All Forum Posts by: John Sherwood

Hi there,

I'm looking for a recommendation in the Louisville, KY area for someone who can build a staircase for a 2nd story deck? Contractor or carpenter.

Thanks in advance!

I'm looking for recommendations for Vinyl Window replacement for a SFR in Louisville, KY. BiggerPockets forum search hasn't returned much. Appreciate any leads.

Thanks,
John

Hi everyone,

I'd love to check my math. Would you do this deal? It (almost) meets the 1%, but my math says 3.8% cash on cash. Am I analyzing it correctly? Even if I tweak the purchase price to 1% (320K), still only 4.8% cash on cash.

Details:

4 Plex (2bds), B Neighborhood 

List: $335k - 25% down ($84k) @ 3.5%, Closing: $10k 

3 of 4 units updated, estimated CapEx = $12k

Total Cash Invested: -$106k ($84k+$10k+12k)

Rents: +$3,231/mo ($785, $785, $827, $834)

Taxes: (0.93%) -$260/mo

Insurance: (0.68%) - $190/mo

Landlord pays Water/Sewer/Trash = -$250/mo

Vacancy (10%), Repairs (10%), Capex (6%), Property Mgt (7%) = -$1066

Morrgage: -$1,128

Market rate is ~$850 - max rent in a year = $3400/mo (maybe get the 1 update unit to that this year)

I come up with CashFlow of $337/mo ($84/door) $4,045 annual 

Cash on Cash of 3.82%.

NOI: $17,5k

Hey Logan,

I recently purchased a 4-plex in Louisville. I’m looking to expand my portfolios in the area with some larger properties this year as well  Would love to connect some tome  

Thanks,

John 

I'm using Property Management of Louisville on my 4 plex. It's early days, but so far so good! They were an excellent partner as I evaluated properties. 

Brian Pfeiffer was my main contact.

https://www.pmofl.com/

Hey @Nate B.. NOTE at the bottom "Owner pays utilities." Probably doesn't have separate meters. So, you need to factor that in. Though, I suppose you could look into trying to split them through RUBS (ratio utility billing system), or putting in things like True Submeter.

But, when I ran the numbers for it a couple of weeks ago, the landlord utility costs made the numbers not work for me.

I'm working on another deal (not pursuing this one), so I'm happy to share what I have with you to see if it aligns.

Eeek, sorry to hear that about Cervices. I guess I'll cross them off my list ;-) Anything about your job/historic home that you think scared them off? Or just typical contractor flakiness?   Thank you for the contractor referral - if they are the ones up near Columbus, that seems like quite a hike down to Louisville for them.

@Megan Gleeson - did you end up getting a quote/work done? How did it go and would you recommend them?

Yeah, I've seen similar things of 7% CoC properties being snatched up pretty quickly @Brian Roberts . My targets have been 11-12% CoC and 9-10% CapRates for properties in the "C" neighborhoods in Louisville. I've seen a few come through, but with all good deals, you have to be quick. If you get into the nicer neighborhoods, those definitely drop, which accounts for the higher risk of the "C" neighborhoods and the issues you mentioned @Craig Jeppesen.  

Thanks @Ross Gleason. Based on the awesome input I got here from everyone, I've updated my CapEx and Repair model - takes into account lifespan over 30 years, and if the age is within 85% of its lifespan, it puts the cost in the replace column, and automatically reduce the capex lifespan cost by the initial replacement cost, otherwise it just takes the replacement cost per year over the span of 30 years. Just need to refine my Lifespan numbers (and the Per Unit Cost based on the area I'm investing).

Now just to find some properties that fit my investment profile, that I can pull the trigger on quickly enough!

Thank you so much for the detailed responses @Marcus Auerbach @John Warren @Brian Roberts. That’s extremely helpful. I do have a sheet/model that has low/high costs in the area to replace items in a property. The one thing I was missing was average life expectancies for each item, since it was geared towards straight replacement costs. So, another lifespan column and I’m golden!!!
Back to the Cash on Cash, Cap Rate and Cash Flow topic. I would assume that small multi unit property values are largely driven by rents and Cap Rate? (And condition of the property). So you will see appreciation as market rent rates rise in an area. 
I understand the $100/ door target, but I have a hard time not getting hung up on cash on cash, knowing what I could get putting that money elsewhere (or I guess loose based on the last few weeks ;-)