All Forum Posts by: Kevin Rollins

I am a newbie although I have been throwing deals into the BP Calculator for over a year to gain understanding. I would like to purchase a multi unit soon. It seems that the greatest factor in the quality of the deal is not the cost to acquire the property but the rent on the units. Increasing rent by $50 per unit over three units has a greater effect on cash flow than a $25 grand difference in the price. So, what matters? It seems silly to worry about 5 grand in the cost of the building up front when it has such little impact on the cash flow. Am I missing something? Thoughts? Also, I'm finding that I'm passing on buildings because of the limited cash flow that other investors are purchasing.

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*This link comes directly from our calculators, based on information input by the member who posted.

I'm just getting started and would like to hear opinions about using a HELOQ to purchase rental properties. Can I purchase a property with a HELOQ and move it to a conventional mortgage in an LLC later? What are the pros and cons? Thanks for any input.

Thank you all for your replies. So it sounds like having the property in an LLC removes it from the FAFSA equation. I will say, I am a teacher and completely agree that the value of a college education has and is going to change. No, I can not predict the future and know that my sons will attend college. I do think it's more likely than not and want to ask all the questions and be as prepared as I can.

Is there a way to avoid it being used in the equation? Does it change things if I form an LLC?

I'm beginning to read a ton and analyze deals and my wife asked me a question I didn't have an answer for. How will all of this effect our children's ability to access financial aid when it comes time for them to apply to college. I have a 4 year old and a 6 year old. She's not comfortable moving forward with an offer on a potential multi family until she knows more about this.  Thoughts?

I dumped my numbers into the BP calculator and it pumped out the 7.02 Cap Rate. Any thoughts on what I might be doing wrong? I'm doing a lot of research, reading and listening, but I'm still a newbie and open to any blunt advice that's out there.

Thanks 

Both units have tenants. Both have been there for over a year. They were on a lease, but are now month to month. I spoke to one of the tenants during the walk through. He indicated that they would like to be there for at least another year.

Although the units are three bedrooms each, both are being rented by young couples with 1 child.

The rent is a little below market, but I would likely not try to change the rent immediately on these tenants. I'd rather have good tenants than make a couple of extra bucks than to lose money on the other end with poor tenants.

Thanks for the questions and input. I'm a newbie and frankly still forming my goals. Right now, I'm just looking for something that earns me a greater return than the bank while building equity in a building that I can sell in 15 years to help with my kids college expenses.

I'm thinking in a year or two I will be able to get more for rent, but obviously there are not guarantees.

I'd love to redirect some expenses to the tenants, but both units are off the same water and heat.

Ultimately I plan to manage the place myself, but have included management so I'm not locked into it if I acquire additional buildings and can't or don't want to manage in the future.

The asking price is $135,000. They have countered my $110,00 with $125,000 and aren't budging from that. My offer did not include asking for 2% towards closing, but could ask for that.

Thanks for any and all help.

This property is a duplex in a college area with good rental history (not college kids)

Purchase price $125,000

Rent $1850

Electricity $25

Water/Sewer $100

Insurance$100

Heating $150

Vacancy (5%) $92.50

Maintenance (5%) $92.50

CapEx (5%) $92.50

Prop. Management (10%) $185

Mortgage Payment $496.13

Taxes $280.83

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Income $1850 - Expenses $1614.47 = $235.53 cash flow

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Total cash needed $37,645

Cash on Cash = 7.51%

Cap Rate = 7.02