All Forum Posts by: Dustin Rand

Sorry one more question...

How much cash on hand is a good amount to have when managing an apartment building?  Is there a formula for such a question?  A certain % to the building value or perhaps a multiplier of the average monthly expenses?  

After many years of saving I think it's finally time to pull the trigger on a multi family building later this year.  But first, I'm hoping to get some help from the smart folks on this website.  

The apartment building I'm looking at is in the midwest where I have family.  Cap rates in the area go from anywhere to 7-8%.  

I have a handful of elementary questions to get myself started...

1.  How much can I afford?  400k saved and a 300k annual income.  I'm ok with stretching myself thin for the first year or two given my current income and ability to save.  I'm also ok with deploying all 100K as I have reserve cash on hand.  

2.   How much tax will I pay on my earnings throughout the year?  What if I put 100% of my profits back into the mortgage...would I still pay my normal taxes on those earnings?  

3.  What all is considered tax deductible throughout the year?  I assume less for me since I would be living in another state while owning this property?

4.  How much tax will I pay when/if I sell the property?

4.  What type of insurance do I need to carry and what would be the approximate monthly expense?  I assume this can vary depending on the building and the number of units?

Hello all,

Myself and two of my friends and soon to be business partners are on the hunt to buy a building, possibly some land.  We are each bringing $75K to the table and each of us has 10+ yrs in RE experience.  I'm a commercial leasing agent, one of my friends is an architect, and the other owns his own construction management company.  

We've thought about doing one of the following...

*Buy a distressed property, likely somewhere in the Midwest (Des Moines, Saint Louis, KC) and rehab to flip.

*Buy an older multi family unit/s, rehab and either flip or re-lease at higher rents.

*Buy a few acres and break ground on multi family units.

But none of us have been able to settle on which we should go after and we're not making much progress.  Any thoughts?