All Forum Posts by: Curtis Rouse Jr

@Patrick Watson I agree with @Oren K. with this looking like a good deal on paper. I also invest in apartments on the lower "C" end and currently in the process of doing some value add now to force some apprecation to my 19 units. I would recommend to be very confident in your rehad budget and get as many contractor quotes as possible to get a good idea on price/rehab needed. I have learned invaluable information from the many contractors I have walked through my properties with to get a better understanding of what I'm dealing with. I've come across many suspect contractors, so just be mindful and check references, pull permits when needed and I would recommend paying them once the job is completed (or you can give them a draw as certain aspects of the rehab are completed). Best of luck and if you ever need help with any analysis, I've built a financial model that I help investors all the time look at smaller SFR's to the larger apartment deals. Let me know if I can be of any assitance!

@Michael A Egenriether Welcome to BP! You are in the right place and this community has literally taught me everything real estate over the last 3 years with all the podcast, forums, blogs, calculators, etc. The first piece of advice I would recommend is to start educating yourself in the area of investing you would like to focus on. In your case, this would be rental properties which is a great place to start with a "house hack." I'm glad that you already have agent/lender already lined up, but I would be careful to make sure you analyze and look at as many deals as possible to determine the best property for you. I would never necessarily fall in love with a deal and make it emotional because you could possibly overlook the financials. I say that because we are in a very hot market and you can easily over pay for a deal just because you like the property. When purchasing, always keep in mind the exit because purchasing and managing are only 2 of the 3 steps involved in the process. 

I've built a financial model that I utilize to help others investors analyze deals, so if you ever have any questions about valuations or the exit, please feel free to message me at anytime. Best of luck!

@Katlin H. I did a quick anlysis of this deal through the financial model I built and I would defnitely stay away from this deal. As you can see from the below metrics, this deal doesn't produce enough income to substain the expenses and mortgage which leads to the negative cashflow (meaning you will be paying the investment each month). The $8k expenses they reported cannot be anywhere close to the actuals and they are definitely not accounting for some fixed expenese that should be there. This is what I preach on the forums is that the smaller deals sometimes don't produce enough income and those that do can have very tight margins if you happen to go vacant (this will happen). I personally invest in apartments where the main advantage is economies of scale and most importantly income if you run your numbers correctly. Again, this boils down to "your" personal goals and aspirations, just want you to be made aware of both sides of the spectrum.

Assumptions

Downpayment: 20%

Closing Costs: 3%

Amortization: 30 yrs

Int Rate: 5%

Materials: 8% of gross (plug)

Insurance: 30 per door/mthly (plug)

Taxes: $7k (plug - assumed higher in CA)

Management: 8% of gross (plug)

Garbage: $100/mthly (plug)

Misc: $2400 (plug - assumed unaccounted exp)

Capex: 8% (plug)

* I hope this helps and makes sense. The BP community has tremendously helped ignite building my portfolio so I love giving back. Best of Luck!

@Shane Gaboury I would personally stay away from any condo investment because the economies of scale (only 1 - 3 doors), the special assessments that you have no control over and this is a speculation play. Most real estate investors goal for investing is to get more "control" and with this type of strategy you don't really have as much. I would be very careful and look at the condminium association itself to see how they are governing the complex. I personally invest in apartment complexes where I have a lot more control over my investing and potentially gives me the opportunity to scale a lot quicker by bringing on more investors. This again comes back to "your" personal goals and where you would like to be like in 3, 5, 10, or 30 years down the road. I would take that $60k you want to use on a condo and parlay that with other investors and go after a bigger deal than just 1 condo. I've built a financial model that I help other investors analyze deals so let me know if I can be of any assistance. Best of luck!

@Dillon Beard I did a quick analysis on this deal through the financial model I built and this would be a horrible investment as you have already seen from your analysis and mine below. Simply put, there isn't enough income coming in from this property that would yield a positive cashflow even with all 4 units being rented out. This is the problem with these smaller deals because just like in any business is comes back to sales or in our case, rental income. That's why I personally invest in the larger apartment deals because of the economies of scale although this is not for everyone and you should invest according to "your" specific financial goals. I have plugged in your numbers and added some other parameters to the analysis. I have only shown years 1 - 3 for simplistic purposes, but have model built out for 30 year projections.

