All Forum Posts by: JoJo Tucker

I should add property taxes are included.

Hello Everyone,

I am creating a proforma for Houston, TX buy-and-hold properties. I wanted to ask the BP community how they account for fixed and variable costs.

Currently, my only variable expense is Property Management fees. I have property management fees at 18% of gross scheduled income (10% monthly fees plus 8% leasing fees). My fixed costs include any potential HOA fees, Repairs and Maintenance (1% of Purchase Price), Capital Expenditures ($2000/yr), Travel ($500/year), Vacancy at 8%, and a Fixed Rate mortgage.

My question is, what variable expenses do you account for? How? Do you keep vacancy at a fixed percent year-to-year? I assume a 1% Y.O.Y. gross schedule rent increase. 

Thank you!

JoJo

@Joshua Lopez Look into "Long-Distance Real Estate Investing" by David Greene, published by BiggerPockets. I also suggest "The Millionaire Real Estate Investor"  as previously recommended. "The Millionaire Real Estate Investor" does have a little bit of that self-help feel to it, but nonetheless a really good read with a detailed plan and strategy. 

@Jason L. "I'm still budgeting for around $1/SF or $1000 (whichever is higher) of annual maintenance". 

Does this include CapEx costs?

@Andrew Miller You could see if the seller would be willing to carry back a note (owner provided financing), although interest rates are typically higher. 

@Cody L. Thank you for the reply and insight. I have been trying to go at this thing from all angles, from DIY to building a team. I really do appreciate the direct response, only way I can continue to grow and learn!

Thank you, again!

Hello Everyone,

I have been configuring a contact list of prospective investor-friendly Houston real estate agents that I may like to work with to assist my search in buy-and-hold properties. I am asking the BP community if they have any recommendations. I am looking for an agent who:

- has experience working with RE investors

- has experience working with out-of-state investors

- understand the necessary metrics in finding a cash-flowing property (ROI, Cash-on-Cash, etc.)

- has extensive knowledge of the local market and demographics

- who may have invested in RE buy-and-hold properties themselves

Any referrals are greatly appreciated. Thank you so much!

Hey @Account Closed,

I have read a couple of books that I really enjoyed. "Commercial Mortgages 101" by Michael Reinhard, "Long-Distance Real Estate Investing" by Daivd Greene, and "The Millionaire Real Estate Investor" by Gary Keller. 

"Millionaire Real Estate Investor": reads as some what of a self-help book (in a good way) with detailed steps of how to build a criteria, what to look for. It also has a collection of models, strategies, and testimonials from other investors.

"Long-Distance Real Estate Investing": A very detailed book with precise steps to take towards making a RE investment, albeit out-of-state. Majority of the information provided in this book may be applied to local RE investments as well. 

"Commercial Mortgages 101": Provides a different perspective from what lenders look for. Gives great breakdowns of various metrics to look at to make a much more safe and sound investment. The book's target audience is certainly mortgage brokers and or RE investors who are looking a larger commercial properties. However, I think it is a must read.

I am very new to the REI world too, but my goal for my first purchase is to be one of much lower-risk. My pro forma reflects that with very conservative calculations. I read the book Commercial Mortgages 101 and although it may not apply directly, it provides a different set of metrics a lender may use in vetting a client (Debt Coverage Ratio). I apply these metrics in addition to the traditional ones used by RE investors.

To really answer your question, with my first purchase I am just trying to find something that will yield any positive cash flow-enough to cover any expenses, debt service, and unforeseen repairs (easier said than done). A property that needs moderate repairs and updating so I can force a little appreciation myself. But I am trying to mitigate risk as much as possible with my first purchase and find something that may not yield higher returns as others would like, but will certainly not give me as much headaches or deter me from investing further. 

I am getting my CA RE license and will begin selling businesses this year. I view buy-and-hold cash flow as an instrument to stabilize my future income that comes with many ups-and-downs. My long-term goal is to hedge the risks and inconsistent cash flow of my current job, by establishing passive income with safe and sound investments. 

I am very new to the REI world, however a friend of mine suggested I look into REITs (Real Estate Investment Trust). I decided to go a different route to primarily focus on buy-and-hold rentals located out-of-state (Houston, TX to be exact). I would assume REITs take a little bit of the fun out of a DIY investment strategy, however it may remove many of the headaches as well. Again, I don't know much about them, but they may be an interesting venture for someone who is removed as much as you are.

Best,

JoJo