All Forum Posts by: Carl Millsap

@Gregory Coppola I would call a couple property managers in the area and ask them, some may share what they had listed is renting for and some may not. 

@Eric Johnson and @Doug Crenshaw thanks for the feedback. I appreciate it.

@Robert Palladino we had a property in our name but the tenants paid rent to our LLC. Unless you set the LLC up as an S-Corp or Corporation (verify this I'm not a tax professional) it'll report on your personal taxes under schedule C / E.

 I would also consult your lawyer just to ensure you're in compliance with State laws, but in my experience it works great.

Hello BP, 

My background....I have an 8-plex, 4 plex, and two duplex properties. Looking to scale so......

There is a 20 unit multi listed for $945k. It's been on the market for 2 years. I requested the rent history P&Ls etc.

I did a walk through with the property manager and sat down with the property owner.

I ran several scenarios using a deal analyzer spreadsheet.  Used current rents, projected rents etc. Pulled actual taxes history, and got an insurance quote so my numbers would be as close to reality as possible.

I pulled up as many sales as I could find in the area going back 2 years for similar units (2 bedroom/1 bath) and found average price is $37,500 per unit. 

My scenarios with the deal analyzer show a price range of $649k (10 CAP) to $812k (8 CAP) and that's using current rent w/ what my expenses would be. Given the deferred maintenance, and current rent amounts I offered $750k, which also happens to fall in line with the area per unit average.

The owner's response was you can't build a 2 bedroom for $37,500 per unit.

So are we using what it cost to build the building in today's $ or what the value of the current income is to place a value? 

Your thoughts please.....

@Dexter Harris just a recommendation, I purchased the Micheal Blank deal analyzer and it's well worth the $129 or whatever it was. 

It's a plug and play spreadsheet that will give you the COC, IRR, and potential offering price at different CAP rates.

You can run the math yourself to ensure the spreadsheet is right but it has saved me hours! It also allows for different scenarios side by side so you can easily compare. 

I'm not in any way affiliated with Michael Blank. I'm sure if you google and / or search BP there are a few reviews on it.  

@Dee Brock is this a single family house? 2 or 3 bedrooms? 

During your rehab is there anyway to add value i.e. another bedroom / bonus room that will allow you to increase the rent?

Calculator factors CAPEX set-aside before and after rehab..are you handling any of the CAPEX during the rehab i.e. new roof, hot water heater, HVAC?

@Wanda Austin-Wingood deal looks good $1200 positive cashflow after repairs? 

Based on repair cost of$135k I'd say the key will be getting an thorough inspection, 3-4 contractor bids for everything you need / want done. The project management will be key to ensuring you keep the cost down so you can realize the projected profit / cashflow.

@Amy Gamboa yes you may be limited if your area has halted evictions, but you can deduct the repairs from their deposit or tell them to have it fixed. 

@Diane G. what is "regular maintenance?' LOL. 

We handle maintenance calls as they come in, we repair / replace potential issues when tenants turnover. 

We provide quarterly pest control, and will start changing air filters to reduce HVAC repair request that are typically filter related. 

@Ken Martin Last week I was quoted 4% 5 year fix w/ 20yr AM for an 8 plex. I was also quoted 4% w/ 30 yr AM for 32 units via Feddie / Fannie.