All Forum Posts by: Dustin Schaefer

Hello BP! I am hoping to get an idea of what landlords in the Madison, WI market are paying for snow removal and salting. Do you salt every visit or restrict that to only certain times/times? I am currently paying roughly $190/trip for snow removal and salting for snow accumulation of 1-3”. It the first multi-family I’ve had to use snow removal service at and want to make sure I’m being fiscally responsible while still ensuring my tenants safety. Thoughts and suggestions are greatly appreciated! Thank you for the help! Dustin

Craig Devine - I love this post! Honest and straightforward! Congratulations on jumping in with both feet. Dig into the forums and reach out to us if you need some advise- keep going!

The deal looks best if you can finance the rehab using leverage. Cashflow per door is still respectable. From what I see (just the numbers and not knowing the FL market), the deal is fine. Once you get in, get creative during your rehab and find ways to increase monthly rent from where it is currently and this deal looks even better!

@Sam Bates, @Jason Muenchow Sam is absolutely correct. I rec'd same cashflow, but factored 10% vacancy. If you roll rehab cost into loan, your COC would naturally go up because your actual cash investment is lower.

Great way of looking at it - as long as you can finance the rehab costs. 

Good luck!

50% rule and 2% rule are just general rules of thumb. They aren't true for every scenario. 2 of the duplexes I own don't meet either and still cashflow well. Do some comparable shopping in the surrounding market to understand what the GRM in the area is. Also ensure that your COC return is within your requirements. Remember, you can make 7-8% in the stock market. From rough calculations, COC return looks to be around 7.5% after rehab. That calculation consists of P&I+taxes & insurance, R&M 5%, CapEx 5%, Vacancy 10%, Prop Mgmt 10%(always include when making the buy decision - one day you may not want to manage it and will lose that cash flow).

There is still cashflow here, but return is relatively soft. Up to you, but maybe there's a better deal out there. 

Maintenance figures don't need to be set at 10%. That would be quite conservative. I would use 5%. Same; with CapEx. The deal is pretty tight when everything is considered.

P&I + Tax & Ins : $898.37 (5% rate, $1,200 insurance- insurance in my area is no more than that)

Repairs: $85 (5%)

CapEx: 85 (5%)

Vacancy: 170 (10%)

Management: 170 (10%)

Total Expense: $1,408.37

Cashflow: $291.63

COCR: 9.4% (w/20k repair costs)

Throw it in the rental calculator and check it out for yourself and make sure you verify your thoughts on rent and ARV

I continue to manage my properties while I'm away. That's just my choice - and I only have 6 units. I use google voice to interact with my tenants for everything so their messages (voice or text) are emailed to me and I can access them wherever I have a wifi connection. It hasn't been an issue thus far and I've been out of country several times.  

If this makes you uncomfortable, there are options for interim management from many property managers. I would reach out to a local PM company and ask them for their charges for temporary coverage. 

Not sure if this helps, but good luck!

@Mark Douglas, sound advice. Doing that today! 

@Daniel O.- loved your response! Definitely gave me a lot to consider. I never thought about the tax ramifications. Every time I use BP, I come away being better for it!

Thanks for being awesome guys and gals! 

@Meghan McCallum, your response was perfect! Thank you for the advice! Plugged the deal into Rental Calc prior to posing the question and found the same result you're pointing out - wasn't sure if I was misinterpreting something. It's clear to me now. Thanks again! 

Hey Bigger Pockets!

Looking to get some advice on an 8 unit apartment building that I'm looking at purchasing. Here are the numbers:

Current asking price: 680,000

Rent: Monthly Rent: $5,585. AVG MO Rent/unit: 700.  Annual 67,020.  Looks to be under market rent currently with room to increase about $125/unit. Not much to be done with respect to repairs as it was recently renovated. 

NOI: $43,943: w/prop mgmt: 37,133 (10%)

Cap Rate right around 7%

Nice area. 

I'm using NOI dived by the cap rate to get a price of $530,471. That's after taking out for property management. Without, I'm at $627,757. Obviously the deal looks far better at $530,471, but should I be using the NOI after prop mgmt fees are subtracted, or am I living in fantasy land?

 Anything else I should be looking for or using to arrive at a good price? After pushing up the rent to market, cash flow would hit about $125/door. Currently priced, it's cash flow negative and that's my concern. Having never bought anything larger than a duplex, I'm curious if this is common in apartment deals of this size. Still feels over priced and I'm looking for confirmation.

Thank you for the advice!