All Forum Posts by: Joe Doman

Welcome Clay, I too started out with an owner occupied duplex. It defiantly helped ease me into the Landlording world. 

If you have any questions, let me know.

Good luck with everything!!

-Just thought of this, what happens with the security deposits for the existing tenants. I assume I will need something in the purchase agreement to say the deposits will be transferred to me?? 

Hello,

I am purchasing a duplex with existing tenants. Their lease expires in October 2016 and January 2017. I understand that I need to honor their leases, do I need to sign paperwork to assign the leases to me? -I am not sure how this process works?

Would also appreciate any tips with buying a property with existing tenants. Thank!!! -Joe

Thanks for the response @Joel Owens. I have heard the phrase "you make money when you buy"... In my scenario, I think it is a good purchase but I am not entirely sure. Is there other ways to determine this if there are no comps.

You make a great point about in this deal: certain things need to happen in order to hit my metrics. i.e. wait until the current lease is expired and then raise rents. -The last thing I want is to be stuck win a non-cash flowing property and a bunch of debt! Do you think I am taking on too much risk with this deal?

Thanks!

I have a potential off market deal lined up in result of a small direct mail campaign. The property is a duplex in a good community with a decent job market, schools, etc. I actually own a duplex in the same city and it is performing very well and I have awesome tenants. The one odd thing, unlike the one I own, this duplex is on a dirt road. I am not sure how that impacts price, rent and tenant quality. -and of course there are no good comps in this area.

So I am trusting my cash on cash return calculation to make sure the price makes sense

Here are the numbers:

180,000 Purchase Price - 45,000 Down - Loan 135,000 - 4.5% - 30 Yr Term 

685 mtg

390 taxes

100 ins

1,175 PITI monthly

425 in Expenses. --- 230 cap ex; 80 in vacancy; 115 all other exp. (any advise on this is appreciated. Tenants pay all utilities, they also take care of lawn and snow. )

1,600 total monthly cost

5,000 in initial repairs. The property seems to be in great shape (I have not inspected it yet) roof and siding are newer, one furnace is older but all else seems to be in good working order.

1,850 is current rent. One side is renting for 1,000 and the other is 850. I think market rent is 1,100 ballpark.

I figured the cash investment will be 56,000 after down payment, closing, repairs.

with 250 in monthly cash flow, that yields a meager 5.3% cash on cash return. (I like to use 10% as a bench mark)

BUT the tenants lease ends by the end of the year. I think I can get 1,100 each side (conservatively) which will get me to 585 monthly cash flow which is 12.4% return on cash.

I would love to here from the community... What are your thoughts??? THANKS!

-Joe

Hi Shaw, Welcome to BP!

I invest in the same areas... you will have to share info on the deals you close on. Good luck!

@J Beard

Yes, that would be the plan. Get a card with 12-18 mo grace period for balance transfers and pay it off before it ends. I was wondering if there is any weird stipulation that the balance transfer must be credit card to credit card? Or transfers can be done with HELOC without crazy fees or interest during the grace period.

@Michael Sothern

I've seen those CC checks come in the mail... I'm  always wary of hidden fees/interest even with the promo: no int for 12 mo. Have you used this before? Is it just the transfer fee that's charged?? -Seems like writing a check to yourself would be considered "cash advance" where they charge interest no matter what..? 

I am trying to stretch my dollar for a down payment on a potential deal... Is it possible to do a balance transfer on a credit card to pay down a HELOC? Has anyone done this before?

 I never thought about using this type of strategy. I will have to do some research in this.

Have you used peer to peer lending? What has been your experience with it? -Thanks for the reply!