All Forum Posts by: Jaysen Medhurst

Congrats, @Dolly La Salle! I know you've been working towards this for a long time. Please keep us updated.

@Account Closed, yeah, gotta think those are pretty well below market right now. A few things to think about:

• What's on the owner meter? Weird that there would be one at all.
• What about landscaping? Is that on the tenants?
• $110 looks high for the water/sewer. I usually figure $30-40/unit/month.
• Anyway you can get town trash service with a duplex? For taxes that high, you should.
• You're near the river. Do you need flood insurance?
• What are you doing with the $15k renovation budget?

I think you need to do a full rental analysis to see what your cash flow is going to be like. Don't forget to account for Repairs, CapEx, Management, Vacancy, Pest Control (if needed) and a little something to cover admin. costs (like advertising a vacancy, tax prep fees, LLC fees, etc.).

If you post your full analysis and tag me, I'm happy to take a look.

You're leaving out Management (10%), @Lokesh Patel. You should always include Management, even if you plan to self-manage. This will pretty much wipe out your cash flow.

A few other caveats with condos:

1. Many complexes limit the number of units that can be rentals and/or for how long.
2. If the percentage of rentals is too high in the complex, financing can become very difficult.
3. Take a good hard look at the books. A special assessment can wipe out months or years of profit. 

Okay, @Daniel Tisdale. I'm a little skeptical of the $700/month cash flow number. Does that account for Vacancy, Repairs, CapEx, and Management (always account for management, even when self-managing)?

Even taking your CF number that returns ~4% Return on Equity (ROE) for the $200k you have in there. I'd want to see a ROE of at least 2X that.

The reality is that SFR properties above ~$130k in value become increasingly difficult into make viable rentals. Either they don't cash flow, the ROE sucks, or both.

@Eric Nuernberger

15% combined for Repairs & CapEx

10% Management (always account for management, even when self-managing)

5-8% Vacancy

Taxes, always confirm with the town. Never use a percentage of rents.

Insurance, always confirm with an insurance agent. Never use a percentage.

$100-$250/month for Lawncare/Snow Removal, depending on your location

Okay, @Gabriel Sanabria. If it's a 3-unit, you should also account for lawn care, pest control, water/sewer, and any shared utilities (e.g., common meter). Is there a charge for trash service in this town? I prefer 8% vacancy on a MFR, this is super local, though.

I've always written up our own, @Thomas Fawcett, based on versions I came across over the years. Certainly worth having your broker review it to make sure you're not making any bone-headed mistakes, though!

Unless there's a ton of value-add opportunity, @Rik Hunter, this is nearly impossible. Almost the entire rent is eaten up by the debt service. These look to be priced as individual retail properties, which may justify the price. But an investor is very unlikely to buy up all three, since it's way cheaper to buy a single 10-unit property and pay based on income/Cap Rate.

@Gabriel Sanabria, this is a SFR, right? Do you plan to house hack? If not, how are you only putting down $25k? If so, you should account for at least some portion of the utilities, lawn care, etc.

• I'm more comfortable with 15% combined for Repairs and CapEx.
• Insurance looks high and taxes look low to me, but I don't know the first thing about Hollywood, FL.

Focus on markets where you have experience and/or "boots on the ground." Search the public records or pay for a list. Find wholesalers and be willing to jump when an opportunity comes up, @Shobhit Jain.