All Forum Posts by: Marten M.

@Tim Herman Yes my mistake - I did calculate those costs into the numbers I ran, I just forgot to include them in my original post. I've updated it. I accounted for 10% repairs and maintenance. The cash flow I originally cited had this baked into the NOI, so it's still at $479/mo. The roof, A/C unit and 1 of the hot water heaters have been replace recently (I'm guessing when the last section 8 inspection was done which was 1 month ago).

Long story short, I've been looking to pick up my first MFH this year and came across a property that is cash flowing very well. It's a 3 BR/1 Bath duplex that currently has tenants in both units. Both tenants are on Section 8 so I'm learning the in's and out's of that program, but it's cash flowing much higher than non-Section 8 comparables. According to the seller's agent, they've received multiple offers on this property, have asked all interested parties to submit their best and final offers this week and will be making a decision by Thursday. Both units are the same size, with similar amenities. Pending inspection, I don't believe either unit will need any renovations anytime soon. Newer A/C units, roof, water heater, etc.

Tenant A: Lived there since 2018. Lease expires in July but I believe wants to stay. Current rent = $1,250/month. FMR in this area for this particular size unit is $1,575 per huduser.gov. I can likely raise this to ~$1,500 when it's time to renew the lease at no additional cost to tenant.

Tenant B: Just signed a 1 year lease on April 31st. Current rent = $1,520/month. This rent will have to stay until it's time to renew next year and/or sign a new lease. It's close enough to the max FMR that I have no issues with this.

Average Rent = $1,385/unit.
10% Vacancy = $277/mo.
10% Property Management = $250/mo
Taxes = $120/mo.
Insurance = $200/mo (rough estimate).
Water = $150/mo (paid by LL)
Garbage/Lawn = $100/mo (rough estimate)
P+I = ~$885/mo (estimated 5% interest rate over 30 years, full asking price with 25% down).

I realize that some of the expense percentages are a little on the high side. Also I will be managing the property myself, but wanted to account for a PM down the road. Regardless, after all expenses are accounted for my numbers show a net cash flow of $479/mo. This is a conservative number and is very likely to be higher unless I'm missing something.

Asking price is $240K - my initial offer was $230K. As mentioned above, they decided to wait until Thursday to review all best offers before making any decisions. My question is, would you offer full asking price or make an even more attractive offer by going above what they're asking? This property is in what I would consider a low C class area so I don't expect much (if any) appreciation. That being said, the cash flow is still solid. If I were to offer higher than asking price to lock down the deal, the only thing that would change expense-wise would be my P+I, but that would be minimal. 

Leave my offer 10k below asking, meet asking price, or go above - what would you guys do? Is there anything I'm overlooking? I greatly appreciate any advice you can provide, thanks in advance!

@Christopher Sanchez would you be willing to share with me the spreadsheet you provide your clients to analyze properties? I have a very basic one I found but it sounds like yours might be better.

Happy New Year everybody,

I've been browsing browsing BiggerPockets for quite some time, but this is my first post and I'm looking to get some advice on my situation. Before getting too involved in the numbers, I'll give you all a little background about myself - I'm 29 years old, currently own a fully paid for 3 bed/2 bath SFH in the Tampa Bay area and while open to going other routes, I'm leaning towards investing in additional SFHs and renting them out.

I apologize in advance for the long post, but I want to give as many details as possible. This is kind of a two part question, so I'll start with the current home I own. 1/3rd of my house was left to me and in 2017 I decided to purchase the remaining 2/3rd's and move in. I currently live here now and in 2018 decided to rent out one of the 3 bedrooms for $550/mo + utilities. Financials on this purchase are as follows:

Property was appraised at 184K. I already owned 1/3rd of this so I only paid 123K (not sure how to calculate this when analyzing the investment). After the purchase, I spent 9.9K on a new roof and 1.3K on the AC system. I haven't had the property appraised again, but per the 2019 County Property Appraiser the Just/Market Value is 232K. 

The house is pretty dated and would likely need a full renovation - floors, bathrooms, kitchen, etc. I was quoted roughly 50K for this project. I'm not sure what the ARV will be, but similar houses in my area have recently been selling for ~300K and I believe I could likely rent it for ~2.2K/mo.

Question #1 - Funding: In order to fund the ~50K renovation, I'm going to need to take equity out of my current home (keep in mind I own the house outright, have no other debt and have somewhere around a 740 credit score). Additionally, I'd like to put 20% down and invest in another rental property this year. I do not have another property lined up to purchase immediately, so I will be in the market for an unknown amount of time. Should I take out only the amount for the renovation and try to fund the 20% investment on the unknown second property separately or do it all in one loan? Secondly, should I do a HELOC, HEL or an alternative?

Question #2 - Living Arrangement: I know that while I'm living in my current home, charging my roommate low rent and not renting my 3rd bedroom I'm not maximizing my ROI. When I do purchase a second property (which will likely need renovations as well), should I just move in there while the work is being done and rent house #1 or stay in house #1 and wait until the reno is done, at which point I would attempt to rent that property. I'm not thrilled about moving and like my current home, but I am willing to make the move if it seems like the smartest thing to do financially. I don't plan on living in house #1 forever anyway.

I'm sure I'll have many more questions but I don't want to be overwhelming. I greatly appreciate any advice/insight anybody can offer!