All Forum Posts by: Eran Roseman

Hey All!

I am looking for a GC in the Cedar rapids - Iowa city area for pre-purchase rehab estimate. Of course I will pay for the estimate and hire the GC (assuming I will buy the asset and that the estimate will be within reach).

I am looking for someone who is used to working with investor and who knows how to do low-cost rehab in a short time. dsfd

Thanks again everyone. I have some more properties to go and check out.

Thank's guys for you great inputs.

The gas and water are last 12 months average. These are real numbers.

The asset is in Cedar Rapids. Here in Iowa City the trash is included in the taxes. I assumed it is the same in CR but have't checked that.

@Kevin Nalley thanks for the 20% tip. That really changes the picture.

Two more questions:

1. Does the fact tat the expenses go over 50% says something bad about the asset by itself?

2. Is there a way to guesstimate the vacancy rate? I just plugged 10% because it made some sense, but it isn't based on anything more then that.

Hey All!

I am new to this community. It looks like a great community and I am proud to be a member.

I would like to hear your opinion on a deal I am checking out.

It is a 3 units house. There are two 2 bedrooms units and one 3 bedroom unit.

There are long term tenants in the house. They are on month-to-month basis.

The house was built in 1890. It is in more then reasonable condition, taking it's age into consideration. Interior is is decent condition low quality finish. New windows, vinyl siding and roof were installed in 2002. New gas lines and furnace in 2008. New water heating in 2008.

It is located in a low income neighborhood, but not "ghetto".

The owner request 75,000$.

No repair currently required.

Current rent for all 3 units is 1,500$, which is exactly 2%.

Expenses:

Gas: 175$

Water: 150$

Electricity: 0$ (paid by tenants)

Tax: 215$

Insurance: 100$ (estimate)

Property management: 125$ (estimate)

TOTAL: 765$

The total is 50% of the rent, but does not includes vacancy and big repairs.

Adding 10% vacancy and 10% big repairs budget, the TOTAL is 1,065$

Mortgage with no money down: 380$ (estimate)

Net Cashflow: 55$

Up to here, nothing too exiting.

The current property management says that it is important for the owner to keep the rent low. He believe in being fair and affordable. He also likes to keep the vacancy rate down. This strategy works and the vacancy rate is practically zero.

According to rentometer the 20th percentile for 2 bedroom apartment in this area is 550$ and 700$ for 3 bedroom. The units in this house are rather small and basic, so 20th percentile seems fair.

Assuming that I can raise the rent by 20% and that I negotiate a better deal and close at 70,000$, the number looks like this:

Cost: 70,000$

Rent: 1,800$ (2.6% of cost)

Total expenses: 1,148$ (64% of rent)

Mortgage: 354$

Net Cashflow: 299$

Now this numbers look much better.

My questions are:

1. Did I missed anything?
2. Is it safe to make such an assumption about the rent?
3. I thought that the 50% rule supposed to be conservative. The expenses here are significantly higher. What can I deduct from that?
4. Would you go for such a deal?

I will be more the happy to get any feedback.