All Forum Posts by: David Terbeek

I think Matt is right to just use an approximate NOI. All you really need is the purchase price, rent and taxes - all available in most MLS and Zillow type listings. Then just have an estimate for insurance, maintenance, percentage management, percentage vacancy loss, etc. Assuming you are comparing generally similar properties as you indicated above.

The MLS will provide some workable deals, there are also online auctions like RealtyBid, or physical auctions like the sheriff sale and Hudson & Marshall. Or, you can network with people on BP that have off market deals. In the end, those areas are sought after by many investors so you will have to work to find the one that is right for you.

Isca-  Unfortunately, Federico's answer is probably accurate.  We see that the turnover costs are inversely proportional to rent amount.  The lower the rents, the higher the turn over costs.  A Garfield Heights double is in the middle of the spectrum.  I would say that you should at least plan a few hundred after almost every tenant but it could go up to $1,500 to 2,000 if they were hard on the unit.  An eviction turn over is going to be higher, three or more years in the unit will be higher.

One tip, make sure your contractor uses a slightly better paint with a sheen, NOT flat paint.  If you have a little dirt around the light switch you can clean it with a magic eraser, with cheap flat paint you will be painting the entire room.

Edmund- BP holds local meetings so have come to the right place. Also, the Greater Cleveland REIA meets in Independence. It is not free but certainly not expensive. Both would be good local places for information.

I am surprised to hear you say LoopNet is not a good place to look.  It lists both traditional (ie full price) properties as well as distressed, value properties.  I wouldn't use it as your only source but wouldn't rule it out.  I'll be interested to hear what others say about LoopNet.

In OH, the court will move them out once you get the judgement so we don't seem to have quite the same situation.  However, given your circumstance it might be best to collect the subsidized amount for the next couple months then move for eviction at the earliest time that will yield a move out order once the winter moratorium is lifted.

Property Management is not for the faint of heart, I agree with @David Dachtera - it might be time to hire a good PM.

Kevin-  Most people are going to brag about the best deal they did and maybe even exaggerate a bit.  Sure 20%+ returns are possible but not necessarily the norm.   You are well advised to consider ALL of the costs that go in, I can't tell you how many times I see ads that "forget" to consider many of those costs.  

A very important consideration is the area, tenant and associated risk of the asset. A new build with a high income good credit tenant is not the same risk as a 50 year old home with a low credit blue collar tenant. The first may have a lower CoC return but might still be a better investment. Of course, measuring that risk is the delicate task of a great investor.

Finally, if you are worried about your CoC diminishing over time, you can always refi the property to return the leverage and restore the return. This is very typical in commercial properties (which usually have a balloon feature on the loan) but can be used in SFR as well. Happy investing.

@Joe Coyne - I know you mentioned that the rents were below market so this might be a moot issue but...  We have found that the lower the units are on the price spectrum, the more frequently they turn over and more repair work is needed between tenants for both poor living habits and damages they cause.  If you change tenants each year (or more frequent due to eviction) and you need to do $500-1,500 per unit in suite turn, it could drastically change the math you are trying to evaluate.   If it is in a trendy area and you can increase rent significantly and get credit tenants this point is moot.

Amit-  As far as suburbs, Cuyahoga Falls has a few opportunities in your price range but would a solid area for rentals.  

Vince-  Are you looking for hard money to fund deals or longer term but non-traditional financing?

Billy, Ryan is right on.  Undisturbed asbestos is not dangerous in itself.  

The other  consideration is if you ever have a water issue in the basement (happens in 60-100 year old Euclid basements).  These tiles will start to peel up.  Now you have the environmental asbestos issue on top of the water clean up efforts - not a good combination.  It is often better to do the preventative solution on your timeline at less cost than in an emergency situation.

Amit-  Your question is fair about whether Akron's future is behind it.  Like many other rustbelt cities, Akron is trying to rediscover and re-brand itself.  Anchored by the Goodyear Polymer Center I recently read an article that dubbed it the center of "Polymer Valley".  University of Akron was close to being renamed the Ohio's Polytechnic University.  No doubt that things have been tough but it is relatively stable with some signs of promise.