All Forum Posts by: Dave Friedman

@James Wilcox. Thanks. I'd done a cursory search for market-specific forums, but hadn't done a thorough one yet. I'll take a harder look. 

Thanks, @Mike Dymski -- that's some good stuff to keep in mind. I also listened to a good BP podcast today where one of the guests said that he basically doesn't expect to get any positive cash flow from his properties for the first 3 years. I kind of like that advice, too.

I think part of the point of Brandon's numbers is that you're assuming some sort of average life remaining on all your components. But some will last longer than that average, and some will last shorter. So, for instance, you may only have 2 years left on a property's HVAC, but you may have 15 years left on its roof. In 15 years, when you pay for the new roof, you'll be 13 years into the "new" HVAC. So you basically always need to be socking away some constant amount of money. For this reason, I'm not sure how much mileage I'd be getting out of estimating remaining service life on a line-item-by-line-item basis.

So where *can* I adjust Brandon's numbers? By getting solid numbers for what replacements would cost for each line item. For instance, if a roof is going to cost me $3K rather than the $5K, I can substitute that figure into his table, and so on. At the same time, maybe a thing to do is just let the property pay for itself the first few years, and not assume any positive cash flow at all--just keep all the proceeds in that property's bank account. Hopefully, I can gradually raise rent as the market (and upgraded property condition) allows.

Sorry, I'm kind of thinking out loud while I reply to you. Thanks a lot for helping me think about this. :-)

@Mike Dymski, @Andrew Johnson, thanks very much for your replies. I'm obviously really new to this, and I really appreciate you guys' insights.

Andrew: I didn't put it very well when I talked about "keeping down" those expenses. What I meant was that I need them to be at those levels--non-artifically--for the transaction to work for me.

So really I guess what I was asking was, "How universal should I understand Brandon's numbers to be"? Like, if I'm buying a small house in a kind of so-so neighborhood in a relatively inexpensive part of the country, could I assume that maybe my cap ex costs would only be x% of what he's offering as averages?

(Actually, that'd be really cool if practical: some sort of multiplier to apply to his numbers for major metro areas. Based on what I'm learning about roofing costs, for instance, I suspect that Atlanta may be about 70% of the numbers he's suggesting.)

Thanks again--I appreciate your sharing your perspective. :-)

Welcome, Sandra! I'm new, myself, and excited about getting started in the RE investment world.

I like that you've got some concrete goals to start with, and am looking forward to hear about your journey as you move forward. :-)

Hi, all. First, apologies if this is the wrong place to put this question--my buying a place hinges on it, so I hope this is the right place to post.

Anyway, total noob question. A lot of you are probably familiar with Brandon's article on estimating cap ex, where he offers ~$180/mo as a ballpark figure for SFR residences.

What I'm wondering is, how "universal" is this rule of thumb? I'm looking at buying a $60K SFR, with a rent of $790/mo.

To achieve a bare 10.2% CoC return, I need to keep cap ex and maintenance down to a monthly total of $125.

What am I missing? How does anyone buying SFRs at this price make it work if $180 is more-or-less where it's at?

Thanks so much for any thoughts--this is really preying on me.

Hi, @Scott Hesseltine. Welcome to BP--I'm brand new myself.

I've actually been curious to learn more about the Lexington, KY market. (My current interests, for starters are buy-and-hold/cash flow.) I'd be glad to try to help you with any info you'd be interested in out here in the San Jose/Silicon Valley area.

Hi, @Chris V. Thanks for the recommendation. SF's a bit of a hike, but I'm looking forward to connecting with Boris and Oshi at the next meetup down in Los Gatos, more my neck of the woods.

Welcome, @Dustin Kroeker! I'm in San Jose, not far from SC. Will be curious to watch how you make out over there. RE in California seems so crazy-overpriced, I'd love to see how people make it work. (We're shooting for less-expensive parts of the country--we're just priced out of the local markets.)

@Metra Ulloa: Hi--thanks for the welcome. Yeah, CA is tough going. Curious to hear how you've made out in Stockton, especially since you were smart enough to buy during the downturn. Did you see the OOS meetup that Boris mentions upthread? It's a bit of a hike for you--it's in Los Gatos--but it sounds pretty neat. I'm going to try to make it to the next one, on 6/27.

@Maggie Wray: Thanks for the congrats! Jealous of you for being there on the ground. This whole thing feels like even more of a crapshoot from 3,000 miles away. :-) Still, will be happy to share my experience/whatever I manage to learn from this.

Hi, @Jared Romaine. Welcome! I'm very new, too, both to the site and the RE game.

Have you put together a spreadsheet to actually see what the cash-flow numbers might look like?