All Forum Posts by: Cliff Harrison

Do your units have w/d connections, dishwasher, and disposals?   If you have the w/d connection, you can offer to tenant applicants to provide a W/D for extra rent (over what was advertised).  You can also offer to add dishwasher, or even fenced in backyard (or portion of the backyard) if the tenant has a dog (and you allow pets).  As an example, in one duplex unit, I got a $70 rent increase and a two year lease commitment in exchange for adding a chain link fence 25x30 which only cost $850 to have installed, you have tax treatment options for depreciation or expense on it,  and it should last a long time.  I ask for feedback at showings if I don't get an application, what were you looking for that you don't see? 

It's not necessary to boot tenants to list them on MLS. But you could advertise them on BP in the Marketplace. Or PM me some details perhaps I would buy them or I also keep an eye out for a couple other out-of-state investors I will recommend them if they meet criteria. Generally, 1.25% or better rent-to-price ratios in B areas.

thanks

Cliff

I would take your $10,000 and buy into a syndicated deal or invest in performing notes through a broker here on BP just as a way to get return and build up what you have. Keep saving new capital and your dividends, and when you have $25,000 or more start acquiring your own leveraged assets, if you still want to do that. I personally do not like the idea of buying one single turnkey SFR. There is volatility in the business and having only one house exposes you to that volatility. I should also note that the volatility is almost exclusively in the negative direction - things can easily go much worse than budgeted, but they almost never go much better than budgeted.

@Clint Looper  Hi Clint,

Welcome to BiggerPockets and the KC investing environment.  I think we are blessed to live where we do in a great cash flow market.

If you are interested, I do offer a paid mentoring session (it's cheap) and there I can tailor advice to you, open my books and contacts, discuss my mistakes, and answer whatever questions I can for you.  I have done these as sit-down meetings and as drive-around including to my own properties or rehab projects.  I am on the very brink of leaving my day job to do full time real estate investing and am owning/controlling 67 units having started less than three years ago. 

I don't have any secret methods to sell, and I don't do this for the money.  But I do get a lot of requests for meetups, and charging a fee helps winnow that to people who are serious.  In turn, I do my very best to help them out.  I am also hopeful it could bring me investing leads or opportunities in some form down the road.

Thanks

Cliff

@Joe Partington - congrats on being funded. My advice is to let us help you prepare an ROI calculation so you can determine how good of a deal it is based on the numbers, and also the forecast you come out with will be a good frame of reference for you and your partners to manage to. If you want to work on that let us (or at least me) know. It's not hard to do and is a crucial step in deciding 'how good' of an investment is this really.

Cliff

Hi Joe. What I suggest is that you do a full analysis and rate of return calculation for hypothetical investor or investors that would come in with you on this deal. Any serious investor will want to see the full numbers - all expense assumptions and revenue assumptions. If it is an attractive ROI compared to alternatives, you have a good story to tell and will likely be able to find some partners. I recently put together a deal with 9 investors to purchase a 40 unit duplex community in Lee's Summit, MO and having the calculations/projections ready and easy to understand was the key to getting other people to sign on to invest in my deal.

I also think this is a good exercise to make sure it really is a good deal like you think it is. To me, it sounds somewhat expensive for the midwest. It is almost $71k per unit and earning $750 per month for that. If I were considering it, I would need to see the projected insurance, taxes, maintenance/repairs budget, CapEx, professional services, vacancy assumption, etc. I would consider around $55k per unit for that rent to have good deal potential, unless there are other considerations.

Good luck

Cliff

I have a few rentals in that neighborhood.  Andrew has a good guess on market value, for move-in ready condition.  In my opinion, a 'good deal' in that neighborhood on a 3/1 with garage that is in good condition is mid-50k.  $875 is a typical rent.  The nice thing is that taxes are usually around $600 or less.

My two cents - the repairs budget seems low.  I would have that around $125-150.

Vacancy seems low also.   I would have that closer to $160.  You might not have that much actual vacancy, but you absorb cleaning and make-ready expenses during tenant turnover.  Also as a tip, I would do analysis including a PM fee (remember to inflate this for leasing fees) so if circumstances change and you want to hire a PM the property can support it.

Good luck and Congrats again.

Cliff

Congrats, that is a great start!  If you are at $117,000 all in and earning $1600 a month rents you more than likely have a cash cow on your hands!

Since you are starting out, I think some of the most valuable feedback you can receive is on your cash flow calculations.  If you would like some feedback, post all of your expenses that you included in your calculation.  Then others (at least, me) will give you opinions on categories you may be leaving out or under or over estimating.  Of course, everyone has different opinions but it's useful feedback and you can then use your own calculation (or keep it exactly the same as you have it).

Congrats again.

Cliff

Congrats, I think you did pretty well here. My recommendation is to figure in $100-$125 for CapEx right away, assuming you have a long term hold in mind. I also like the zip code you bought in, some nice neighborhoods in there. The property tax is surprisingly low. My only house in KC with lower tax is in a borderline hood area. I strongly recommend to run the address on rentometer.com (I have a professional subscription, but anyone can run a general analysis) and confirm the market rent. Even the most reputable turnkey companies naturally fill their properties at the top of the market rent it makes all the other metrics look great and maximizes the purchase price potential. Also check comps on MLS/zillow and make sure the purchase price seems to fit and you aren't starting with much negative equity. Regarding vacancy and maintenance, consider costs of make-ready and LEASING FEES between tenants in addition to month-to-month items. With just one property in the portfolio right now, be conservative. PM if you want any help.