All Forum Posts by: Joel G.

@Jon Huber Great listing! I've personally been using realtor.com and rentometer.com, but I'm looking forward to using some of the additional resources you have listed. Thanks!

@Account Closed Good insight! I'll introduce include some comps and GRM comps in my analysis.

My main thought was that the property was a deal given the other hurdles this property met (i.e cap>8%, ROI>12%, DSC>1.5). After introducing some other items such as Capex reserves and property management, the property becomes a bit less appealing, so we'll see if the seller counters the offer.

@Craig Teeter Thanks for the follow up. After crunching the numbers on multiple properties here, it looks like 1-1.5% is the typical return, though I feel like using some of the other metrics might be more relevant. 

@Account Closed Care to provide some constructive feedback? What do you recommend I check out or consider?

@Neil Schoepp good points. Ok going to make sure I'm asking about any special considerations for the upkeep of the property 

@Kathia L. Good idea - looks like the place is separately metered for electricity only, but I have been looking into RUBS or sub metering (thanks to @Serge S.'s interview). I think you are right with that having being a good additional source of income that isn't factored into my equation above. 

@Hattie Dizmond I'll let you know what i find on the home inspection for multi families. Seems like I've got some research to do!

@Hattie Dizmond Thanks again! What are your thoughts on a home warranty? That seems like it would cover some of the big ticket items. 

@Drew Clements Awesome resource - thanks!

Thanks @Hattie Dizmond - I think you read right (old/aging).

What kind of CapEx reserves do you recommend?

@Brett Russell Thanks for the reply! I agree on the fact I'd be break even (more than likely I'd be negative cash flow). I think the value in being able to live for almost free, along with the low down payment, and tax benefits should offset that in the short term. The numbers above are assuming I move out in the future, everything else held constant - do you think this is an appropriate way of thinking of this deal? 

Good call on the property management - assuming 10% I think my net income (so to speak) drops to around $310/mo and DSC drops to 1.3. Still seems good, would you think so? 

Good point on the capex fund. I've not really thought about that (aside from just having a bit of savings for unexpected emergencies). What kind of capex funds do you typically aim for? 

Final thing, I'm curious to know the maximum you think I should pay for this property? 

Thanks again!

Hey All,

Looking to make my first offer today and I'd like to run the following deal by you all: 

Historic 4-plex (2 buildings). One 2bd/1ba ($725/mo), Two, 1bd/1ba ($630/mo), One, 1bd/1ba ($590/mo). List Price $255k. Tenants pay electric, owner pays water/sewer/trash. No repairs appear to be needed (looks like seller made a bunch of renovations). Property is in C+ to B- neighborhood and I would plan to manage the property. 

What I'm planning on offering: $220k

Down Pmt 5% = $11k

Expenses (monthly): 

Monthly P&I = $1,059

Hazard Ins: $100

Mortgage Ins: $117

County Taxes: $112

Water/Sewer: $220 (high range for the past year according to water company)

Vacancy: $257.5 (10% monthly rents)

Repairs: $129 (5% monthly rents)

Other: $25 (buffer)

Total Expenses (including P&I) = $2,019

Misc Closing Costs: $3,000 (guess)

I'm calculating the following: 

Monthly Cash Flow (income less expenses): $556

50% Rule: $228 cash flow ~ $57 per door

Cap Rate: 8.8%

Cash on Cash ROI: 20% (using 50% rule for annual cash flow

Rent as a percent of purchase price: Approx 1.2%

Debt Service Coverage: 1.5

What are your thoughts? This will be my first property (will owner occupy) and don't want to get in over my head. The purchase price feels a bit high, but I'm thinking the cash flow should make it worth it. Also, any other expenses I should be including? 

Thanks for the help!