All Forum Posts by: Bill Schrimpf

HI @Jay Porras

I just formed my first LLC in NV, its very easy and inexpensive and your state probably has something similar. You need to find a resident agent if your out of state and complete the https://www.nvsilverflume.gov/startBusiness web site. I used an attorney to draft an operating agreement so I'm in for only the filing fees and an hour of "attorney" time.

@Matthew Dick Hi Matthew - Welcome to BP. I'm new to REI as well but will will purchase my first buy and hold unit in the next 30-60 days. I'm just over the hill in Reno and may want a partner for a second deal late this summer.

Good Luck!

Sound like my numbers are sane. Condo's in my area would likely be a painful investment.

Thanks everyone.

@Steve Babiak Thanks Steve! That gives me a different way to measure the HOA.

@Brett Russell - Thanks for the quick reply and I will include only P&I in my mortgage number! That will help.

Assuming the HOA is properly ran (it's a professional one, hundreds of units) then I would need to dig a bit more into details. 50% seems high for condos as some of the opex and capex expenses is reduced compared to SFR, assuming competent HOA. Would 35% - 40% be better as a rule of thumb? I know I would still have to do my due diligence; I'm just looking for a better way to screen condos based on what others have experienced.

I need a sanity check please! I see too many condo deals like this in my area (Reno, NV) and keep passing because it looks like these wont cash flow. Am I doing this right, can somebody check my math and logic please? It just seems like the 50% rule should be less for condos, although when I asked before, I was told to use 60% for condos! Is that right? These numbers are estimates, for screening.

My goal is buy and hold to generate passive cash flow from rent.

The following looks painful, is that right?

Purchase Price = 64,500

Finance 80% = 51,600

mortgage payment = 324 (includes taxes, not insurance)

HOA = 155

Average Rent = 690

50% rule = 345

My cash flow estimate calculation:

Rent - mortgage - HOA - 50% rule = est. cashflow

690 - 324 - 155 - 345 = Pain

Thanks in advance!

@Jean Bolger @Account Closed

Thank you both for your input. I'm glad i asked before I got into something problematic!

50% Rule and Condo HOA

The 50% rule looks like it's a rule of thumb for properties where the owner would be responsible for a long list of capital and operating expenses items such as roofs, HVAC, landscaping etc. Does it make sense to use a different percentage for a condo where the HOA takes care of many of these items?

Maybe 25%-30%, since it’s still prudent to budget for interior repairs and vacancies…

Thanks in advance for your thoughts!

@J. Martin - Thanks!

Thank you all for the info, I truly appreciate it.

@Will Bernard - Will you please expand on your comment about using leverage wisely? I imagine there are some obvious things to look for like credit/debt ratios, interest rates, loan terms, basically stuff I learned when purchasing my primary residences. What would be some tips that set the investor apart from the owner occupied point of view?