All Forum Posts by: Elliot Mendoza

Cap Rate? Define please. And what's a good number to look for?

Sorry if I'm mixing numbers or confusing people. Theres 6 quad's for sale.

I'm purchasing one at 330k, it's rentals will be 850x2 and 900x2.
There's one more being built just like it.

The other 4 are 325k and are currently all rented out for 765x2 and 795x2 respectively(slightly smaller, built less efficient).

Maybe I calculated it wrong but heres the numbers I get with 20% down:
325k
20% down = 65k
260k loan at 4% interest over 30yrs = 1,241.28
Tax + insurance = 646.17 monthly
Total mortgage: 1887.45
Rents are 765x2+795x2 = 3120 monthly
minus 10% PM - 312 monthly

Net gain: 920.55 monthly
Yearly: 11046.60

I -think- this is the right equation for ROI(?) but it should be:
11046.6/65000 = 0.16994 (it goes on apparently)
Then 0.16994*100 = 16.994%

Am I calculating this wrong?

Ah, yeah, I'm closing on my first quad on the 27th, using a VA loan.

Using the owner occupied loan, but the quads -should- rent out at 850 and 900. The asking price is 330k, tax rate is 2.65%, I've been told taxable value's is 80% so calculating for that. Mortgage is going to be 2,230.47, with rents totaling at 3,500 a month. I will be using PM due to the fact I'm military and tend to be gone a good bit, even so I -should- be pulling in over 900 a month in cash flow with a 0% down payment. Gives me enough room to have 1 vacancy and still make some money on the side.

What are concessions? And why should I be expecting to pay the buyer 3% in them?

But taking your adjustments into consideration, then I'd subtract 13k from 94.5 and come out with 81.5k. Got it.

Thanks for the pointers. I'm just looking for possibilities when I get back and what direction I should move towards in order to maximize efficiency and profit.

So I am deploying in a few weeks to afghanistan and did a bit of number crunching to see what I -might- have by the time I come back in 9-10 months.

I currently have 35k in the bank.
I make 5.5k a month without deployment or tax free benefits
And I own a rental in NC that appraised for 210 about 3 months ago, and I cashflow about 230 a month on it.

I -had- planned on purchasing 30k worth of gold prior to leaving but lets say I just leave everything as liquid for numerical purposes.

In 9 months, 5.5*9 = 49.5k not including the extra deployment pays(about an extra 500 a month I think) or tax free. So lets say 40k, maybe I buy some **** while I'm out there (can't think of what but for safe numerical values). I don't have credit cards payments(but I do have 8 credit cards, and really don't know why), no car loan, and I won't have anything to pay on during my deployments, so everything essentially goes into my pocket. My credit is currently in the low 700's.

My renters lease ends in june, I asked my property manager who is also a realtor to pull up local comps for my property. The appraisal I received was based on it's rental value, but the comps for the same size property are between 215k-224k, so lets say I sell it put it for sale at 215k in june, pay all closing costs for the buyer, and pay for the HOA transfer fee, it should come out looking like this:
Sale: 215K
Commission: 3% - neg 6450
HOA Fee - 7500
Closing costs - also about 3% so 6500 approx.
I owe 95.4k on the mortgage right now, so 95k by the time i sell.

I -should- walk away with about 99.5k.

So in theory, 35k + 40k + 99.5k, I'll be sitting on ~174k to invest with in september of 2013. I'll even say 150k to be on the lower end side for safe numbers and just in case **** happens. Of course, not sure how long the property itself will take to sell, and I may be missing something in terms of cost.

That being all said, I -want- to buy and hold for long term investments. Quadruplex's are currently what's got my fancy the most, but I would also like to get into giant apartment complex's.

What I am reading here is that fix and flips might be the most profitable in the shorter term in order to build enough capital for the buy and hold properties.

Anyone have any suggestions on what to read or who to talk to?

Kind of feels odd putting myself out here to a bunch of strangers, but I figure if I want realistic suggestions, I should give realistic figures about myself. Any constructive criticism, idea's, suggestions, hand-walking and spoon feeding would be much welcomes. I just might need a burping and diaper change later if you're going to spoon feed me.

Thanks in advance.

Ah, maybe i should clarify. The builder has a multitude of quad's it has for sale.

