All Forum Posts by: John Leavelle

Howdy @Cody Smith

Not sure where you are getting your financing information from.  But, this is considered a commercial purchase (not Residential).  Therefore, it would not be a 30 year term.  More like 20 years with a Balloon payment in 5 years.  The interest rate may be slightly higher.  You would also be require to put at least 25% as a down payment.

Your numbers are more optimistic than conservative. When you analyze a property use current rental income. Not what you think you can get. The purchase price will be based on the current NOI and market Cap Rate. So it is important not to fudge numbers. If you truly want conservative estimates stick to the 50% rule. Example: I always want to be able to cover one month of rental income ($3,450) for my annual Vacancy reserves. That's 8.34% or $287.50 per month. The description says only 5 units occupied. You say you would most likely have a PM yet you didn't include that expense in the analysis. 10% is average so that's an additional $345. Even if you end up managing yourself always keep the PM expense in the analysis. Your time is worth something and if you decide later to add PM services it has already be included. Your CapEx amount may or may not be to low. It will depend on the current condition and life expectancy of the property's major components and appliances. You would need to have it inspected to determine the condition. Is there any owner utility costs? How is responsible for lawn care?

As you can see your Cash Flow is not as good as you think.  I would stick to the 50% rule until proven differently by actual numbers.

Howdy @Justine Scheuher

Been going through old post and saw no replies to this post.  I know there was a problem veiwing reports a couple of weeks back.  Anyway here are my comments and questions:

1.  For Buy and Hold deals I look for Cash Flow more than Appreciation.  Make sure any additional upgrades will directly reflect in an increase in Value.  What is your primary goal?  Cash Flow or Appreciation?

2.  If your goal is Cash Flow why are you using a 20 year amortization verses 30 years?  Your P & I would be lower resulting in improved Cash Flow.

3.  Your Expense amounts are too optimistic for a Proforma analysis.

a.  I always want one month rent ($800) for Vacancy Reserves (8.34% or $66.72).  If the actually turns out to be your 3% ($288) then you have better cash flow for that year.  However, if the property stays vacant for 30 days you will be in the red -$512.

b. Water Heater is 15 years old. What else could be lurking waiting to breakdown? 3% for CapEx is not going to cover these costs. The problem is you don't know what you don't know until you have the property inspected to determine the current condition and life expectancy of all major components and appliances. I understand the property has been updated significantly. I would never go below 5% CapEx. I base my final number on what the inspection report reveals.

c. Again I would not go below 5% for Repairs.  $288 a year will not cover much repairs that a rental tends to have.

d.  You did not Include Property Management.  Even if you plan to self manage you should include this expense in your analysis.  Your time is worth something, right!  If you expand your portfolio you may want a PM service later.  If you did not include it in your original analysis it will be hard to cover to cost and maintain positive Cash Flow.  PM 10%.

It is better to stay conservative when analyzing properties.  Don't fudge numbers to make the deal look better than it may be.  You will sleep better at night in the long run.

Howdy @Joshua D.

When you first entered this post the Report would not display (along with a lot of other peoples posts).  This is the first opportunity that I have had to revisit some of the posts.  I would suggest in future post you indicate what type property it is and what type information you would like us to review/provide.  You may get better responses.

Here are my comments and questions on this report:

1. What type loan product are you using? 15 yrs./5.75% APR/No Down payment.

2.  Why is there a $15K surplus?  Loan amount is $50K.  Purchase price $35K plus Rehab $15K = $50K.

3.  I would increase Vacancy Reserve to cover one months rent (8.34%).

The remainder of the report looks good if they are realistic numbers.

@Account Closed

The report link is not working 

@Mark Williams

The report link is not working.

@David Ferrier

The report link is not working.

@Awais Sheikh

The link to the report is not working.

Howdy @Mike Stadel

Was this all cash?  Or do you have a loan to pay off?  

You say you are all-in at $150K. You expect the property value to be $200K. Lenders will provide 75% LTV for Cash-out Refi. That's $200K x 75% = $150K. I'm confused, where are you short on getting your cash invested back? It looks to me like you are.

What is the rental rate you expect?  That is the real determining factor to me as to holding or selling.

From the overview this looks like a decent BRRRR deal.

What am I missing?

@Ali Joseph

No.  I am not a Wholesaler.  I just see Wholesalers’ commenting on posts.  If someone likes what you have to say they can pm (personal mail) you for more specific discussions.  Plus, I see deals advertised over on the MarketPlace all the time.

Howdy @Ali Joseph

You are here.  Post your deals over on the BP Marketplace.  Also, set up some alerts for cities being discussed where you are wholesaling.  Join in on some of the conversations on this and other forums to get your name out there.