All Forum Posts by: Adrian Mata

I'm looking into this right now. I've been picking it up the last few months. I tried giving them deposit slips but have had some difficulty. "I don't know where the bank is"which is a solvable problem. My biggest concern with the deposit information is they'll have the ability to make a partial payment. I'm looking into paynearme and paylease. From reading this, I should just old school it and create a PO Box, give them preaddressed envelopes, and go to the box on the due date.

@diego corzo ...We bought it together so we're both on the deed. You can't really buy a property with an LLC if you're getting a mortgage here because your LLC won't have any credit. They'll let us buy it as individuals then quit claim deed it to the LLC that we set up.

PS...I tried copying and pasting and that isn't working. I also don't see any lists. I'm on a work computer though that might block popups.

@Joshua Dorkin you just want the price of the house and the rents?

Price: $45,000 with a new furnace installation
Rents: $675 per side
30yr mort at 5.1% with insurance and taxes included $350 per month
We do have a PM. They charge 10% gross rents.

We bought it with one side empty. This was leased out 2 wks after we closed.

In repairs so far, we're going to have to spend $1020.

After being on Biggerpockets for over a year, I finally got my first rental property with a partner. It's a duplex. So far things have been going ok. The number one thing I'd tell anybody reading these forums is that NO DEAL will ever be perfect. You just have to find something that's as close to perfect as you can get. There will always be something wrong with a house or some small improvement it needs. Anyways, I'm a landlord now and hopefully for the rest of my life. I want to thank Biggerpockets for the wealth of knowledge and understanding. I recommend this site to others all the time.

I was fishing for different listing opportunities and that meant calling a variety of different numbers. I did not have an agent at this point. I got a call on that Monday trying to set up an appointment for this house. We (myself and realtor A) set an appointment for the next Friday to see this specific house.

Literally the next day or two later, I got a phone call from a former associate that I had known in another line of work. He told me that he is becoming a realtor now and he's just calling different people he knows to spread the news and maybe get some referrals. Great coincidence!

Through the next weeks we (Realtor B and I) looked at a few listings but they each had various problems.

I went and ended up meeting Realtor A at that broke down house. He talked to me and told me he has a few pocket listings that would interest me.

He just contacted me a couple days ago and asked me for "proof of funds" or a "letter of approval" from a bank. He said the seller's requested it.

Should I let Realtor B know about this potential deal because I have been dealing with him in the last coming weeks? I haven't signed anything official with anybody but I don't want to do anything questionable either.

Is submitting a "proof of funds" standard practice? I have been asked for this a couple times. I sent him a screen shot of my investment account.

I would try to get into apartments and multi-family homes. I'm trying to get into them now actually. I'm in Indianapolis too.

I really appreciate your feedback.
@Harry M.

@Harry M. The bank that I get a mortgage through should be able to tell me my closing costs. Right? Thanks for the tip to reduce closing costs. Hmm alright, I'll change it to 25%. I didn't know that they up it to 25% for a multi-family.

As far as the rate goes, the mortgage banker at Chase told me he'll match anything I can find elsewhere.

Repairs - well, I am new to this so I don't know the intricacies of inspecting a house. There is a toilet in the kitchen of the side we walked through. (Literally, there is a toilet hooked up and everything in the corner of the kitchen). That needs to be moved or the kitchen needs to be reconfigued so there's a small bathroom as you walk through the kitchen.

Prop mgmt - They're supposed to be a good firm. A lot of the others seem very fee happy. I'll keep looking though.

Insurance- I got the State Farm quote today! $1554 annual with an $83 charge back for an alarm system so that would come to $1637 per year without one.

Water - I was going to ask for documentation from the seller if the #s work out.

@Matt Devincenzo

1. Just 10% of gross rents?

2. I got a quote from State Farm today and it came to $1637. I'll adjust it in my equation.

3. What does COC stand for? I got the taxes from the realtor and the MLS. The house is on a busy street pretty close to downtown.

I'll check if it's separately metered. From these calculations, I'll definitely have to adjust the purchase price.

What does DP stand for?

@Tom Goans You're able to get your down payment back within the first year? Wow.

Alright, I will not estimate. I don't know what to use for maintenance though so that is why I used the 10% equation. I don't know what is going to happen so how would I be able to allocate future maintenance costs? There is a toilet in the kitchen that needs to be moved or adjusted into a half bath. The furnace is a bit old as well. I still have to walk through the other side though. I have to get a home inspector and bids from contractors to see how much that would cost to take care of.

Ok so you take all real costs and double them and you double the repair period for vacancies, what do you use for maintenance costs?

Well as far as the rent, a 5 min drive to another duplex that is just a 2-1 gets $600 per month. I don't like that one as much as this one because of the neighborhood. I haven't ruled it out yet though. To answer your question, no, I don't know the demographics or median income. I have a good understanding of market rents though. How would I find the median income?

Yes, insurance premiums and taxes are calculated at a 2% increase annually.

I was going to use another 10% or get documentation from the seller. I have heard that I could contact the water company as well.

Landscape....in Indiana, the owner is responsible for "common areas". Both sides are separated and fenced off. The seller has stated in the MLS that the tenant is responsible for lawn care. I was going to talk to the current tenant about this. Is that seen as disrespectful? I don't think I can believe the seller because he stated that his expenses are $0 which can't be true.

What do you mean by hard holding costs?

8 percent represents 1 month of vacancy. I will have to adjust this though for the repair period as you suggested.

I'm just starting and trying to learn the right way to do this.

I found a duplex that is pretty nice in Indianapolis and being that I'm from WA and CA it is very reasonable but when I use the analysis given, I'm having trouble. Am I doing this correctly?

These are 3-bed 1-bath, and should bring $600 per month each side quickly. We want to create another bathroom and reconfigure the kitchen.

As-is with a mortage of $361 and using the 50% rule...

Gross rents $1200 per month ( 50%) = $600

$600-$361= $239 per month cash flow

Purchase price: $ 79,500
Closing Costs: $1988 - computed from my spreadsheet
Downpayment: $15,900
Loan amount: $63600
Repairs: $5000-I have no idea. I'm totally guessing.
Rate: 5.5% - I got this from a mortgage banker at the local Chase
Term: 30 years
Mortgage Payment: $361

Vacancy: 8%

Gross rents: 13248 - with 8% vacancy included
Property Taxes: $2036 annual
Insurance: $480 -I estimated that at $40 per month
10% gross rents for maintenance-1440
10% property management fee- $1440
1st month's rent for property management leasing- $1200
Administration- $1500 -cost to set up the LLC with a lawyer
Yearly cash flow: $934
Cash on cash return: 4%

The MLS sheet says the tenant pay all utilites but I'd have to pay the water. I didn't allocate any advertising costs because the PM does that.

Am I on the right track with my calculations?

25200(0.4) = 10080 NOI

10080(10)= $100,800 sales price at a 10% cap rate

I think you should be careful assuming 100% occupancy.