All Forum Posts by: Cody Jackman

Update: I spoke with my agent who has updated me on current storage units, town water, and taxes.  After adjusting my numbers I came up with a much smaller Annual Cash Flow of $16,000.  However, I also messed up my Cash on Cash Return section and rehab estimate. Turns out the storage units aren't in as bad of shape as I originally thought.  So my NEW numbers for this project are:

INCOME- $4,040

EXPENSES- $2,700

CASH FLOW- $16,000/yr

CASH ON CASH RETURN- 26%

I also figured the CAP RATE to be 6% (16,000/250,000) but a better CAP RATE would be 7% of course. This is what I used to come up with a target of $228,000 (16,000/.07).

Seems like a good investment potential, with plenty of room for error as long as you make a good buy. I think I would offer $225,000 and negotiate from there.  If they accepted I would need to come up with $45,000 cash for a down payment.  I currently have $10,000. 

@Kyle Spearin thanks!

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $38,000
Cash invested: $15,000

First property, I live in the 2 bedroom 1.5 bath house, there is a detached garage with loft style apartment that I plan on short-term renting as I continue to inject forced appreciation into the property and drive down the mortgage to increase equity before I resell.
*Update* 2020- Appraised for $45,000 more than invested

What made you interested in investing in this type of deal?

The need for a home, and potential to cash flow

How did you find this deal and how did you negotiate it?

Private deal, non MLS. Buyer approached me and they were highly motivated to sell

How did you finance this deal?

Construction loan at first, then refi into conventional

How did you add value to the deal?

No one wanted to buy the property because of how distressed it was

What was the outcome?

Used the local bank as a lender and closed through an attorney, all without ever meeting the buyer

Lessons learned? Challenges?

Lots

Hey BP, I have been searching for a cash flow property in my area and found something with potential. This property is a duplex on 5 acres with a barn that has been converted into storage units and is priced at $250,000. The rentals are a two bedroom and three bedroom, currently renting for $750/month and $950/month respectively. There are 40 storage units of various sizes, but these typically go for $75/month. Utilizing the Four-Square Method, I began with the total potential INCOME of $4,700/month.

Now for the expenses category I included smaller items like CapEx, Lawn/Snow, and Property Management even though I plan on managing the property. All those items, along with the mortgage payment give me a total of $3,00/month in EXPENSES. This would give me a CASH FLOW of $1,700/month or $20,400/year.

Sounds good to me! But is it a good investment? I happen to know the property as I drive by often and am aware it needs some foundation work, which can cost up to $10,000. I also know the inside is clean and updated, so may be able to get by for now. In addition, the tenants are willing to stay. After covering closing costs and allowing for a $15,000 rehab budget, my TOTAL investment will be about $267,000 at that asking price. Now I know the agent and have a good relationship which works in my favor. By these numbers, I estimate a 7.6% return. Or, for the 2% rule, the property at that asking price is 1.88%.

Do you try to make an offer or keep searching?

@Matthew Irish-Jones yes it is. I'm not aware of any local investor meetings in my area but I will do some research ! 

@Matthew Irish-Jones $40,000

Hey Joseph, I am currently looking at refinancing the property,  and looked at that as an option. However,  I dont have much equity in the property and wouldn't be able to pull out nearly enough to rehab. 

Hello,

First time posting here. I have been a member for years, and always been drawn to the lucrative seasonal rental property business.  I secured my first property in 2018, a single family home with a detached garage where I live now.  The two-bay garage has an upstairs loft apartment.  The building was erected 1970, and after some unsavory tenants left the place in shambles I was able to buy the property for cheap. I renovated the home, but now am left with a garage that needs renovation as well.  I live in a great location for outdoor recreation where every year vacationers come to enjoy the hiking, biking, skiing, snowmobiling and other opportunities the area has to offer.  I see many properties on Air Bnb in the area consistently booked year round.  Analyzing the property using the BiggerPockets Four Square Method, I calculated anywhere from a 7%-36% cash on cash return on the property.  The only issue is, I do not have the cash right now to rehab the property.  So the question becomes, would it be better to continue to save my money until I have enough cash to put into the project or take out a loan to rehab?  It would take me years to save up the cash, and those years I could be getting a return on the property.  Does anyone have experience with this , or suggestions? Happy to share more information if asked.  Thanks for reading.