All Forum Posts by: Neil W.

It's 5,100 sq ft

Closing on a 4 unit soon.  Purchase price and appraised value is $210,000.

Received an insurance quote with replacement cost of $450,000 with premium of $3,200. Received another quote with replacement cost of $275,000 with a premium of $2,100.

I'm skeptical that true replacement cost is $450,000 and am considering insuring for much lower to decrease annual premiums. 

What percentage of replacement cost do you guys typically insure investment properties?  Is there an easy way to estimate replacement cost?

Thanks. 

My goal in real estate is to establish long term cash flow. 

Looking at a 4 Unit town home style property.  List price is $275,000.  I think I can get it for $210,000.  

Property consists of 2 units with 2BR and 1.5BA and 2 units with 3BR and 1.5BA.

Rent is $750 + 750 + 850 + 850 = $3,200

Taxes and Insurance are no more than $1,000.  Only utility paid by landlord is water/sewer.

This is located in a prime location with high property values for the area. Market value of SFR in the area are $175,000-$300,000 I recently purchased a SFR (purchased for $70k + $6k improvements = market value $115,000) in a very slightly less desirable location and am renting for $1,000 per month so the units are bringing in near what a nice SFR does.

Rental demand in the area is strong. I put the SFR for rent and had 15 calls in 3 days. Showed 4 times and had 2 very good and 2 very bad applicants.

Two questions: 

1) Is this too good of a deal to pass up and worth the risk of high monthly expenses?

2) Is this a better idea than purchasing foreclosed/dilapidated SFR and converting them to rentals? That market is extremely competitive.

Thanks for the reply.

The units are 3br, 2br and efficiency. I wasn't a huge fan of the efficiency either, but I went ahead since there were 2 other units with multiple bedrooms. Kind of just like gravy on top.

Owner wants to sell to focus on flipping vs renting. Tenants have been there 3 years, 2.5 years, and 3 months.

Good tip on setting aside money. That's the main reason I'm opting for 0 down and pledging stock instead. The previous owner did some minor updating (floors) but there's definitely room to spend a few grand on the units when they become vacant.

Looking for any feedback. Already under contract, just interested in what others have to say. Thanks.

50k PP and loan will be for 50k. I'm paying only closing cost.

Rent = 650 + 425 + 315 = 1,390

Taxes + Insurance = 208

Water, Refuge, Lawn/Snow, Permits/Inspections = 295

Separate gas & electric paid by tenants.

I'm allocating $100 for short term repairs and $100 for long term repairs.

Total Exp = 703

Cash Flow = 687

100% Occupancy = $687 -- Cap Rate equals 16.5

90% Occupancy = $549 -- Cap Rate equals 13.16

80% Occupancy = $410 -- Cap Rate equals 9.83

50k at 4.25% over 7/20 years = 310 monthly payment

Can't figure out how to post my PDF spreadsheet.

50k PP and loan will be for 50k. I'm paying only closing cost.

Rent = 650 + 425 + 315 = 1,390

Taxes + Insurance = 208

Water, Gas, Refuge, Lawn/Snow, Permits/Inspections = 295

Separate gas & electric paid by tenants.

I'm allocating $100 for short term repairs and $100 for long term repairs.

Total Exp = 703

Cash Flow = 687

100% Occupancy = $687 -- Cap Rate equals 16.5

90% Occupancy = $549 -- Cap Rate equals 13.16

80% Occupancy = $410 -- Cap Rate equals 9.83

50k at 4.25% over 20 years = 310 monthly payment

Anyone interested in taking a look at numbers and giving me some feedback? This is my first purchase for rental.