All Forum Posts by: Jonathan Woelfle

I do have a property I do this with. It came out by accident as I bought the house as Owner Occupied. Lived in it for just over a year and rented out rooms. The intention at the time was to rent out the whole house. Then I did the math. I was able to make about 300 more by renting out the rooms. The way I did this was to get basics for the house. TV, Couch, Cooking supplies, Table, and dishes. A few lamps. It all cost me under 400 and then I had common areas covered. I have found in the past couple years that the tenants often have their own stuff they add to it. Then I just take back what they don't want and use it on another house. My next house I plan to do the same. It just makes the math/profit work out better for me. The tenants are all easy. I just make sure they have a job, no criminal backgrounds, and are thinking 6+ months. I have had no issues... well very little issues. There was some bickering between the tenants. I was able to handle it and then also had to remind them that they are grown adults who should be able to manage these things in the future. Hope this helps!

Originally posted by @Aaron H.:

Brandon's book on Rental Property Investing (in the BP store) has an awesome quick chart to help estimate Cap Ex (it's in Chapter 5). I think he said he stole it from Ben Leybovich or somebody else that knows what they're doing.

Thanks Aaron! I am using this to a degree, but just seems a little to imprecise. The roof on 1500 two story won't cost the same on a single story 1500. Also it seems these numbers stay static no matter the home you are buying which doesn't make sense to me. If you are buying a 100k house and a 500k house then why would we be looking at the same CapEx? I can get a lot more precise by pricing it all out, but that is going the opposite direction of making it easier. Using Brandon's numbers and offsetting with a Home Warranty I have my CapEx at 165 a month. That is 165 across the board despite if I am buying in North Carolina, Washington State, or Texas. Despite buying 400k home or 125k home. Cost of goods and building change per state. Hence me being unsure how to run these numbers.

Hello All,

I am looking for advice on how to figure out CapEx when running the analysis on a deal. I have seen many different ways, but when trying to do it quickly I become quickly unsure. This seems to be the one item that quickly slows down and analysis as you can just get stuck in minitua. Does the house have a garage, how old is the roof, are we looking at AC, etc. If anything I tend to over estimate and then I know that can blow my numbers out of the water depending on the deal. So I am curious what methods some are using to do this?

One Method I have seen is using a Home Warranty to cover appliances and major systems. This costs 39 a month and then that covers some big ticket items. You still have to take into account roof, driveways, cabinets, landscaping, and structure though. Also when I run through what it does cover it seems to be mostly items that are cheaper like appliances. Also if you were to save this same amount and then not have to use it then you could possibly use the money not used on next deal. That said I am a buy and hold investor. How do you figure out CapEx when analyzing a deal in a way that is not labor intensive?

We are all going to be at the back table 

I like the Tacoma area quite a bit as I see long term potential. That said the areas are very hit and miss. That area is a prime example of that. I have friends that live over there and love it. I also know of some homes that are nearly flop houses. You raise a neighborhood up one home at a time. Be a good landlord. Maintain the property. Get great tenants. Raise the area up.

Welcome Shane and congrats on all the amazing success already! I have to say the forums will really blow you away. The details you pick up are what I love. It’s one thing to share what you have done, but even better to hear how you did it. You have some great successes under your belt already. Would love to hear how you did it. 

So the question you really have is not to do or not to do, but what your risk tolerance is. My risk tolerance is low. This is one of the reasons I like property investing. You need to decide what your risk tolerance is. That said I will comment on some of what I have seen in the comments. I don't do purchases with negative cash flow. That is crazy talk to me. Economies go up and down. Your property should be able to stand on it's own two legs. If it can't then you shouldn't be investing in it.

Now this is not to say you can't do low cash flow or better yet find ways to house hack it. I know my rental markets really well. If I see a 2 bed 1 bath going for under market value I ask why and see about improving it. So think outside the box on some of this. I am in the Seattle Market. Based on the numbers I see I would invest in South of or North of.

When to buy. I hear this question a lot. It is also nonsense to me. This is not a question of when. This is a question of numbers. The math does the work for you. If the numbers add up you invest. If the don't then you don't. That is it. Nothing more complicated than that. So that said you may want to review new ways to find deals. Go outside of the MLS. Hunt down clients. You can walk it to find locations with potential. You can ask Title for leads at usually 5 cents to 10 cents a lead and start mailing them. Good luck out there!

So I agree with the idea of just not renewing them. I think it is the best and easiest answer. That said they pay their bills. Not on time, but the pay them. How are they as a tenant otherwise? I ask because another solution would be to up the late fee. They could have just done the math and realized it made more sense to them to pay late than on time. Make it make less sense or more sense for you. We get caught up in our properties. Get tied emotionally to them. Take the emotion out. Do that Math and see where that math starts making sense for you to deal with this hassle of them paying late.

Yeah I love that place. I went before the renovations and once since. Thought why not head here for a meetup! Can't go wrong with good food and drink.

Just a couple REI investors chatting over Coffee and Beer!