All Forum Posts by: Nick Miller

 >Dan, a comment you made that I don't concur with is the cap ex on a new build of 300/month, unless it was a low quality builder (I have no idea who the builder on this property is). We bought a new build years ago (and sold it 3 years later when the market turned up) and our TOTAL cap ex was $550 over the 3 years

Question: have you ever filled out a spreadsheet of cost and lifespan of each product of a property?  I will predict you have not.  At 3 years none of the costly items have hit their end of life.  Ideally you have not replaced roof, hvac, flooring, kitchen, bathroom, fencing, windows, foundation repairs, hard scape repairs, electrical, plumbing, etc.  everything has a lifespan and if you do not evenly allocate for those expenditures, you have not allocated for all expenses.  I will tell you that the $300 i used in the above is far less than i allocate in my market.   I took into account a likely cheaper labor rate but will say when we owned units in gulf shores that i was not encountering that low of a labor rate.  A underwriting that i recently completed on an offer we made i used $600/month maintenance/cap ex and believe it to be as accurate an allocation as i could predict (4/3/1, 3100’, class a finishes).

I use $300/month in my market on an attached 2/1/0, ~700’.  Again i believe it is my best estimate of actual sustained maintenance/cap ex in my market.

I did an estimate about 1,5 years ago on a emerald coast 3/2 condo with class a interior finishes and came up with $300 for just the interior (class a finishes cost more).  This spreadsheet was reviewed by our RE agent and his input was used on costs in that market.  So multiple eyes and local expert providing local cost and input on lifespan.

Here is an example that has a part that is more expensive in my market than other markets (unlike most parts that are the same everywhere, so in this case your cost should be significantly less due to both cheaper part and cheaper labor): $1600 40 gal water heater installed (this is good price for a plumber, a little high for a handyman) with expected life of 12 years (i have some that go 20 years and some that die in less that 10 years (mostly rheem die in less than 10 years), 12 years is fair life expectation.  $1600/12 years/12 months/year is $11.12/month.   Make a spreadsheet of items and life span and see what you calculate.  Also class of tenant plays a role.  In class c if rug is over 5 years old it probably needs replacing.  Same carpet in b+ area will get 10 years plus.

i stand by my sustaining maintenance/cap ex estimate and hope my response indicates why.  I invite you to perform the exercise and find what your cap ex allocation should be.

certainly $50/month for maintenance/cap ex and misc is not enough and this property is definitely cash negative when properly allocating for expenses.  

By the way the recent underwriting that i referenced above showed the purchase would be cash negative first year and sustaining for extended duration, but i still made a competitive offer. I have never done that before.   I am finding the market challenging especially as it relates to cash flow.  I do not do flips, so I am finding the market is more challenging than any time since 2008.

 Good luck

Hello Team,

After 6 months of analysis and back and forth, I had good success in Ocala, FL an KC-MO, but I have my first deal closed in Huntsville(more later on deals analysis). Still not getting any luck with Chattanooga which is another market I am closely trying. 

I would like to know, if you have good success with Property Management teams in Huntsville market as my property in in C area(35810) and like to get a very good team who can find good tenants and handle the property well.

Also, if you had general contractors who you had success with as well, as I am looking to do new flooring to this home. 

Please DM or PM me me. Thanks, Happy long weekend!

There are a lot of unknowns here. How nice is the trailer? How nice is the neighborhood? Will the fence repair last 3-5 years? Is the fence so bad that it would prevent people from renting the trailer unless it's scraped/painted?

You should have assessed the cost prior to purchase and used that as a negotiating tactic or been prepared to handle repairs after purchasing. I would assess the market, the neighborhood, and the individual property and make a decision about what is appropriate and necessary.

Sorry I can't answer better without seeing it.

That's a tough sell, @Nick Miller!  I loathe spending money on fences, and usually I'm looking at under $3k for replacement.  Double and triple that and I get the heebie-jeebies.

At the end of the day it all comes down to safety, function, and returns.  If the improvement doesn't optimize or ensure of of these, I wouldn't do it.  

If you went with the $1,350 for repairs and did not have the rest of the fence scraped or replaced, would you be creating a dangerous or non-functional situation?