All Forum Posts by: Jonah Hartsburg

@John Ellis Nailed it. I wouldn’t add to what he said. 

More leverage isn't always better, but getting better returns on your money is the main reason for high leverage. Plus, if you can buy below market on each property, you earn more instant equity with each buy. So I would look at your ROI after you have the expenses down and know how much you need to put in of your own cash (including down payment, acquisition costs, and rehab). Then you should take a personal assesment to balance the ROI with your risk assesment of how much you can property manage and if the market takes a dip soon. Again, a deal is a deal is a deal is a deal...so if it's a deal and you have some left over for unexpected repairs/maitenance, it won't matter as much how leveraged you are.

Great! Keep me updated on what you find. It’s good to hear the cap ex seems recently updated. I would definitely look into how the utilities are split. That makes a huge difference in cash flow. All it takes is for one unit who doesn’t pay utilities to run up a careless bill that eats all your cash flow. 

Can you break down the rent for me again? Are we still talking about the fourplex? NOI is $1400 for three units in the fourplex if you were to live in one unit?

Then what’s your financing looking like? Will you have the cash to put the renovations in if it needs $40k (or over time at least)? I’m going to see what it looks like refinancing out of $182k ($139k purchase, $40k renovations, $3k for acquisition costs). I’m plugging the numbers into our proforma (even though the BP calculators are very detailed if you wanted to use those). 

Also, if you use the desktop version of BP, you can should be able to insert a photo. Thanks for letting me take a look at your deals!

@Conrad Pels

Running comps isn’t really an exact science, especially when there aren’t local properties to comp similarly. Then from an appraiser aspect, I would probably go ahead and see if you can chat with a local appraiser and see what they say. I don’t have enough personal experience to say for sure how they would handle it, particularly with the actual person making their subjective comps and within their understanding of the market.

How much work does the fourplex need? Have you included the repair costs in your rent to all-in cost ratio (which was about 1.5)?

Nice analyses! Here are just a few of my thoughts to throw out there. 

First, I would look at your goals and how much of your energy you want to invest in these. Assuming you’re going to self manage, do you want just 2 units for now? Do you want to try to find tenants and do any of these repairs yourself on the quad? Are you looking for quick cash flow by putting in a low of work or would you prefer an easier slow, long-term process of wealth building?

But strictly from a monetary investment standpoint, the quad sounds more appealing. If you think you can do the cosmetic repairs and get the units filled, I suggest speaking with a realtor in the area on what comps you’d be looking out to try to pull out your cash with a refi. Hypothetically you’d be looking at a quad that cash flows with minimal of your money left into it. 

Now there are many more things you could consider, but if you are truly feeling indifferent about both places after considering your options, you could just send in low offers on both and see which one goes through. Sounds like the duplex might with it being on the market longer. 

Assuming it’s not in a war zone and putting aside current tenant situations (evictions, low rents, etc.), if it was our company, this property would be very close to what we look for. But we would refi out most of the down payment to try to leave as little money possible in the deal. I do question if it really only needs $1,000 in repairs. Even if it was essentially turnkey, I would be pretty skeptic of it needing almost nothing at all. The closing costs also seems a bit small depending on your financing. Is this the asking price or could you offer less? What’s your source for finding this property?

@Jones Udo-Akang 
I have only limited experience in Anderson looking at rentals and have even considered living there myself at one point. Of course, there are definitely depressed areas in Anderson, both on sides of the town and in various street-by-street pockets. For rentals, some of your target populations are the students from Anderson University and Indianapolis commuters. I’ve seen myself and heard from locals that generally the closer you get towards Edgewood on the west side of Anderson, it begins to transition to a higher-class area. The Edgewood elementary school and the golf course there are desirable for families. 

Hope that provides some help!

@Shepard Solomon

Yes, our primary focus is investing in and around Indy. While we are not actively looking to add capital investors on our team for reasons similar to what @Josh C. stated, we do provide development services (rehab work) and agent representation.

Mirgul,

I also went to a small Indiana college and didn’t look much into investing in real estate until late in my schooling. The summer before my senior year I was looking for a job and unintentionally got my foot in the door for real estate with an internship through my school at a property management company. From there I got my real estate license and joined a team of investors in Indianapolis. In my personal investing, I was able to get great conventional rates as a first-time home buyer and bought a duplex to house-hack. I’m still in the early stages of my career and investing, but I’m very exciting for the opportunities in real estate and hope you’re able to find your place to get your “foot in the door”!

@Jennifer Ward For sure! I’ll send it right over. 

@Jennifer Ward If you’re still looking for a contractor in Indy, I know of one that is good and works as our project manager!