All Forum Posts by: Curtis N.

Hi everyone - I have been looking for my first investment for some time now. I finally found something that looks good (to me) but wanted to get others' thoughts.

It's a 16-unit apartment building located in a pretty good area. It was built in the 70's and was remodeled about 5 years ago. It's not distressed so one of my main concerns is if the numbers they provide in the listing are correct, why are they selling?

I have only seen it online, it's not close to me so I'm just going off their numbers for now. They say it's fully occupied and everything is in move-in ready condition. No fixing up needed.

Purchase price = $644,000
Units = 16
Occupancy = 100%
4 x 2BR @ $580 / month
12 x 1BR @ $490 / month

Monthly rents = $8,200
Yearly rents = $98,400
NOI with 50 % rule with 8.3% vacancy = $49,176
Includes cost of PM @ 12%

20% down with loan at 4.3%
Cap rate = 7.6%
Cash flow = $18,763 ($130 per door per month)

The NOI they have in the listing is slightly higher which makes it an 8.25 cap. I overestimated the expenses to 50%.

CoCr is 11.66% and total ROI is 17.06% based on my calculations.

This seems relatively turnkey and I wasn't sure how good these numbers were for a turnkey investment.

I am ready to put my money into something and I am having a hard time finding something where the numbers make sense. Any help is appreciated!

No problem! I've been using it all the time and even though it's making all my "deals" not look so much like deals, it's a great tool. After using it for awhile you'll start to be able to do the guesstimates off the top of your head and then once it passes that test, use the spreadsheet to verify.

Mineto Anfield - check out some of the rental analysis spreadsheets available here on the site. I've used J Scott's rental analysis spreadsheet and it provides all the numbers you would want to see.

http://www.biggerpockets.com/files/spreadsheets/category?dir=desc&order=downloads

Thanks Jason. I might not be able to make this one. My first baby is due May 13 and this might be too soon, lol. Maybe the following one.

I would be in but it's just a tad too far away for me. Looks like a nice big group, though. Thanks for the invite!

Jason Cohen - do we have any plans for the next meetup?

Welcome Raj and Paul.

Pretty darn cool! Congrats!

You might be able to forget hard money right out the gate because for your situation, it sounds like you probably need the money for longer than 6-9 months - which is the usual case for HM. It's usually used for rehabs where the investor needs quick cash to close on a deal, rehab it, and get it on the market and quickly pay off the loan.

Normal private lending could work for you if you have access to it. The problem that I've seen locally is it's almost as hard to get as a conventional loan unless you already have a reputation built up with a lender.

Most people choose hard money because the lenders don't care as much about you individually, unlike banks. They care about the collateral (your property) and how good of a deal it is. If the numbers work, you can get your cash within a few days. But they will usually only loan up to maybe 75% LTV.

The only reason I can see this happening is because your original contract is not as good of a deal as you think it is. If you didn't find a buyer in time, that's probably why. 9 out of 10 buyers won't care if they have to pay you a cut as long as there's still room in there for them.

But to answer your question, I don't think there is any reason to have a noncompete if you already have a signed contract with the seller ... which you should.

I had looked into several property managers in the DC Metro area, upstate NY, and south-central PA and the average was 8-9% of collected rent. Collected is the key word. If they don't have tenants or if the tenant doesn't pay - you don't pay them.