make sure with whatever loan you're starting with you're accounting for the holding costs of the loan etc.
- I would also adjust the insurance costs, I did a bit of calling around a while back for 3 deckers in Worcester and I believe I was quoted around $2400-3500/year, but best to double check yourself and call a few insurance folks in the area.
If there is anything else I might be able to help with, I'd be glad to take a peek! Keep on crunching those numbers!
Oh man, this is so much fantastic information let me dive in! First and foremost this was a purely hypothetical analysis, with that in mind:
- I've not tried to get any actual loan through any lender, I more or less took a stab at what it would be like to invest at a negotiated lower price so I could understand the impact of margin and what it looks like in the calculator. Moreover, what would you personally say is a more realistic margin for a negotiation on an REO?
- True, in your experience would you say that banks are eager to show? Do they show REO properties on request or do they only have set public showings? Does it vary from bank to bank?
- When I was attempting to estimate the rent I assumed that it would be the cumulative gross rent from each unit which makes me a bit confounded. I could be grossly misunderstanding this, but we're assuming that between all of the tenants on each floor that the total rent for that floor (unit?) would be the going rent rate (which I believe I understand you say is priced more realistically at $1200?)
- I truly believe I read something incorrectly on Trulia's section about property taxes when I was spitballing my data
- I am incredibly grateful for that range of insurance info! Who did you call? Any recommendations?
I know I asked a lot in the above but I am super curious and trying to sponge up all the information I can to more accurately project before investing. Thank you graciously for your time and if you'd at all be interested in meeting up sometime shoot me a direct message on here and we can go from there!
