All Forum Posts by: Garrett M.

@Michael Noto

You are correct I was accounting for the fire tax. I must have mislabeled it as insurance. 

Recent comps in the area closed at around 200k so yea this one is a bit more, possibly the most expensive in the town at the moment. Ideally I would look to buy closer to Wesleyan but there is nothing there at the moment. 

I mentioned in an earlier response that I did not account for maintenance/capex reserve. Placing that at 10% of rents brings me into the red at about -$15/month to own the property.  Doesn't sound like such a good deal anymore...

Hey @John 

What is a typical Coconut return one should be looking for with rentals?  I can get 1.25% in the bank so i thought anything above 5% would be acceptable.  

The fire insurance is required for the town it seems.  Some local ordinance 

Hi @Michael Noto, 

Property is in Middletown, CT. 

Estimate was from my agent (who is experienced and owns rentals himself) but I also took an average from a website estimator and met somewhere in the middle. I bumped up the exterior repair to 12k  from 6k and increased my misc. repair budget with a total repair cost being about 23k. Cash on Cash return is now 5.02%. I'm waiting to hear back on his opinion on the deal (which I only think is 'warm' and wanted to run it by BP.

@Craig Bellot - budgeting 10% for repairs/maintenance/cap ex reserve I end up $-14 cash flow/month or a cash on cash return of 0.30%. Not good at all. 

Overall - I'm looking for properties in a town that I could see myself living in. Seems to be the case that I would find less of a good deal in these areas as the properties would be more expensive. I was looking into, but not yet visited, some towns where numbers make much more sense (New Britain/Bristol/New Haven). I could not see myself living in most of these areas but again, the numbers are better without trying to find a 'diamond in the rough' in the towns I am currently looking in. 

Hey all, 

Looking to do my second deal, which would be my first 100% investment property. Currently living in a duplex I bought and managing myself. NYC is super expensive so I am looking out of state in an area that I believe is moving in the right direction. Hoping someone could take a quick look at the below info/numbers and let me know what they think.

The House

3 Family, all units are 2bd/1br, built in 1927, upgraded electric

1st floor - $900 (tenants have been living here for over 2 years, leased). Recently renovated unit. 

2nd Floor  -$850 (tenant has been living here for 4+ years but is section 8, leased). 

3rd Floor  - $800 (new tenants, lease beginning in June. Recently renovated unit. 

Asking 250k

Taxes: $4300

Monthly Expenses (taken from the average of three similar houses on the MLS as this one does not include a disclosure) - I am also trying to overestimate the below expenses to give myself a cushion.

Sanitation $42

Water $175

Landscaping/snow removal (tiny driveway, tiny backyard) $125

Insurance: $150

Fire Insurance: $125

Owner Electric: $25

Vacancy Reserve: $85

Property Mgmt: $230

I think the above should cover it. Please let me know if I am missing anything!

Interior

1st and 2nd Floor tenants have oil heat (they pay for heat themselves), 3rd floor is electric heat (tenant paid as well). Separate electric for all three units. Hot water heaters are newer and boilers are newer. 

I did a walk through this weekend- 1st floor bathroom looks pretty dinky, could be upated but dont want to update until they move out. 2nd floor is old but cannot update until after move out, 3rd floor is fine as is.  

Basement has coin-op 2 washer/dryers.

A few rusted radiator vales need to be replaced, I am budgeting $600

Exterior

House has little curb appeal. Older wood siding is chipped/peeling and will have to repair or replace. I am estimating  $2/sqft and at a little over 3k sqft this comes to about $6k. 

New Gutters: Budgeting $2000

Other Misc Fixes: Budgeting $5000

So to recap:

Asking 250k

Monthly rents $2550 (there is room to increase this as rents are about $50- $100 under market)

Upfront repair costs total :$13700

Total Out of pocket @ 25% down at asking price is $62,500. 

With a 30yr fixed at 5% I am getting a total monthly expenses with mortgage at 2400 while bringing in rents of 2500, this is not so good and a 2.85% cash on cash return is meh...

I believe I can make an offer of 230k and be accepted which brings a return of 4.8% with 230 monthly cash flow. 

