All Forum Posts by: Kevin S.

@Jill F. actually 60 minutes could be (and possibly should be) the determining factor. All other things being equal, if you went with the 2nd applicant and the 1st applicant filed a Fair Housing Act discrimination suit against you, what would be your defense for not having picked the 2nd applicant? If both of them meet your criteria you're safest off choosing the first one to apply, and your reason for denying the 2nd application is that there was a qualified applicant that was "in-line" before them. I understand you're just checking to see what other criteria people may be using, but it's a risk to change your criteria in the middle of the process AND you've posted it on BP which makes it public knowledge now. All that being said I'd go with applicant #1. Good luck!

@Michael Riba Assuming that your rental rates are correct, this would be a pass for me. You're already at a negative $242/month cash-flow and looking at your expenses you've definitely underestimated them. Vacancy should be 8% as 8.33% per month gives you one month of rent saved up each year (1/12), CapX and Repairs are definitely way too low at 2%, I'd probably go at least 5% for repairs and 10% for CapX. Just glancing at them, property taxes of 16% look high to me, but I'm not familiar with the area so that could be correct.

I know you mentioned certain "synergies" which help make this a good idea for you, but if you were referring to living in the 5th wheel on the property and getting rid of storing the cargo trailer, well you've already said you don't want to live in the 5th wheel much longer so I can't see that as a long-term win.

Overall, ignoring the underestimated expenses and everything else, you're report basically shows that you'd be spending $180k for a negative return, so unless you're banking on the property appreciating a ton in the future (which based on pg. 2 of the report it doesn't look like) I'd say this is an opportunity you should just pass on, but that's just my opinion.

@Connor Burke just based on my quick look 1) all I can see is the outside pic you posted in the calculator, but based on the age of the house from that pic and the description mentioning needing a "little TLC" $8k may be low for repairs, 2) if it were me I'd up the vacancy to at least 8% since 8.33% each month would give you a month's rent set aside each year (1/12), 3) again, I don't know the age/condition of the house but my guess would be 7% CapX is a bit low, I'd up it to 10%.

Not being familiar with the area, I won't comment on the assumed ARV, rent, water/sewer, or property taxes you used.

@Leah Roberts The two things I notice are 1) typically it's considered a good idea to budget for management expense (usually somewhere between 8-10%) as some day you may need to outsource that rather than self-manage, and 2) you might consider bumping up your vacancy to 8.33% since that would equal one month of rent saved up for every year your tenant is there. Good luck!

@Sean Jany A couple things jump out to me looking at it: 1) your closing costs seem low, 2) the monthly projected income seems off compared to the property description, are you running your numbers based on it being fully rented out (even though you'll live in one unit)? 3) I'd go with Vacancy of 8.33% as this will mean you save up one month of rent every 12 months, 4) 3% repairs seems low, if it were me I'd at least bump it up to 5%, and 5) even though you plan to live there and self-manage there may come a day where you want/need to outsource management of your properties so it's usually a good idea to budget for management costs like @Doug Shapiro was saying.

@Deborah R. I'd personally up the amount of capX and repairs to 10% and 5%, respectively, however given that the house is <10 years old I can see where you're coming from there. I'd definitely increase the vacancy to at least 8% as that would get you close to one month's rent set aside each year (1/12 = 8.333333%). I have no information on your area and what rents go for, but I would be careful on being overly optimistic on rent, make sure to back up your numbers with research on Zillow, craigslist, rentometer, etc. (if you haven't already done so). Good luck with the purchase!

@Will Gaston great, thanks for the info!

Thanks for the feedback @Will Gaston. What kind of price-point have you seen for resurfacing?

I've got a tile shower that is original to the house (so 1975) that really needs to be refreshed, the tile is not the best color and the groute is discolored or missing in places. I wanted to see what the BP community's take was on having the shower resurfaced versus having all the tile ripped out and replaced. Has anyone had experience with resurfacing? Was the cost truly a lot less than just replacing the tile and do you think it was worth it?

@Curt Smith Thanks for the info!