Assumptions

Downpayment: 20%

Closing Costs: 3%

Amortization: 30 yrs

Int Rate: 5%

Material: 8% of gross (plugged)

Misc: Added the PMI to roll up here on the P&L

Vacancy: 10%

* I hope this helps and makes sense. This is a sample and part of the full analysis that I do when preparing executive summaries for raising private money, so if you need more detail than what's provided just let me know. Please let me know if I can be of any additional assistance or if you have another deal I can help you analyze! The BP community has tremendously helped ignite building my portfolio so I love giving back. Best of Luck!

@Jason Lowery To me this is a no brainer to invest the money in some cashflowing rental property (preferably MFR than SFR) because houses to me is a speculation game hence the 2008 housing crash. My personal goals is to own as many doors as possible, but again this comes back to your personal goals. You can always get a gym membership for like $30 a month and enjoy the pool, hot tub, sauna for a percentage of the costs of building your own. If you are rich and have money to play with, then I would say go for it, but if you are counting on this money for investment purposes and building generational weatlh, I say invest all day. If you ever need help anaylzing deals, I've built a financial model that I help investor look at deal so feel free to PM at anytime. Best of Luck!

@Rashad Jones Jennings I'm in the apartment space and looking to add to my portfolio another 30 - 50 units like yourself. I've been analyzing deals daily through this financial model I built and love giving back and helping others with their search as well. There are some examples on my website and you can look at some of my previous posts on BP to see some examples. I have also been looking pretty much all over the southeast like Alabama, South Carolina, Tennessee and Florida trying to find value add opportunites where I could double my money in 3 - 5 years with a 10% COC while I wait. With compressing cap rates, this as been tougher to find as I'm sure you are aware of, but would like to jump on a call to see how we can help each other out. I've been speaking with investors on BP and I personally have a few individuals ready to jump on the right deal that meets my parameters. PM if interested and we can schedule a quick 30 minute call.

@Melvin Hazelton Welcome to BP! I'm an investor in the Metro Atlanta area and the best way of finding deeply discounted properties is through networking with local investors/agents/brokers and driving around and mailing/speaking with motivated sellers. The timeline for this all depends on your drive and work ethic to make it happen because nobody will give you anything in this business. You are in the right place with unlimited resources so make good use of them. Best of luck and let me know if you need any help analyzing any SFR's or the larger commercial apartment deals!

@Alina Trigub You didn't really answer the questions, but yup that's the name of the game is patience and sticking to my numbers like I have done been doing. Best of luck 

@Peter Bui So I did a quick analysis on the deal through the financial model I built and this doesn't look like a good deal at all even with missing expenses that you can see from the below charts. The last two charts indicate the purchase price ($160k) that makes the most since, but again it looks like there are some expenses missing so I would be careful with this deal. I personally invest in apartement complexes and the problem with these smaller deals is the economy of scales and only having 3 units bringing in all your income and what if 1 of the 3 units happens to go vacant (trust me this will happen), then your cashflow could potentially be wiped out for the entire year. Not trying to discourage you from these type of deals, just want you to be mindful of the challenges you could face coming from my experience and the many investors I personally know.

Assumptions

Downpayment: 20%

Closing Costs: 3%

Amortization: 30 yrs

Int Rate: 4.3%

Materials: 8% (plug)

Maintenance: 8% (plug)

Capex: 10% (plug)

Makes sense: Purchase Price @ $160k

* I hope this helps and makes sense. This is a sample and part of the full analysis that I do when preparing executive summaries for raising private money, so if you need more detail than what's provided just let me know. Please let me know if I can be of any additional assistance or if you have another deal I can help you analyze! The BP community has tremendously helped ignite building my portfolio so I love giving back. Best of Luck!