All Forum Posts by: Chris Duzan

@Andrew Syrios 

I might be using the term "acquisition cost" wrong. My thought was that the house is posted to go for 35,000. And my thought was to get a 20% discount which would bring it down to 28,000. So I thought that's what acquisition meant.

Regardless, based on acquiring the property at a sale price of 28,000 with 25% down on the mortgage(7,000) and the closing costs and estimated repairs I would be in on the deal for 19,000. Which is where I get the 20% cash on cash return.

@Bill Jacobsen 

When you say, "I usually have to pay 10% times actual rents + 1 months rent to fill a vacancy." are you talking about for property management? And do you always just assume there will be 1 vacant month every year(~8.3% rather than my 5%)?

Welcome to BP @Craig Bowen !

I actually grew up in Cayce and live right across the bridge in Columbia now. Nice to see more and more new locals on here.

Sorry, guess attaching a pdf didn't work. I'll try to post all the numbers then...

Sale Price: 35,000
Estimated Repairs: 10,000
Closing Costs: 2000

Acquisition Cost: 28,000

-----------------------------------------------------------------
Mortgage: 21,000 - 30years @ 5%
Down: 7,000
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Income: Rent: 1000/month

Expenses:

Mortgage (Principal + Interest): 112.73
Taxes: 208.33
Insurance: 100
PM: 100

Vacancy: 50  (5%)
Repairs: 50  (5%)
CapEx: 50 (5%)

Total Expense: 671.07

Income - Expense = 328.93 x 12 = 3,947.16

Cash on Cash ROI = 20.77%

Hey guys. Did my first analysis on a rental in my area yesterday and I wanted some people to take a look and tell me what they think.

If you're from the Columbia, SC area let me know if the property taxes and insurance seem pretty close to the norm. I got the taxes straight from their posting. I also counted for 5% vacancy, 5% for maintenance, and 5% for CapEx. Utilities are covered by the tenant and I even dropped under the supposed current rents just to be conservative. However, I'm assuming that I get the property for a 20% discount. I always hear Brandon talking about that in a lot of his posts and the property looks like it's been on there for 6 months, so here's hoping they're a motivated seller.

And I would love to hear anyone else's thoughts on it too, even if you're not from the area. 

Here's the listing...

http://www.zillow.com/homedetails/2020-Apple-Valle...

... and I've attached the report I created.

Thanks ahead of time and if you like the place go for it, I'm just working on analyzing properties right now.

A little late to the party, but I'm looking at college rentals right now too.

For those of you that are advocating for grad students, how are you able to choose them over an undergrad because I'm assuming at some point an undergrad has applied to live in your house? I just know there are very strict laws on discriminating when it comes to rentals and I guess I was wondering if this is considered discriminating to pick a graduate student over an undergrad. Or if you can give that as a reason when you turn down a potential tenant.

@Shiloe B.  That is definitely my go to to weed through hundreds of properties. But I'm thinking a step further into the process. If I look at a hundred using the 50% rule, then I might get 10 that pass, and I'm referring to how I might analyze these 10 houses.

@Arlan Potter  I don't know if it's because everything I'm reading is dealing with multi-plexes or if not all SFHomes are in the same situation you mention. The book I'm reading now(Frank Gallinelli's "What Every RE Investor Needs to Know About CF") mentions expenses like insurance, repairs, taxes, trash service, lawn care, utilities, etc.  He mentions looking at other properties currently for sale and examining their operating statements. Is this something more along the lines of large apartments and commercial RE rather than single family and small multi-family(2, 3, & 4 unit) housing?

I've been reading several things recently that have mentioned getting a rough idea of the return of the property to see if it fits your criteria. I know you can get an idea on the taxes on the property and the amount of the monthly mortgage payments, but how do you get an idea of the expenses before taking the property under contract?

One of the books mentioned finding comps and determining the percentages of each expense to quickly find any discrepancies. (ie. Water ~ 5%, Electricity ~ 10%, etc.) So does that mean I need to get these properties under contract just to find out their real expenses only to turn around and tell the seller that I don't actually want the property?

Thanks ahead of time for any assistance anyone can offer me.

Maybe I should give it a chance and look some more into it. I live right off of campus and after being here for 4 years I kind of know what a lot of kids are looking for. Thanks!

@Roger Blankenship 

Have you ever rented to any college students? The thought of it sounds enticing but I feel like I'm always hearing horror stories about it too. Just wondering your thoughts on it. Seems like you would have a lot of problems with it.