All Forum Posts by: Joe Fornasiero

@Dave Toelkes

Thank you for providing the breakdown. The capex is what I was using as my replacement reserve (10% of monthly rents) although it probably should be higher due to the age of the property and the fact that some of the larger systems like HVAC are nearing the end of its typical life expectancy. One clarification- in your calculation when you refer to the $493 are you factoring in the replacement reserve? My calculation did. I just want to make sure I do the math correctly when evaluating properties from now on

@Tom S. 

My lender was on vacation so my updated preapproval letter was delayed. When I went to put in the offer someone else had put one in that morning and it was accepted. I'm keeping an eye on it in case the deal falls through. I'm also curious to see what the final selling price is vs my calculations. If anything changes I will update the thread.

@Jonathan Towell if I can pick it up at my offer price I don't believe I should have any issues getting rid of it. The property was initially listed at $75,000 two months ago and reduced $6,000  to $69,000 a month ago. It's an older couple trying to unload the property. When taking into account the taxes and the fact that the property could use some updating I believe I would need to pick the property up for $50-55k I won't go any higher than $55k as this would be my first investment property and I don't want to make the mistake of overpaying. I'm planning on submitting the offer today.

@Nathan Patterson in one of my posts above I called out what I was factoring in for capex, maintenance, etc. I used 10% capex, 10% maintenance, 10% vacancies. Taxes at $187/mo (actual) I have several options for marketing that would be very low cost (if any) which I would do myself. The property has also been rented out for 5 years so turnover seems to be very low. That said, I still used 10% vacancies as a worst case scenario.

Jeff Gebhart the current landlord pays water/sewer/trash the tenants are month to month so I can change the contract quickly. The rents are also low for the area. Comps seem to be going in the $800 range. That said, the home is slightly outdated. Everything is functional but it could use some updating to generate higher rents. Justin Tahilramani I have a family friend that I use to get good deals on HVAC's I would expect to pay around $6000 for both. The roof is in pretty good condition and about 8-10 years old based on the sellers disclosures. The $187/mo is correct. Total taxes come out to $2,245/year. I believe those should come down if I can pick the property up for $50k

Not sure why the formatting got messed up when I posted that

Nicole W. - Thank you for the link. After further evaluation with an offer price of $50,000 I get the following: Monthly rental income $1200 Taxes-$187/mo Vacancies @10%- $120 Maintenance @10%- $120 Capex at 10%- $120 Insurance- $100 Water/sewer/trash- $60 Mortgage P&I @ 20% down- $222 This puts my total cashflow at $271/mo. Does this still seem reasonable for a duplex? From the research I've done most people expect $200 per door on a duplex

Drew Castleberry the HVAC is all relatively new within 10 years old, water heaters 4 years old, electrical has been replaced, and plumbing has been updated to copper. The home seems to be in good shape and could use some slight updating (kitchen cabinets, floors, paint) I was using the 50% rule when determining the cashflow but would most likely manage the property myself as it already has tenants

I've recently found a duplex that I'm interested in purchasing the list price is $69,000 but I believe I could purchase the property for $60,000. Current rents at $600 per unit totaling $1200/mo. The tenants are up to date on rent payment and have both lived in the property for 5 years. The home was built in 1925. I was informed that all systems (electrical, plumbing, etc) are up to code and the home is in good condition. The home is in a B/C class neighborhood 1 mile away from a very large employer and 3 miles from a college campus. Based on the 50% rule I would cashflow $375/mo with PM and $495/mo if I self manage. (20% down) Does the maintenance percentage change with an older home like this? I want to make sure I'm evaluating the property properly.

I don't believe you need to refi. I talked to my lender today about the exact same thing. As long as you have occupied your primary for a year then there shouldn't be any issues using the property as a rental.