If I can get a rate of 4.5% I have a 5.98% return which doesn't seem so bad to me. 

Anyone available to do a quick once over and tell me what they think, good or bad it would be most appreciated!

Thanks!

Thanks @Hyacinth Dolor.

I've expanded my search and have been analyzing multiple areas throughout CT at least until Black Rock has more inventory. Properties there seem to go fast. I'm looking for buy & holds 

Using the various crime trackers certain areas of Bridgeport seem okay on the surface. 

I've started to look at Hartford, specifically the South End and parts of New Haven. Anyone familiar with which areas in the South End should be avoided (ie. north of Barker/Meadow street) and which are okay?

Hi @Craig Bellot

Cash returns I am looking for must be above 5%, nothing to crazy, however with vacancy and maintenance so high (thanks for your input) my numbers come in just under that for Blackrock and just over 5% for Bridgeport. The taxes are killer here it seems, plus a good portion of these buildings look like they need a about 10k worth of work to be livable to my standards. If I wouuldnt want to live there... 

I'm using a 10% across the board for Vacancy/Management/Maintenance on some older buildings and it makes getting to my 5% cash ROI tough.

I need to remind myself that this is not NYC where vacancy is 1-2%.

There is not much inventory right now in Blackrock and I still feel Bridgeport as a whole is too risky with the crime levels/tenant demographic. I am going to expand my search for the time being into other areas in CT until I find the numbers I need.

@Nathan Reid jr Much Appreciated! Zoning in on a specific area right now and it looks like North End or Black Rock will be it as West End is too dangerous for my liking. 

@Kevin Hunter I figured as much. There are some areas around me where you see similar trends of stable neighborhood with property rarely being offered while 'across the tracks' a new house pops up every week. 

Regarding the North End - would the area around Capital Ave and Main st (south of Summit St) still be considered a desirable area of the North End? 

Hey BP people, 

I am looking to diversify and expand my property search outside of NYC, within an hour of the city and have my sights set on Bridgeport, CT. From what I have found it seems to be a good spot to acquire some property. Relative to NYC prices are lower, rents are comparable however taxes seem to be a bit higher - my calculations seem to offset this with the income per unit over the acquisition cost. 

Specifically I am looking at 3+ units in the Black Rock / Blackrock area south of I-95. My research tells me this is the 'good' area (or one of the good areas I should say) of Bridgeport. I'm interested in this area over Bridgeport as a whole as I have read that finding and keeping good tenants in Bridgeport can be difficult whereas the Black Rock area, I believe, tends to attract a more professional and stable tenant. 

Another key factor that has me looking at Black Rock is my plan to manage this future property myself, hence the need to have a more stable tenant pool who would hopefully cause less wear and tear than in some other areas. I am however not opposed to connecting with a property manager for other areas in CT that need a more hands on and local approach to manage effectively. 

My research also tells me that West End in Bridgeport is a 'good' area however looking at some crime stats I see there is a lot of activity in this area. North End, Bridgeport doesn't seem to have much on the market at the moment however the more south you go (to West End) the more houses on the market and then you get into the higher crime areas. Would anyone local be able to confirm this?

Right now I'm looking to connect with other investors and agents that are more familiar with the area and are looking for opportunities in the 3-4 unit space. 

Thanks everyone!! 

Wow. This is a huge eye opener for me. I was thinking to myself , $60,000 for a down payment $20,000 for closing costs and I am in for $80,000 out of pocket.

With a total out of pocket expense of $116,000 I am going back to the drawing board.

This may be too broad of a question to ask but is this amount typical for SONYMA / FHA loans or could I expect to pay less in closing with a conventional loan, albeit a higher down payment?

@Brie Schmidt @Ryan Thomas , thanks for your comments. The more questions I ask the more I realize RE is more expensive than I thought!

Thanks for the response Ryan.

These numbers are coming directly from the mortgage consultants Good Faith Estimate Worksheet (in PDF form).

I thought that line item was high as well. I have heard in NYC it is typically $450 per $100,000, which would be approximately $2700.