All Forum Posts by: Chris Marshall

Those are all very good points, To address the possibility of large expenses I’m adding in a set back of 5% of the rents for Cap Ex.

In regards to land availability there is just enough land to add 3 more duplex’s ( 6 units) there is already rough plumbing and electrical ran for one of the potential duplex’s (apparently, I have not verified this).

And as far as the slimness I am trying to think of a more creative way to structure the debt with them to make it look a little better. Such as the example above of paying a higher price with 0% interest or a lower price with a higher interest.

There is a 2000sqft garage on the property that is not being rented out right now and built onto the side of the garage is a small self storage space for each tenant that is included free with their lease. I do believe that currently each unit is about $50ish under value and then I could make utilization of the self storage and extra fee.

Those are a few of my value add ideas and then different ways to structure the debt to make this property better. Any further thoughts on that?

I have found a mostly off market multi family deal, the property is not on the market but the property managers have permission from the owner to start looking for perspective buyers. I actually sat down and talked with the property management team and the seller for about 2 hours yesterday afternoon and discussed their property and how I might go about purchasing it. After a few hours of talking we and discussing the property I decided that I wouldn't be able to go after this purchase for a cash flowing property but I could go after this as a value add property. the property ha the potential to build 3 more duplex's. currently there are 2 duplex's and a single home that matches the duplex's. So 5 units currently. There Is also a garage on the land that is rather large that could have something done to it.

Obviously based off the numbers from the head line this deal is no go. That being said there is always more to the story and I would like to run this deal past all of you fine folks to see if this actually is a value add opportunity or if it is still to much. So after sitting down with the owners for a while theses are the numbers that we are currently at.

Asking Price : $500,000

Cash at closing : $45,000

Owner Financing : $455,000

Terms of owner financing loan 5.25% for 25 years fixed rate.

Monthly payment : 2726.58

Income from 5 units Year to date  : $12,700 or $3175/M 

Yearly income for 2018 : $36,875

Expenses in 2018 : $4982.52 (they did not add in their insurance, taxes or maintenance)

The property is in a very nice area right outside of my town in one of the few markets that saw growth last year in Missouri.

The property is tax assessed currently at a value of about $294,000 and their taxes last year were $2687.17

They have not provided me what their insurance is and I have not secured a quote for insurance yet.

So after all of that is this something that could be a good value add opportunity. If you use all the equations like the 1% rule, the GRM, or the Cap rate it doesn't look solid but because its seller finance and I told them that we would have to make sure the property could handle its own expenses with 5% of rent set aside for maintenance or cap ex then we would have to get the mortgage down to be covered by the NOI. What are your thoughts? We are not under contract or anything yet but they told me they would give me time to sit down with me again and do some more negotiating to see if we could further work out a deal.

I'm looking for information about how I should go about purchasing a commercial retail/office building. I did not believe that I would be able to purchase something like this for a while let alone have the opportunity but My wife and I have found ourselves in a situation that might make it possible for us to purchase one ten to twenty years before I ever thought we would be able to. So I have not really started learning how to analyze those deals since I'm still trying to figure out flips.

The only things I know about the building are that there are five office/retail spaces and that the business we are purchasing uses 2 out of the five at a lease payment of $1800/ month, which more than likely makes each units lease $900 each month, bringing total lease to $4500 each month. I know the business we are purchasing currently signed a 5 year lease that expires at the end of this year which is when we intend to officially take over the business. Other than that the only other thing I know is that they apparently have a simple rent structure its just $900 a month and then the businesses take care of the utilities and everything else themselves. 

Information about the land and building is that the building sits on 1.3 acres and the building is 11,080 sqft. three of the four businesses in there have been there forever and the fourth is a hair salon that just started. As far as I know the building should stay leased out fully for the foreseeable future with no changes except the hair salon. (our area sees hair salons come and go nearly ever season so who knows how long that one will remain.) There is about .25 acreas in front of the building that is not currently being used for anything other than grass. 

According to the assessors site in 2017 the land was worth $113,260. The Building was worth $330,040. which brings the total to $443,300. I can not think of any other information that I know about the building.

