All Forum Posts by: Dmitri L.

Don't forget expenses. Cost to replace a roof can be absorbed much easier if your rents are 2000/mo, rather than 500/mo. 

You probably won't make any money at either extreme - 30k junkers and or 1M McMansions, but there's a sweet spot in the middle there for rentals. Where exactly will depend on your market, strategy, etc.

Good luck!

@Nick L.

I agree with everything except for class B/C apartments. If you think class A is being overbuilt, there will be an oversupply of these on the market. Some of these will get priced down to compete with B class properties. Some B properties in turn will fall through to C, and C.. Well you get the picture

Hotels.. Hmmmm ;)

D

If you subtract the ARV from 70%, your offer price will be negative ;)

On a serious note - good luck! Maybe in Garland, but not Richardson or Plano.

Why wait? 

@Dan Baker

Last time we ended up sticking around for a while, so I'm sure it's not a problem if you come a little later. 

@Matthew Pinkston

Not sure I'll be able to make it, yet. Let me confirm early next week. Thanks for setting it up!

it's very difficult to genralize because everything depends on your current situation, and your goals.

Remember that unless your state has no public infrastructure whatsoever, they need to source those revenues somehow - the big ways are income, property, business, and sales taxes.

When people try to sell a particular location to you as the end all be all of investing, they are likely omitting one of these costs to make the overall picture look much more attractive. In reality, the factors tend to cancel each other out due to market forces setting appropriate rent/property value numbers that make sense to investors and retail buyers. It wont be perfectly equal of course, but definitely beware of anyone claiming a single factor - such as lack of income taxes or sales taxes - is the one and only reason to invest in their area.

What I would urge you to do is run a few scenarios that take a look at the end result for your situation, as well as what that would look like in the future once you work up to your desired number of properties. 

For example, you may find that the cost of paying income tax and paying someone to file an extra return for the small amount of positive cash flow that you generate from a few properties - would be less than paying 2-3% on the total assessed value EACH YEAR in higher property taxes in an income tax free state .

Good luck!

Dmitri

@Brian Lenz

Looks interesting

Can you share any more details on the seller's situation ? If it's a small cosmetic work remaining, why don't they finish the rehab themselves?

Is one of the bathrooms missing?

Thanks!

Dmitri

@Carol Kohn

You mention an NOI of 1171/mo on gross rents of 1700/mo, so the expense ratio is only about 31%. Are you accounting for all 5 main expense categories ? VIMTM, pronounced "vim-tim":

• Vacancy
• Insurance
• Maintenance
• Taxes
• Management

I would expect the expense ratio to be in the 50-60% range if all of those are accounted for.

Also, to get the most value from others' experience in this deal analysis, you might want to consider sharing more specifics on the property location. Since it's under contact, there shouldn't be any issue to even post the address if you feel comfortable doing that. Based on that, someone familiar with the exact area might chime in about the expense/rent estimates.

The numbers you posted are really just a math problem, so having someone double-check those doesn't give you much value. The best use for the deal analysis forum IMO is to get others with more experience to chime in on the "soft" estimates, to tell you if you're in the right ballpark, or way off

Good luck with the close!

-Dmitri

This may be highly relevant to this thread: 

https://xkcd.com/552/

Or it may not be. It's hard to tell.

I think it's more common than we'd normally think. Going through the motions of an eviction even though you already have the property back, would prevent them for example from claiming that they were just out of town on a long trip, oh and btw where is that gold watch I was keeping under the pillow?