4 of them are currently fully rented and theres 2 more on this block being built. I am purchasing one of the brand new ones because it's slightly bigger for only 5k more and built with 2bd/2bth throughout so i plan on charging a bit more for rent due to the area's situation and influx of soldiers.

The one i'm making the second offer on, is going for 325k and currently renting for 795x2 and 765x2. 2 units are 2bd/1bth and 2 are 2bd/2bths, and slightly smaller units each.

But i definitely appreciate the input.

Hey Aaron, yeah thats cool stuff man. The EOD community is small and I'm a team leader, so maybe he'll be under me when i get back from this next deployment(coming up in january). Love my brother engineer's, sometimes they're a special bunch but you guys have saved my *** in the past so I like to return the favor.

And Izzac, the property is on the east side of town. I'm sticking to this side mainly due to the growth and expansion of the region. Also, doing some homework, I see 3 current brigades (thats approximately 10-15k soldiers, not including their families) currently gone from fort bliss all due back approximately the september time frame. So I am going to take an educated guess that the east side of el paso is going to see a huge influx of renters and business when everyone returns.

Well, i bought my first house after my first deployment. It was a single family home and it was 2500sq/ft. I ended up having 3 room mates and they paid everything so I lived for free then.

I liked the idea, so I looked into quad's and well, now here I am.

I've heard about investing in real estate a good bit. I'm actually in the process of purchasing a quadruplex with my VA loan. I figure it may not make me any real money while I'm living in it, but I need a place to stay and this will make enough money to cover my mortgage and a bit left over for utilities. Would be more if I wasn't going to use property management, but I don't want the tenants to know I own the property and being military(more particularly EOD), I'm gone rather often.

I also own a rental property in NC where I was stationed prior. Has a good bit of equity in it, little more than 100k in equity. I plan on selling it in august or so(when the current rental lease expires). I was turned on to the idea of quadruplex properties as rental properties recently.

Problem is, it's kind of a pain to get the 20% down for properties in the 350k range. And according to everything I've read on here, most banks will only allow up to 4 personal loans to your name?

Guess I'll be doing a lot of reading and learning over the time I'm here.

If there's anyone in el paso, I'd love to pick your brain on the in's and outs, maybe partner up for something.

Ah, well, I guess at worst case, I end up waiting a few months to get the 20% down in order to purchase the next quad as an investment property.

I really have no clue how I'd be able to purchase more real estate in my current financial position. I currently have 30k in the bank and I'm only looking into the investment world from the outside in so far.

I do plan on selling my house in NC once the current rental lease is up. I have a good amount of equity in it and plan on using that for future investment plans.

Well, the selling point I made to the VP of classic american is that it'd be interest only payments until I could refinance. So at minimum an extra 24k before getting paid in full.

She's sounded promising but it's been 24hrs and have not heard a reply as of yet.

I've got insurance quotes from allstate (as landlord insurance) at 72 a month,
taxes here are 2.65%(got it straight off the CAD), and i'm going by the 80% value of the asking price as the taxable rate(got it from asking a lot of questions to realtors and google searching).

Price for the quad i'm offering is 325k, at 5% down with 4% interest only payments the monthly payments are 1029.17 + 72 + 574.17 for a monthly mortgage payment. The monthly rent is 3120 and of course PM is 10%.

I actually had to create an excel spreadsheet in order to look at these numbers easier. Took me a few hours but I figured out how to get all the calculations done fairly quick and easy.

Any advice if they wouldn't take my offer? I initially thought of putting 25k down, as that would still leave me a decent cushion in case things go sour for a bit.

So I'm not a true real estate investor. Not yet at least.

I'm currently going to close on a brand new Quadruplex on the 27th (dec 12) using a VA loan for 100% financing at 3.5%.

I'll be living in one unit, and renting the other 3 for 850 and 2x900.

I also made an offer to the builder to purchase another quad being built across the street once it is fully rented for 5% money down, with a 4% interest only loan, amortized over 30yrs and balloons in 3yrs. This gives me the 2yrs to build rental history with it to refinance it through a bank, and still gives me almost an extra 1200 a month in cashflow with property management.

Am I making any major mistakes or are there any possible pitfalls I might be missing?

I'm going to be spending a lot of time reading on here to learn most anything about investing in real estate.