I am mainly looking for any help with what I need to be looking for, how I should approach them about seller financing the property, how I should set up the deal. pretty much anything. I looked up in the podcasts section for any podcasts on the matter and none jumped out at me so if there are some in there that do speak on the subject id love to listen to them. Same with videos or other forum posts, or if you have any information you are willing to put on here that would be amazing as well. I just need a direction to start going into since I know nothing on the subject about purchasing a commercial office retail building so any help[ would be amazing! Thank you in advance!

Hello all, over the past months I have been preparing myself to find a flip and although i knew the end goal was rentals I haven't been really paying attention to how to really run the numbers on a rental. I might have them right but if I do then it isn't really a cash flowing deal so I would appreciate some more experienced eyes on this.

Purchase Price $79,000

Sellers is paying the first $2000 of closing costs

Estimated Repairs $20,000

ARV $120,000

This is two separate homes on the same property both are pretty much identical.

Conservatively looking at $650 a month rent for each so $1300/month income

RDP Insurance $1668 annually for both

Taxes around $1200

I am figuring 5.5% for all loan values

Using about $44,800 on a HELOC and $66,200 on a 25 year amortized loan.

Figuring 30% for all repair, vacancy, cap ex, and property management 

My totals come up to like $46/month cash flow. 

Am I not thinking of something? Am I missing something? We are going through the process of getting the HELOC and loan to purchase at the same time. I wanted to do the BRRRR strategy on this as well but when i figure the cost of just one $100,000 loan over 30 years the cash flow is even worse, I would lose money each month. Any insight in what I am doing wrong would be HUGE and if this actually is not a good rental property tips on what I could do would be amazing as well. I do have this property under contract currently and I am trying to get financing in the manner that I stated above but if there is a better idea I am all ears!

Thank you in advance and I appreciate all the help!

Welcome to the community, nice to see another face from Missouri in the site!

I’m from farmington Missouri, I started my own high end renovation and remodel company in my area to help my Realestate goals. I was having trouble gaining the funding for flips so I figured while I was waiting to gain funding I would start doing remodels so I could quit my job selling insurance. I worked in construction for about 7 years before that so it made sense to me. I get a jump on my knowledge and build my connections as early as possible. If you ever need anything in the farmington to cape girardue area feel free to hit me up

Nathan Platter yeah my real estate agent I always use thinks 900-950 would be good price range to rent my house. And between the rent coming in from my wife’s salon and the house we would be at 175% of what monthly expenses would be for the property. I was thinking of setting aside $100 for each of those, maintenance, vacancy, and larger problems (is that what cap ex is called?).

Hello all just a quick question on the numbers or this idea my wife and I are playing around with. Right now we own a 3 bedroom 2 bath 1400sqft home in farmington MO. We are thinking about renting it out so we can move into a live in flip. I’m comfortable with the flip numbers but I want to know what you think about renting out our personal home. The numbers are, mortgage $392.87 insurance escrowed in. Electric for out property we budget $400/month usually less than $300/ month. Property tax this year was $875. And then we have a building on our land that is on the same electric bill but has it’s own insurance policy (I’ll explain why in a moment) which is 475/ year or about $37/month. So total bills on this property equal about $905/ month. That second building on our land is a hair salon that my wife runs her business out of. It pays us $140/ week in rent for fair market cost for the building and it’s share of the electric which is about half. On a four week month we get about $560 in rent from her salon. We put the rental money her salon pays us in one account and then we have that account pay us $100/week to pay it’s share of bills. So in a 4 week month $400 of the total $905 is paid by the salon. So now with the explanation out of the way, is $900-950/ month going to be enough rent to make it worth it? Those would be expected rents for a house like ours in this area. Also I’ve already checked our escrowed insurance would drop about $48/month by switching it to an RDP insurance policy. I’m just not sure if I’m thinking of everything when looking at rental income. What percent of the rental payment is supposed to be set aside for repairs? And does anyone have any better ideas on how to make this better?

I’m not sure about the exact rules on forming a group health insurance plan, I just need to look into it. If I find out anything worth while I’ll try to make another discussion on BP. There may be one already on here for all I know.

I actually don’t have health insurance right now. To be fair though I didn’t have it when I worked at State Farm selling insurance either though. I’m looking into a couple alternatives to insurance such as a Christian health bill share plan. I’m also looking into starting a group health insurance policy with other people that need insurance. But I’m still not sure how to go about that. The office I do most of my insurance through no longer is selling health insurance policies this year so I have to find a new place.