All Forum Posts by: Joseph Gibney

Hi all - my wife and I made our first 4-plex offer last week and our deal was rejected out of hand.  I am fairly confident in our valuation, but just looking for a sanity check:

• Asking price:  $220K
• Rent per unit (x4):  $475
• Ratio of operating expenses to rent (all expenses verified with reasonable assumptions around property management, vacancy, maintenance, etc):  54%
• Annual capex budget of $1,900 (1x monthly rent per unit)
• Pre-tax cash flow per month $360 ($90 per door)

My valuation was  $100K-120K (1.9 to 1.6x rent).  Apparently the sellers turned down an offer of $185K earlier in the year, so I didn't have a chance.  However, looking at the numbers, I think my valuation was pretty fair - in fact, even a bit aggressive.

My feeling is that the seller just has unreasonable price expectations (and we've already moved on with offers on two other 4-plexes) but I'm curious if people think my numbers/ratios are in range.

Cheers!  Joe

Hi @Anthony Vu - welcome!  As others have stated, BP is an incredible resource - I've found general advice from the forums and very specific advice by asking questions.  Good luck in Orlando - I've got a rental property in East Orlando - my experience is that it was a great market at the bottom but house pricing has come back to the point that it's hard to find deals there that cash flow.  Best of luck!

Joe

I just closed on my first duplex in Oak Ridge, TN. My numbers are: pre-tax cashflow of approximately $97/unit, price to monthly rent 1.4x to 1.5x with an IRR of around 10.5%. Thanks to Bigger Pockets and the forums, which was a source of information and motivation. Now on to the next one!

Thanks everyone, these were great suggestions and we've now got some more reasonable quotes that should allow us to move forward.  As a side note, during this process I learned that if I choose to insure a property through a company other than the one I currently use exclusively (for home, fire, car, etc), they will cancel my umbrella policy.  Thus it looks like this exercise may result in me bidding out all my insurance products.

Appreciate all the help - Bigger Pockets rocks!

Thanks Bryan, I will run those options down and provide feedback back to the forum if I can get it done.  Appreciate the info!

Hi all.  I've got a duplex in East TN under contract.  It's the second duplex I've offered on in the last month (last one didn't make it to contract).  The two deals are similar in price & rent generation (rent is 1.5% of price).

The fire insurance quote I received on my first deal was around $650 and in my model I used that same number for the second deal.  Now that I've progressed to contract, the actual insurance quote is $1,700.  The first duplex was wood construction and apparently because the second duplex is block, the insurance company is saying the cost to rebuild is $175,000 (price of duplex is well under $100,000.  Unfortunately the additional cost of insurance vs. what I expected it to be is killing my returns and I'm not sure I can move forward unless I find a reputable fire insurance policy for $600-$800.

Has anyone else ever had this problem with insurance coming in way higher than expected and have any ideas for me?

My wife and I are hosting a Bigger Pockets meetup in Knoxville, TN this Friday evening. The purpose is to meet other local investors in the Knoxville area to network and share ideas about the market.  We will be in town for the purpose of making our first duplex purchase.  Details of the meetup:

Friday 10-24-14 from 6-8PM @ Clancy's Tavern, 602 S. Gay St, Knoxville, TN  37902

Please message me if you are able to attend.  Look forward to meeting some Knoxville Bigger Pockets members.

Joe Gibney

Hi John, thanks for replying.  I own a rental property in Orlando and was planning on making more investments there, but the market has gotten overpriced relative to rents in the last few years.  I grew up in Knoxville, so know the area well - that takes a bit of the risk out of long distance investing - and I've found the price of housing much better relative to rents, especially on the multi-family side.  Right now I am looking at duplexes but my plan is to expand into 4-8 unit buildings (they are relatively plentiful, it appears) in the next year or so.  Sorry you can't make it to the Meet Up, I will try to schedule another one on my next trip.  Meanwhile I'd love your feedback/thoughts on investing in Knoxville - I haven't gotten much response from the Bigger Pockets community on Knoxville investing.

Cheers,

Joe

We will be there from 6-8.   Look forward to seeing you.

Cheers,

Joe

Hello all - I'm a relatively new member of Bigger Pockets and a fan of the podcast.  My wife and I will be in Knoxville, TN on Friday 10-24 and would like to meet up with other Bigger Pockets members.  I've booked a table at Clancy's (popular new pub on Gay Street) and am hoping to share ideas, opportunities and networking with other Bigger Pockets members in Knoxville.  My purpose for being in Knoxville (I live in DC) is to look at multi-families - we might be fresh off of making our first offer that night!  Please respond if you are interested in joining us.