All Forum Posts by: John Robinson

@Thomas S.

My monthly expenses are $627.33

Here's how I broke it down:

Water & Sewer: $35
Garbage: $35
Monthly Insurance: $49
Vacancy: 5%
Repairs and Maintenance: 5%
Capital Expenditures: 10%
Property Mangement Fees: 10%

In my calculation I also put in $2,500 on property taxes and $5k for initial repairs (mostly cosmetic - had seller take care of all the serious ones before hand)

  What expenses do you feel I missed out on (or way underestimate on) ?

Thanks, 

John

Thanks @Dawn Owens -
  I don't think I really have a choice with the washer/dryer combo.  I agree with you, but have nowhere to fit a tiny stackable unit.  I was considering putting in a tankless hot water heater to make space but the seller installed a brand new 2016 hot water heater so doesn't make a lot of sense to replace that now.

   I'm planning on keeping it as a buy and hold.  After renovations I'm hoping it will appraise closer to 95k.  Identical models on the block are appraising around 105 when totally finished - we'll see.  Appreciate the feedback, and yes, the town does have a limit of 2 students per home.  I was very excited when I found a 4 bedroom for 80k only to find out that the town owned it with that provision (only up to 2 unrelated parties can stay in the home).

  Thanks again for the feedback,

   Yes @Joshua D, but I'm only going to be spending less than 5k - house has a newer roof - most of the improvements will be sweat equity, refinishing floors - fresh paint - biggest expense will be adding a TINY washer/dryer. 

    I'm looking into the European combo style that sits in the kitchen.  If anyone has any experience (good or bad) with one of those - space is my biggest issue with such a small home.

--John

Started learning about Real Estate Investing when I started with the first MorrisInvest podcast about 4 or 5 months ago.  Heard Clayton on an episode of This Week in Tech where he mentioned he'd be starting a podcast, listened to his thrice weekly podcasts for a few months - people kept mentioning Rich Dad/Poor Dad (I book I avoided reading for years knowing I'd kick myself once I did - big surprise there - I kicked myself about 3 months ago when I finally read it) and BiggerPockets so I finally made my way here.

   Signed up for PRO after about a week on the site and started using the Rental Property Analyzer, which if you haven't played with - do so today.  Even free accounts can use it 5 times.

   Got the wife on board, had a plan and started analyzing properties.  I'm going to be opening a new location for my business on November 9th and needed a property for my son to stay in while getting the shop off the ground the first year.  Figured if I can find one, have him fix it up while staying there then use it as a rental unit I'd be killing two birds with one stone.

   Searched Bloomington/Normal, IL area near Illinois State University.  Knew I wanted a property kids could walk to class to.  My son had just graduated and was wasting $475 a month for a run down disgusting apartment with 3 other friends ($1,900 a month) - parking was an extra $100 a month for 2 of the renters.  

Visited many hopeful properties - hard to find any that were in a REALLY good location though. Lots of great deals that are 1+ miles from campus - didn't want to go that route. My biggest worry with REI was finding tenants (over the years, I'd seen so many vacant homes waiting for someone to rent them). My son had originally wanted to rent a home with his friends but all of the close ones were always snatched up! Made offers, got turned down - saw units that needed TOO MUCH work for my experience level - found one hopeful home that needed a new roof but again couldn't get to the right price.

   Finally found this crazy small 700 square foot home at 22 University Court in Normal, IL.
2 bed/1 bath
 Closed yesterday:

Paid $74,500
Monthly rent = $1,000
if I use a Property Management company I should cash flow $372.67
if I foolishly try to PM it myself it can cash flow $472.67 - but I live an hour 45 minutes from here so I doubt I'll be doing that.
Cash on Cash ROI is 5.56%

 While most families would NOT want to live in such a TINY HOME - it's ideal for college students as they will have low cooling/heating expenses from such a small dwelling.  Also has 1 detatched garage.

I realize this is smaller/lower than what most people would consider worth their time/trouble - but it's gotten me started fairly quickly, takes care of 2 problems at once and gains me invaluable experience points.  At 49 years old the clock is ticking and it feels great to put something else in my ASSETS column.

   Once the home is rented out, I plan on refinancing and taking the money to move on to my next college town property and grow my portfolio with 1 or 2 properties a  yeary (hopefully multi-units for the next ones)

 I appreciate everyone's transparency on the boards and wanted to share as much information as I could as well.  I find having hard numbers/facts really helps me, hope this is of some use to others out there!  

If anyone has any questions - just shoot!

John

@James Syed  It is a 2 bedroom 1 bath.  Tiny home - expect to get $1,000 per month ($500 per room) - spectacular location to the college, but crazy small.
 Will post details of the deal once I've actually closed.  In theory, 2 days to go - still lots to do.

Just an fyi, your decentproperties.com link is not functioning....

Buying my first rental in Normal, IL this week.  Closing is Friday!  Great town!   

Hoping to buy a multi-unit next year as well. I'm about an hour 40 minutes from Normal - SFH is going to need some work before I start renting it out though...

Happy to compare notes!

  Snow/Winter time can be very misleading for how safe/quite a neighborhood is.  Joliet has some crazy bad areas - but even they seem okay when it's 20 degrees outside.

   I lived/work in the Plainfield area right next to Joliet, would be happy to give feedback on specific areas as well.  I was originally looking into investing in Joliet like yourself (low entry point) - but have settled on college towns instead.   There are some enticing properties in Joliet for fixing up/renting - good luck with it, and welcome to BP!

Hi Efrain -

   I'm in your same age bracket and realizing the same thing/same time.  Got interested about 3 or 4 months ago through Clayton Morris podcast (learned him of him through the This Week in Tech podcast) ~ and just had my first offer accepted (still haven't closed).

    Only discovered Bigger Pockets about 3 or 4 weeks ago and have been soaking up as much as I can.

    Once you're at the point that you want to start running numbers on properties you really need to sign up for the PRO service here.  I believe it was around $250-$300 a year - but the Tools Calculators make it well worth the investment.  As a new member you can  use them 5 times I believe ~ give it a shot.

    The piece of advice I keep hearing over and over is to just do it.  So many people over analyze and talk themselves out of any action for fear of getting a bad deal, or a not good enough deal.  While my current 'deal' is hardly FANTASTIC like some of the posts I see - it is a way for me to learn hands on and move forward.  
   You can daydream all day long about it, or you can dive in.   

Welcome to the group ~ and thanks for your service as a police officer - it's appreciated!

Welcome Bryan -

  I'm new here as well and just had an offer finally accepted on my first buy and hold property.   Grew up in Glen Ellyn, great town - glad you found your way to BiggerPockets - it's worth signing up for the PRO level to use the built in calculators (under Tools).

Hi Kyle -

   Some affordable homes in Gurnee!  Just started as well - welcome!