All Forum Posts by: Dan Jones

It is not under contract.  I was just in the analysis phase of the deal and trying to make sure that it made sense.  Just in case you were curious what I was working with....

Asking Price: 108K, Term: 30 year, Bid (never entered): 83K.  I had not talked with them about seller financing.

@Thomas Fosnaugh - Thanks for sharing.  That is spot on what I was looking for and really helps me.  Seems like 1250$ would be pricing over the market in the area.  And I've heard that is a pretty basic rule to not be the best house on the neighborhood, so sounds like I'd have to get a sweetheart deal on the asking price, because the actual rent number is likely closer to 1000$ based on all the feedback and info I've gathered.

@Alex Cotton - I've been using rentometer and hotpads to try to find comparables.

I think I've pretty much concluded that this deal is a stinker.  Here is my thinking... from comparables that Thomas gave, as well as other research it looks like the end rent after putting on the 2 car garage would be around $1000.  Further from talking with the real estate agents I can guess that the after improvements and repair value would be around $110,000.  So with a weak rental value and only getting around 8000$ of value out of 25,000$ in improvements its a total stinker.  The only way to make the deal work would be to pick up the property around 70,000 or lower.  With an asking price of 108,000 that isn't going to happen unless the house goes into foreclosure or the seller gets desperate.

Thanks everyone for the help! This has been a great learning experience. Analyzing properties seems really easy but getting the right numbers seems like where experience and education is really needed. Onwards to look for the next deal - hope to maybe see some of you at the IC and CR REI meetups this coming week!

Thanks Jonathan,

According to my numbers 1250$ gets a 300.34$ cash flow @ 18.97% cash on cash.  1100$ drops to 175.92$ cash flow and 11.11% cash on cash.  I put my meh category at 200$/15% so maybe that is just high newbie standards.  I'm definitely going to put some more leg work into this and call up some credible property managers in the area.  Any suggestions?

The garage seemed like a good idea to me as every other house on the block has a garage and talking to the seller he said that potential buyers have said their biggest complaint is the lack of a garage. I can definitely see that too having lived in Iowa with a garage and without. Talking with another REI professional with 10 years experience in the area he even added that in this area garages are big value items for rentals. Does that jive with your experience at all?

I certainly hope Rockwell Collins doesn't leave the area - I work for them full time :)  As for Zoey's I'm a Tomaso man.  But, when Zoey's come out with the Zookie that alone probably raised land value in the area, lol.

Thanks for the advice Austin.  The exit strategy of selling the property really gets brought into question when I put a $20,000 garage on the property that my real estate agent will increase the sale value by 8K.  Basically means I have to underbid the sale price by a ton.  Much appreciated, though I had let the exit strategy slip my mind.

I'm looking to make my 2nd deal and I really stumbled into my first deal so I'm pretty much a newbie.  That said I've been trying to analyze a deal in the Marion / Cedar Rapids area.  The property is on 3rd Ave in Marion, right across the street from a school.  My numbers are telling me its a good deal (19% cash-on-cash, 300$ cash flow) if I can get it for a good price below the asking.  The big question though and what I need help with is... will it rent for 1250$ which is what all my math hinges around.  If it goes for 1100$ its meh, 950$ and it starts stinking.  The street doesn't have any other 4 beds, 2(ish) baths, with a 2 car garage.  There are plenty of 3 bed, 2 bath, 1 car garages around that looks to be in the 1000$ rental income range.  I should mention that part of my analysis includes putting down 25,000$ in repairs/improvements (most from building a detached 2 car garage) with a home equity line of credit.

Basically I'm looking for advice on if other investors in the area think of this is a good deal or a stinker?  Would a 4 bed, 2 bath, 2 car garage rent for 1250$ in the area?  Would improving the house that much make it too good for the neighborhood?  I was envisioning the rental tenants being a small family with kids that wants to live in a nice place close to school and downtown Marion.  However, I recently talked to a real estate agent about the location and I got a bunch of ice water poured over over my idea.  She wasn't a rental expert, more of a buy and sell realtor.  Anyways, looking to get some more expert advice.

Please let me know too if I need to provide more detail too.  I'm not sure how much detail to post on BP.

Thanks for all the great thoughts!  My concern had been the lack of market for larger single family homes but it sounds like its there and quite stable.  Also minimizing the amount of hands on time is big for me as I'm already working a full time job so the point that a single family will be much less hassal than multiple individuals is well taken.

Thanks for the insight guys!  @Andrew Dunham - really appreciate the local tip.  Seems like its just not a smart move to try to split up a single family unit into a multi tenant rental.

Julie Freeman*

Typo correction

Hi Chris,

There is an Iowa City/Cedar rapids REI group that meets the third Wednesday of every month. Their meet up link can be found here... http://www.meetup.com/Iowa-City-Area-Real-Estate-I...  .  The next meeting is on the 17th for them.

There is also a Cedar Rapids REI group that is meeting on the 16th this month. To get into contact with them you can reach out to Julie Freemon. This will be my first time going to either meeting so I'm sorry that I don't have more info but that should get you started.

In my area there are multiple single family houses that have 3+ bedrooms and living area enough for a multiple individuals but would be a smaller market for a single family (I.e. the family would either need to be fairly large or convert the extra bedrooms into a different type of space).  When renting out a large (1500+ square feet, 2+ bed/bath) single family home what is the better strategy to take: rent to a single family or rent to two or more individuals?

Are there legal or ethical questions that should come to mind or is this purely financial?

Should I focus only on smaller single family houses?  What are some strategies to fill a bigger single family house?