All Forum Posts by: Chad Adams

Hi @Patrick Marsh. I'm in Joplin MO and would be happy to answer questions or meet up some time. 

Hi Matt,

Welcome to Bigger Pockets!

I live in Joplin MO, but I work for a company in St. Louis. I have 2 long term rentals in the Joplin area. There are a lot of people on here a lot wiser than I am, but here are my thoughts.

1. For your first rental I think you would be better off looking for local properties. 
2. The grass is always greener. I fight the opposite attitude that you have. I live in a mostly rural community and I look at St. Louis as a place of great opportunity. Seems like there are all kinds of deals and rents seem MUCH higher. So just recognize that it is sometimes our tendency to look somewhere else and think it would be easier/better there.
3. Go listen to the BiggerPockets podcast episode 229. The lady on that podcast lives in Boulder CO and has 4 or 5 "vacation" rentals in St. Louis. She puts them on Airbnb and seems to be doing quite well. I mention that because it is in your area, you probably know the neighborhoods and she mentions her purchase prices on 3 of the houses; $70,000 something, $60,000 something and $50,000 something. Which all seem very reasonable even when compared to a smaller town like Kirksville. 
4. Having said all of that, I think you should ignore everything I've said IF it somehow puts the brakes on your desire to get started. What I'm saying is, we all do this differently and there are a thousand different ways to invest in Real Estate. If you have a plan that makes sense to you and you are ready to get started, then get started! Part of the process is being creative and seeing opportunities that other people aren't seeing yet. So, do the research, learn some info, but at the end of the day, don't fall victim to analysis paralysis. I may think St. Louis looks like a good market, you may see it differently, we could both be right. 

Hope that helps. Good luck! Let us know what you decide. 

Hi David,

Welcome to BP. I'm also in the Joplin area and am brand new to RE investing. I just bought my first SFH and am in the middle of rehabbing it.

I look forward to talking to you more.

Chad

I'm looking at a property that has not been managed great. This is good because it provides the opportunity I'm looking for.  But it is bad because the guy who owns it can't seem to be able to provide the information I'm looking for (rent rolls, expenses, copy of leases, etc...).

I'm brand new, this would be my first deal.  On the one hand I want to stay away. I'm nervous anyway being my first one, and he's not providing all the info I want (at least not yet).

On the other hand I can understand that he is in over his head, he doesn't keep good records, and thus he wants out (good for me, he's selling at a reasonable price).

Looking for guidance, how do you determine whether a deal is just poor management and record keeping, or if he's trying to hide something?

Thanks, 

Chad

Thanks @Roy N. 

I appreciate all the help and advice. 

I'm going to move forward on this property (though slowly and with caution).

I'll post back here if/when we make an offer. 

Thanks,

Chad

Once more to pull all the numbers together:

6 units

$180,000 = Asking

$165,000 = guessing at the final purchase

INCOME:

$2,650 = Gross Rent / Month

$31,800 = Gross Rent / Year

$175 / Month for laundry (I'm not including this anywhere other than just to mention it)

EXPENSES:

$2,649 = Vacancy (estimated @ 8.33%)

$2,649 = Main & Repairs (estimated @ 8.33%)

$3,180 = Property Management (10% of Gross yearly rent - though I'll really be doing this myself)

$1,400 = yearly taxes

$3,200 = Water and Trash (these are actuals).  I still don't have a number for electricity.  Tenants pay their own, but I'd be responsible for some outside lights and the laundry room

$630 = Insurance (just a guess based on purchase price/1000*3.5 - forget where I found that calc)

Total Expenses = $13,704

Trash guy just came back with a rate of $86.60 per month (higher than what I was estimating before.

Now including that the numbers change to:

Assuming a purchase price of $165,000 I show a cash flow of:

$631 (assuming 100% financed @ 5% for 30 years)

$700 (assuming 25% down @ 5% for 20 years - commercial loan on 6-pled)

$557 (assuming 25% down @ 7% for 20 years - commercial loan on 6-plex)

Thanks @Bill Jacobsen and @Roy N. 

I called the city and figured out that the water bill runs between $80-$180 per month.  I'm using $180 in my calculations for a yearly total of $2,160. I didn't even know the city would tell me this information.  Thanks for suggesting it!

I called the trash company, but had to leave a message. I know they are using a dumpster on site.  He will be calling me back with the numbers, but I might not hear back from him till Monday.

I'm estimating:

8% vacancy ($2,544)

10% property management (though I'll be doing this myself) ($3,180)

8% Maint & Repairs ($2,544)

$630 for insurance (Price/1000*3.5) - seems low to me. I've submitted info for a quote @ http://www.landlordinsuranceequotes.com (don't know if that's a good site or not)

Assuming a purchase price of $165,000 I show a cash flow of:

$684 (assuming 100% financed @ 5% for 30 years)

$753 (assuming 25% down @ 5% for 20 years - commercial loan on 6-pled)

$611 (assuming 25% down @ 7% for 20 years - commercial loan on 6-plex)

Thoughts?

Thanks!

Asking Price $180,000

Gross Monthly Rent = $2,650

Additional Income = $175 (plus or minus; laundry)

Owner pays water & trash (I don't have numbers yet), tenants pay electric.

Taxes = $1,400/yr

Based on those numbers it seems like a something to take a closer look at...agree?

Other info/concerns:

It has a tile roof (rare for my area), can see some chips from the ground.

Nice neighborhood.  Safe, no crime to speak of, kids playing and people taking walks when I drove by.

I asked selling agent for rent roll and utility bills.  She respond with, "they really don't keep good records on the property". She will send me what she has been given, but it is probably sketchy at best.

Thanks for the advice @Doug Shapiro and @Michael Seeker .

We went to look at it last night and you were right on about the neighbors and the property in general.  It looked a lot better on paper than in person, and it just looked *okay* on paper :-)

Thanks, 

Chad