All Forum Posts by: Devin Monroe

@Nick Barlow

This is a good point. 6% COC but total return may be close to 10% which isn't bad. Being a stock guy it's hard to see such a low COC since there is a lot of working going into this investment.

@Russell Beach

Thanks for the tip! Glad to know that the numbers are being run somewhat accurately at least. All the off market deals that I see require 100% cash but I guess I could purchase and refinance it with a bank? I’ll keep looking though but I surely thought the 1% rule would have worked here without lowering my criteria. Thanks again.

@Patrick Liska

That’s a good way to look at it. But you are assuming nothing else goes wrong in the house when you need the roof. I may need to retool my numbers to be more accurate about cap ex.

The vacancy at 1800 includes the PM leasing fee (75% of first months rent) and one mortgage payment. So it’s right around 1860/year. That assumes my place rents 11 months out of the year and takes one month to fill. It doesn’t even take into consideration tenant turnover that could cost me a lot to repaint or change carpet etc. that’s why I’m a little worried about cash flow as swapping tenants every year I’d break even essentially.

@Andrew Rosenberg

Gotcha. My first time posting so my apologies for the confusion.

@Andrew Rosenberg

The actual loan is 550. Property taxes and insurance are about another 185. 735 total and it actually could be slightly more but those were the first numbers I pulled.

@Casey Crites

I wish I could be more like you and just jump in. I’m very cautious but know I’ll feel better after the first one. My numbers may be high but I’d rather that than be too low. But the 6% return is killing me cause that’s not very exciting. Hopefully it ends up better but if the house doesn’t rent for what I think it should go for the numbers could look worse. Just doesn’t seem like I have much wiggle room.

@Andrew Rosenberg

Great question! I am trying to aim for 3k in maintenance and cap ex. I talked to a real estate investor who told me his properties usually averaged around 200/month. I have my own townhome and over the last 5 years including all repairs I’ve prob averaged that myself. Now with larger things being done already (roof hvac and water heater) in the future it could be lower but I’d like to set my expectations there for my rental as to be conservative.

@Andrew Rosenberg

Hi Andrew it’s not so much the mortgage. Let me give you an example of what i mean of a house in Baltimore county and not even the city where taxes are higher.

145k home with 20% down Is 29,000 and another 8700 of estimated closing costs.

Rent - 1500 (meets 1% rule)

Mortgage - 735

Vacancy - 150 (covers leasing fee and 1 month mortgage assuming house rents 11 months out of the year)

PM - 150

Maintenance - 200

Cap ex - 75

Cash flow - 190 which is roughly 6% COC

This actually meets both the 1% rule and 50% rule (almost) but hardly makes any money with a PM. Is there something I am doing wrong here?

I would love some insight to this as I am a new investor (don’t have a home yet). I know most don’t recommend using a PM but I see myself long term with 60+ units one day and would eventually use one anyway.

Ok with that out of the way how do you all make money with a PM? Am I being too conservative? I'm in the Baltimore area looking at homes that would rent for 1500-1800/month. When I make assumptions for vacancy (assuming it rents on avg 11/months a year with 1 months rent taken away from the PM), maintenance and cap ex around 250-300/month abs property management around 8-10%. With all that out the way I maybe walk away with 200/month and that puts me around 6-7% COC which is not great. That also doesn't assume the cost of tenant turnover which would wipe me out.

Am I doing something wrong here? I’ve heard of people getting 10-15% with a PM but I can’t make the numbers work. I would love at least 10%

With 250/month per door but it’s not looking great. Any advice would be helpful. Thanks.