All Forum Posts by: David Boley

Hello! I'm playing around with the BP rental calculator and I'm trying to understand the table. 

I'm curious about:

1) What does the changing Cash on Cash ROI tell me over the years?

2) How does COCROI differ from the Annualized Total Return (e.g. how do I use it?)?

3) At year 30, how can I make a $460k profit on a house that's valued at $240k?

4) I'm trying to do the math to understand each of the numbers, but I can't get the calculation for the "total profit if sold" correct. Any tips?

Sorry, that's a lot of questions. Any help would be much appreciated!

David

@Jim K. I hear where you are coming from, and appreciate the comment. My unfortunate position, however, is that I am overseas and half to trust the observations and opinions of others. In this case, the turnkey company, the 3rd party inspector, photos sent to me, the management company, etc. For sure, I will dig into more detail on the repairs and status of any non-repaired items (e.g. roof, siding, etc.). 

@Account Closed It's in the Kansas City MO market. I had the same thoughts that the major repairs would be done before purchase, so hoping repair costs will be low, but want to be prepared. Plus the company guarantees their repairs for the first year, so if a water heater busts, they'll replace/repair it for free.

@Tim Herman That's helpful. An independent appraisal is part of the process. I've been approved for financing from a lender recommended by the turnkey.

@Sam B. That's what I am thinking. Get me out of the paralysis and start learning the ropes.

@Jay Hinrichs I've included the tax and insurance in the calculation above. The turnkey company guarantees rental for the first year, or they will pay the rent to me directly. After that I deal with vacancy on my own (through the management company). I'm wondering if the 5% repairs (suggested by the turnkey) is based on the fact that they do a full rehab on the property before sale, and guarantee their work for one year. That's not to say that the roof won't need replacing eventually, however. I'll look into IRR calculation - I'm still learning!

This is so helpful.

@Tim Herman Thanks for the reply. I see that BP recommends 5% vacancy, 7% capex, and 8% repairs in their webinars. The 8% management is the local rate. When I run those numbers I get:

Monthly Cash flow: $170 (20% down) or $236 (25% down)

Cash on cash: 8.8% (20% down) or 9.8% (25% down)

Running the numbers this way doesn't sound like a good deal....

I'm a classic "analysis paralysis" real estate investor, but am finally in a position to pull the trigger on my first deal. It is a turnkey property, which I know causes some heartburn with many of you, but it is the right fit for me given the demands of my job and my current living situation. Here are the details.:

Purchase price: $109,950 (non-negotiable)

Type: Single Family; 3 bed, 2 bath

Rent: $1,095/month

Cash flow: $270 (25% down) or $205 (20% down)

Cash on cash: 11.2% (25% down) or 10.5% (20% down)

Assumptions: 7% vacancy, 5% capex, 5% repairs, 8% property management

Any thoughts or suggestions? 

@Chris Szepessy Thanks, Chris. Are there "property managers" that do AirBnb? Ideally the location would be in the NE - either western MA, VT, NH, or upstate NY.

The situation: I live overseas with my family, but we return to the U.S. almost every year. When we return, however, we end up staying on friends' couches, or in family's basement. It's getting old fast. Practically speaking, I can't buy a property just to have it sit idle for 10 months out of the year.

The question: Does anyone have any ideas on how to purchase a property, but have it available for  4-6 weeks over the summer months? Ideally I would like to leave a vehicle, clothes, bikes, and a few other things available for my use when I stay there.

Thank you!

@Wei Jie Yang Thanks for bringing this topic up! I've just learned about Bridge through the BP Podcast and think it might be a good fit for me.

@Nathan Brooks I'm a bit caught up in analysis paralysis (going on my 4th year). My real hang up has been that I work overseas and only really get back to the U.S. every year or two. I had been looking in one midwest market because of family nearby, and started to build my team. But now that family may be moving from that area, there is no real reason to buy there. It seems that Bridge may be a good way to get my first "door" and get into real estate investing.

Welcome @Rupa Nair! I'm looking to invest in the MSP area as well - but newbie and looking for my first property.

@John Woodrich I'd be interested to know more about the "Mpls shot spotter map" you mention.

@Jordan Moorhead

Thanks for the message, Jordan. That's good to hear that you've had success with purchasing property sight unseen. I read a BP article that stated something similar, that trusting your agent and inspector will likely tell you more than you can see for yourself. I'll look into the BP rental calculators. Thanks!