All Forum Posts by: Carol Kohn

I am closing in a few days on a duplex that is fully occupied. A few newbie questions about inheriting the tenants:

1. Should I have them fill out a new tenant checklist? (move in checklist) Or rely on the original move in checklist? Only one of the tenants filled out a move in checklist.

2. I will be changing the locks, and using a handyman to fix some minor items from the inspection. Is there anything else that I should do? Ie: should I have plumber replace valves, pluming hoses, etc; 

3. I have read that I should send a letter to the new tenants with an introduction and new payment procedures. How quickly after I sign the closing docs should I do this?

I have read and researched quite a bit on being a new landlord, but would love any additional tips/recommendations for a newbie. Thanks in advance!

@Okeoma M.Thanks for asking for more details. I connected with this thread because of the 'no excuses' theme. I was a successful analyst working for Yahoo for several years until I was confined to a  wheelchair a few years ago. Instead of using that as an excuse, I decided to start looking into another dream of starting a real estate investing business. I moved from Cali back to my hometown in Springtown, TX and started saving my pennies (the savings of living expenses alone allowed me to save quickly). I, too, have a great family support network so I found an agent and a loan officer. Once I found a property that I liked (which was two story... quite a challenge for being in a wheelchair), I toured the downstairs while my uncle (the electrician), my parents, and family friend contractor viewed the rest. I wanted to find a newer property because I wanted low risk for my first property. This was a 2005 duplex about 7 miles from me. I am about to close in a week and while I didn't get the best deal, I got a decent deal given my criteria (newer multifamily close to home).

Here are the highlights:

Asking price: $190k  Final price: $165k

Gross Rents: $1,655/mo

Maint/Exp/Ins/Tax/Vac: $1,120/mo

Net Operating Income: $495/mo

With a cap rate of 8.1% and cash on cash rate of 12% it is not the best deal, but I had to start somewhere and I have used this as a huge learning experience. I will be managing this property myself so the learning experience continues!

Anyone have suggested reading/advice for land lording?

@Andrew Herrig apologies in the delayed response as I did not get notification of your post for some reason. Location is Azle, TX. Gross rents annually: $19,860. 

@Thurman Schweitzer I am on track to close on Nov 13 and everything is looking good for closing. Seller and I negotiated repairs and we are on track. Now on to reading, researching, watching podcasts on being a landlord!

@Okeoma M. congrats on your first deal! I too just completed my first investment property purchase (duplex in TX) after spending about 2 years researching, reading, looking at neighborhoods, etc. Always a good feeling to get the first one under your belt!

@Dmitri L. thanks so much for the input and recommendations!  

I have accounted for all major expenses that you have mentioned. The property was built in 2005 and is located in Azle, TX, where duplexes are in high demand as there is a shortage of rental property in this area. The rental listings for this neighborhood are rented quickly, so I am hoping to increase the Gross Rent to $1800 next year.

Here are the expenses I have accounted for:

Gross Rent: $1,705/mo   $20,460/annually

Vacancy Loss (4%): -$68/mo  -$818/annually

Operating Income: $1,637/mo   $19,642/annually

Cleaning & Maintenance (10%) -$164/mo   -$1,964/yr

Insurance (6%) -$92/mo   -$1,100/yr

Taxes (13%) -$211/mo   -$2,530/yr

Operating Expenses (28%) -$466/mo   -$5,594/yr

NOI: $1171/mo $14,047/yr

Mortgage payments: -$643/mo   $7,718/yr

= Cash Flow: $527/mo   $6,330/yr

What I don't know is a few things:

1. 1. Is 4% vacancy loss enough given the rentals are filled quickly?
2. 2. I have not included management fees as I this is my first property and the fees seem too high for one duplex, so I will be managing the property myself. Is this a good idea to manage my first property? I am willing to put in the time, do the research, and learn from my mistakes, but I am nervous that it's too much.
3. 3. The cap rate is only 8.2% for this property. I was hoping for more. Any thoughts on whether I may have overpaid? Like I said, I am treating this as a learning experience to building my business, so there are no regrets, just an opportunity to learn from this deal and from the BP community.

@James Palin thanks for the REI club recommendations. I will definitely check them out. I have also found DFW REI Club but not attended any meetings yet. Any thoughts on them? Also, was going to check out the more rural REI meeting in Weatherford, TX to network for building my team.

@Mark Nolan thanks for the welcome!

@Grant Greene thanks for the recommendation to consult with a lender. I plan to network to find a lender in my area who will sit down with me and discuss the items you shared with me. I have almost started off "too hot" until I started reading BP and realizing that I should not spend all my money quickly. Going to do much more networking and research before doing my next property. Again thanks for the info!

@Jerry Puckett thanks I have sent him a message.

Not sure how mentions work, but I am guessing the "@" symbol triggers it? Guess I will give it a go!

@shane woods hopefully you get this!

@Account Closed thanks for the recommendation. I was a little hesitant because he has only been licensed for a year but if he grew up on BP, he must know his stuff!

I am brand new to BP. Been lurking for a weeks while doing some research (and inspiration!) into investing in my first property... a duplex in my local town. I am now under contract and decided to stop lurking and introduce myself. In a previous life I worked for Yahoo in Silicon Valley as an analyst, so I am pretty good at crunching numbers and know Excel very well (pivot tables are my favorite)! Nowadays I am disabled and must keep my future 3-5 multi families close to home. 

Anyways, I am more than willing to exchange my knowledge of excel and analysis skills for my tons of newbie questions!

Hello,

Sorry for the spam as I posted in the wrong forum,

I am about to close on a deal on a 2005 8br/4ba (4/2 on each side) duplex that I was hoping to get analyzed as this is my very first investor purchase.

Purchase Info:

1. 1. SqFt (total): 2492
2. 2. List price: $189,900
3. 3. Purchase Price: $171,750
4. 4. Initial cash invested: (down payment +cc) $51,340

Income Analysis:

1. 1. NOI: $1,171/mo $14,047/yr
2. 2. Cash flow: $527/mo    $6,330/yr

Financial Metrics:

1. 1. Cap Rate: 8.2%
2. 2. Cash on cash return (year 1): 12.3%

Comps in the area are about $68/sqft for 3br/2 bath duplexes, and this 4/2 comes in at $68/sqft.

Rents are running $850 for other 3/2 duplexes in the area. The current renters for this property are running $830-$850.

Does this seem like a decent deal? Option period just expired with the inspection popping one major problem with the HVAC that seller is fixing. Just nervous since this is my first deal and am second guessing the numbers. I am not even sure what questions to ask on here. Thoughts?

Thanks!

CK