All Forum Posts by: Jeff Costa

Water cost may be on the landlord, depending on your municipality (it’s generally not your decision to make). PMs don’t handle garbage, but your property taxes often do.

Did you know about all the CapEX needs when you purchased? Did anything else need renovation? I assume the cost to put a roof on a mobile home is a fraction of a SFH, right?

How does seller financing work with an MLS-listed property? I've started to see MLS listings stating "Seller will consider Owner Financing." If they are already working with an agent, does s/he just get cut out of the transaction?

Also, does anyone have a LOI template they would be willing to share? Or point me to a resource?

The standout item for me is $0 fixed expenses; that seems like a miss. You will likely be paying water, sewer, and garbage. Is the insurance number coming from a real quote your agent provided? If not, get that quote and ensure your $1300 annual estimate is accurate. 

Wow, this is a cascading failure of due diligence from "Furu" to student1 to student2 to you. I am sorry this happened to you. It sounds like you are taking the necessary actions to get this back on track. You might consider looking for a new partner who can put up the cash, while you put in the sweat equity. You might be negative for 1-2 years, but real estate is very forgiving in the long term.

Buying for cashflow is income. Buying for appreciation is "ifcome" - IF things happen in your favor, you get income. 

I would be more conservative in a few of your variables. Set vacancy to 5%, management fees to 10%, and interest rate to 7.5% (likely higher after today's Fed action). Do you have a quote from a PM at 6% that could change that number, for example?

Why are you budgeting zero for CAPEX? You should have a CAPEX budget line item every month.

You should have access to a local assessors website that you can pull actual 2022 numbers from. Its better to use actuals than estimates to improve the accuracy of your pro-forma.

@Account Closed The update after yesterday's visit sounds exciting! You are looking at this as David Greene preaches: "What is the highest and best use of the property?" My point on the 50% Rule was that its one scenario you should consider alongside your primary analysis. Put differently, you want to run three scenarios of any deal: bull-case, base case, and bear case. It gives you the "margin of stupidity" (if I totally mess this up, how bad off am I gonna be?”). Post back when you win the deal!