All Forum Posts by: Eric Schrader

Try www.fitzgeraldfinancial.net/.  They may be able to work something.  I was planning on using them on some rental properties. 

@Hong Lem, So I have been looking for funds Hi and Lo to purchase some rental, buy and hold properties and they popped up on my radar to.  I followed through on the preliminary application and this is my interpretation of what they do. 

They look at your credit score and past payment history and come up with a potential funding range.  In my case I received 2 ranges.  The first funding range was up to 75k with some debt pay down conditions. The 2nd was up to 50k without any conditions. 

 When I returned the initial call I found out some more details.  Essentially they have a network of banks they use.  They use your credit history to apply for 0% financing credit cards.  These cards are sent to you.  You use them (Stonebridge)  to leverage the full amount of the card balance and they xfer it into your account.  If you do this yourself, you would get hit with a 20% (or something very high) cash out fee.  In my case, it was an almost 9% fee or max of $5k.  I don't know if this is a fixed or variable fee. 

If I understand it correctly, to get the full 50k funding it could require multiple CC. Your APR could be 0% for up to 18 or 24 months. Overall, a 9% loan doesn't seem too awful. From what i can tell there are no other fees, points, pre-payment fees, etc.

So that's what I know.  Not sure if I am going to pull the trigger.  

Eric  

Hey all.  

Question. If i am renting a portion of my house to a separate party (say a basement) part of the year, what sort of tax benefits can I expect? If report the extra income as income, can i deduct a portion of the RE taxes, insurance, maintenance, etc on my taxes for the year. To make this more formal, would i need to create an LLC or something similar to make it more formal?

As always Thanks for your input. 

Group

My wife and I are slowly proceeding towards our goals of being a buy and hold investors.  We didn't make any purchases during 2016.  How do our treat our incurred expenses during 2016? 

Thanks

I will find out about the PMI. THS... townhouse

Good afternoon group, I would love some comments about my deal review below:

Current REO 3 bdrm / 4 bath THS with garage. List 115k. Low end comps in the area over the past 6 months, 215k. Conservative rent 1650/month. Average vacancy time for rentals in the area for 2016 is 36 days. I have a lender that will do 15% down @ 6% for 30 yrs. I have 30k for a deposit/repairs.

Estimate:  carpet (1300 sq ft @ $5/sq ft) $5200

Appliances: 3500 for kitchen

Paint : 1000

Monthly Expenses 

HOA: 65 / Vacancy 130/ management 130/ capex 65 / maint 65 / utilities - tenant

Total 465

Purchase price 115k

Closing costs  5k

Repairs 10k

holding (2 months) 2k

15% down 17000

Ins 60/month

property taxes 172/month

Total monthly expenses $697   P&I payment $686  Total $1,383

Cash flow $266      Cash on cash return ~18%.  

based on the above, i am all in at 149k and based on the current ARV's i should be able to BRRRR this and do it all over again..

lawn care is included in the HOA fees.

Thank you for your time.

Eric 

Hi group.  

So, at a snail's pace, been working on my first purchase.  I have identified two potential properties.  The first is ready to be rented, the second needs a minor Home Depot make-over (new appliances and carpet).   I have run the numbers and they look pretty good.  I have placed some phantom adds to judge rents and interest.  I have found and investment banker and been qualified for the purchase of these properties.  So i am back to "How do I get the down payment!" I have asked some family members if they would like to invest, but the response wasn't very enthusiastic.  I have talked to some other private money organizations for the down payment or the straight purchase, and most of them only lend to entities, not individuals.  Anybody have any other suggestions?  thanks

So group.  General question.  When purchasing a property that needs a complete overhaul (i.e. new kitchen, floors, Bathrooms, windows, etc), how much should  you allocate to the  monthly maintenance and capex figures?   

thanks

i didn't know this was around.  i will definitely look into it. 

All

So I have started to dig in and evaluate some deals as recommended.  I have also heard that all the deals on Loopnet are picked over/left overs etc.  So I will go over a pro forma provided to me by a broker and see what type of deal it is. 

Background.  

10 unit / group of townhouses.  They consist of eight 2 bed 1 bath and two 3 bed 1.5 bath units.  All are currently rented.  average rent for the lot is 900/month.  Pro forma has the cap rate at 10.12%.  The comps for these THS are approx 90k for the 2/1s and 125k for the 3/1s.  Paperwork claims the following:

summary of expenses for the property on pro forma:

So my analysis.  

Taxes:  Based on the assessors website, the average yearly, tax rate for the 2 bdrm is $931 and the 3 bdrm 1331.  Total taxes - $10,110  slightly different then pro forma

Insurance:  on an individual basis, home owners for each unit is $70/month x 12 x 10 = $8400.  I am sure the cost may go down if the group of homes is insured as a bundle, but i used this as a worse case scenario.

Utilities and HOA: Most HOA fees in this area include lawn care and trash removal. I have not contacted the HOA to verify this. I am also assuming that the utilities they are speaking of is water/sewer. Since these are individual homes, there should be individual meters so the tenant can pay, however, the amount above seems off. My families usage, when in a similar THS was around $90/qtr for water and sewer. I have used those here as well. so total HOA fee + water/sewer = $ 19,200

Management:  in my conversations with the broker, the current owner self manages.  i would want someone else to do so.  For management, 10% of monthly rent: 90x12x10 = $10,800

Maintenance: I think the maintenance for the older units is not represented in the #s above. Again, i used the percentage method as a first go round.  80x12x10 = $9,600

So to sum up, my GSI calculation for the deal

So based on my new #s, it looks like the purchase price should be around the $400k mark, not the $650k mark based on the provide cap rate.

Now reviewing the pro forma #s in a rental calculator, this deal does cash flow (assuming 20%down and financing).   The 10 units spin off $240/ month.  That is total.  Definitely not something to purchase if you are looking at long term cash flow.  

If we look at a purchase price of $400k,  we get a monthly cash flow of almost $1,400/month for the 10 units. So a bit better.  

Overall, I think it could be something to look deeper into based on the new #s.  The majority of the units are below market rents, some up to $300 below.    For this area, the 1% rule is the norm.  

At last look, this property was no longer listed.  

As always, comments and suggestions are welcome.