All Forum Posts by: Dan M

Jonathan, i was assured by my agent that multiple leases won't be a problem. i would think 2 would be ok but how would i rent the 7th bedroom on a floor by itself? i would already have 3 on each of the other 2 floors

Yes Joe, the current tenants are consigned by their.parents.

Steve, its a duplex. does that mean i could only draw up 2 leases? Not sure how i would make the bedroom on the first with just a bathroom fit into the plan.

Thanks Chris. The building I'm considering has 3 beds, a bath and a kitchen on each of the second and thirsting floors. it has one bed, one bath and a kitchen on the 1st floor. I'm hoping to be able to rent to 7 kids, maybe more? what are some of the legal troubles i might run into with this? the unit is in PA. im still waiting to talk to a re. lawyer.

This property is a couple blocks from campus. It's basically set up for housing students with small kitchens on each floor(2).

I will always need a group of 7+ kids. Since only juniors and seniors can rent of campus, tenants will be there for at most 2 years. There are rules about 3 or more unrelated people living together so I will need 3 separate leases at all times. I'm concerned about not always being able to fill the need constantly.

Renting to non students would probably be difficult and would command less rent.

As a first timer, I want to give me myself some room for error, so I won't go much higher than 200k putting down 50k. Please let me know your thoughts.

Updating the above assumptions with this will yield the following(using several tools I found on this site):

Annual Net Cashflows: 10,000
Capitalization Rate: 5%
Cash on Cash Return: 1.97%
Load to Value: 72.35%
Debt Coverage Ratio: 1.1%
Expense Coverage Ratio: 66%
IRR over 10 years: 16.8%

My total initial outlay:
Repairs: 10k-I don't really know exactly yet. Conservative estimate
DownPayment: 50k
Closing: 13k

Total: 73k

I plan to put a 190k offer on this property tomorrow. Looks like I would need to raise the rent 200+or so-I think the repairs should command that but I'm not sure. Any thoughts/advice would be greatly appreciated.

Andrew, good point, the current tenants are students(7 students) and paying that amount but the house isn't in great shape(they also pay all the bills). If I do 10k in renovations I think it would command 2700+. There aren't a lot of comparables since it's 3 units and most in the area are just 1.

I'm actually trying to get the property for around 200k. It's in need of repairs as the owner has neglected it. So I need to factor in about 10k, With repairs, I think it could command a rent of 3000/month. I'm a first timer, so I'm carefully trying to analyze all the important metrics.

Thanks for your response. 1 correction

Annual Taxes/Insurance are actually 7k. My mistake.

This would roughly lead to 1500 Monthly Payment/Expenses includes taxes and Fees. So your net monthly cashflow is +1k.

Here's very simple hypothetical situation. Would you purchase this home if you were investor looking to hold for 10+ years.

Home Price: 230k
Downpayment: 60k
Loan rate: 4.4%
Improvements/Repairs: 10k
Annual Taxes/Insurance: 15k
Closing Costs: 15k

Monthly Payment/Expenses: $1500

Let's assume it's easy to find tenants and it commands a rent of 2500$ per month.