All Forum Posts by: Eric Meyer

@Dimitri Metropulos - When I analyze a property in my area here is what I run on my spreadsheet and what I try to look for or at least know what I can make a property achieve for me.

- closing costs

- repairs and pre-rent holdings

- mortgage

- property taxes

- insurance

- utilities

- HOA's

- lawn care/snow removal - I try to put this on the tenants in possible, even if I have to discount the rent a bit

- vacancy rate: 5%

- repairs rate: 5%

- Cap-ex: 10-15% dependent on age and condition of property

- I tend to look only at multi-family, much better of a return if bought correctly, not to say SFR's aren't good. But much more competitive in this market.

- I've ran so many properties now that I have a good estimate on my known expenses.

- My price range tends to be in the "C" to "B-" neighborhoods so I expect a little better of a return due to the possibility of addition risk. 

- I try to achieve a 15% cash-on-cash return but will go as low as 12% if the property has some improvements, or if I see the chance for value add to increase rents to boost my return. A garage is a good value add. Old owners like to rent the garage out, which I'm happy to do for $100 a month, other wise the tenants can rent a space for a discounted rate or a boost rent and include a garage space.

- Don't forget holding costs (utilities that you have to pay) prior to renting and also the cost of any improvements/repairs prior to renting. Over estimate any repairs/improvements. Its to easy to go over budget. Older homes tend to be like onions, you peel one layer back just to find another layer of problems. 

I hope this all helps and wish you the best of luck. You are on the right track with analyzing deals. That's the first hurtle in my opinion. Run the numbers on multiple properties just to get practice, even if you aren't interest in that property. Then start making offers. Don't get hung up on what you think a property is worth, figure out what price makes your numbers work and stick to that. I know what works for me, and other people are over bidding me, good for them for probably getting a lower return or buying a bad deal, I'll be there to buy it later when they realize they made a mistake, for a cheaper price of course.

@Dimitri Metropulos, @Joe P. - I'm not going to bother to type it all out, but I second what Joe said. 

- Closing costs

- Up your insurance estimate unless you already got a quote from your insurance agent

- Cap-EX on top of your repair estimate. I do 15% Cap-Ex because of the age of houses I deal with.

- Water/sewer/trash at a minimum

Some people may say I'm to conservative, but I'd rather over estimate and have more cash in my pocket then negative cash flow. Good Luck

I have a property that has to sfr’s on the same parcel. It depended what insurance company I used, on how they insured them. My current insurance company insures them separately. Two different policies. But there are companies that will could put them under one policy. Hope this helps.

Congrats on another property. I inherited a tenant that didn’t have a lease and no security deposit. So to get everything spelled out for myself, I had the tenant and landlord fill out an estoppel agreement. Once I become the owner, I had the tenant sign a month to month lease so I had the flexibility to have them move out if they were bad tenants. I asked the tenant to give me a security deposit and he didn’t even fuss about it. I did put him on a payment plan for it though. Your situation is different then mine since you have a lease in place, so I don’t know if you could demand one. What you could do is talk to the tenant and see if they would be willing to void the current lease and sign a new lease with you or at least make an addendum for a security deposit to the current lease. As long as both parties agree, you should be in the clear. You may have to offer some incentive though. I am not a lawyer and this is not legal advice. Good luck

Michael Gansberg : I don’t have to worry about cleaning it up, the EPA is going to remediate the area. But that’s is nice to know that sunflowers will help absorb the lead. This is just all going to take time. Thanks

So a little background: My area has been a heavy industrial area for well over a 100 years. With facilities such as oil refineries, steel mills, smelters, chemical plants, and power plants. So it can be said that most likely our ground and air have been and may still be heavily polluted. Everyone has to assume this but yet still people live next to these facilities and investors continue to buy in this area. So the reason I mention all of this; the EPA has come forward and announced that the soil in these communities are contaminated with high levels of Lead, as much as 7 times higher then then normal level. These communities area great investor friendly areas with being in close proximity to all these jobs and next to Chicago. The rental market does very well here. 

These are my questions:

What impact do you think this would have on property values?

Do you think this would have an effect on rentals?

Would you invest in these communities? i.e Buy and Holds/Rentals

Would you run away as fast as possible?

I mention and ask all this because I've been working on a off market deal that is this area and the numbers make complete sense and there is even room to improve cash flow, but before we have come to terms, the EPA has made this announcement of the contaminated soil. What would you do???????? 

Anyone have any insight?????

I’ve been analyzing some off market deals that my Agent presented to me and a couple of them make sense to look at and make offers. Well today it was announced that the EPA has found lead contaminated ground. The contamination came from a old smelting plant. The EPA planning to do more testing and start the remediation efforts. The smelting plant was shutdown in the 80’s. Now my question is, has anyone or would anyone invest in a superfund site? I figure this would be devastating to property values but over time the contamination would be cleaned up and everything would go back to normal. Any recommendations or experience is welcome. Thanks

I’ve lived in Northwest Indiana my whole life. Gary is and has a high rate of crime. Had the nickname: Murder Capital. Now this doesn’t stop investors. There is money to be made, but personally I’m not interested. Now East Chicago gets a bad rap but I have a duplex there, with out any problems. I know other investors dealing in East Chicago also. I personally don’t mind investing there. The city is investor friendly. With all that said, there is crime and gang activity, and there are better and worse areas there also. Hope I didn’t scare you, just being honest. Good luck.

Welcome Nate! Small world! Bigger Pockets is a great community broaden your investing knowledge.