All Forum Posts by: Martin W.

Glad Nathan brought up management. One of the hardest things to get into the head of many new investors when evaluating a property is to include management expense and turnover rate and costs being figured in. I don't care who you are, when you start valuing your time as worth zero, you get what you ask for and more.

I had one investor bring me a sheet asking what I thought about a certain property and the vacancy rate was about right but I was familiar with that property and even though it was vacant only a few days most of the time there were much longer periods when it was vacant, it was vacant often and the turnover rate was high and the prep for the new resident wasn't a once a year thing it was more like 3 times a year and because of the former owners month to month policy he got a lot of short term residents Of course they all said they intended to stay a year or two. So that expense and headache was also out of line. 

I agree with avoiding realtor commissions. The title company I use is in Maplewood, protitlemn.com.  They have a real estate attorney on-staff and could do purchase agreements as well as the closing (flat-rate, no commissions).  Ask for Jamie Bodin and mention my name, then push for their best price.  :)   I'd guess $500 for the purchase agreement and $900 to close (including title insurance, etc.).

Your plan to do grass and snow service yourself is fine. At some future date you could discount rent to one of the tenants for them to do the work. At one of my SFH, I even rent them a mower & snow blower for $120 annually.

Does your subject property have garage spaces?  I don't think the other duplex does (on Laurel).  You really think it would take $100k to rehab?  I've seen pictures and guessed $40k-60k. 

@Martin W. 

Just be careful with the "do yourself" in your calculations.  Things like cutting the grass are things you might justify as "I would do regardless" and that's fine, but you shouldn't be pricing in time and aggravation for free.  If that's the only way a property makes money (or breaks even), it's a losing proposition in the world of "investing".  It's one thing to buy your dream house that just happens to have an investment property in the basement that kicks in a little icing on the cake... it's quite another to buy a multifamily for your family as an investment strategy.

Do you have an exit strategy for the house or do you plan to live there forever?  If you do plan to move, but hold, are you going to continue to manage it yourself and mow and shovel even though you are doing both those things at your new residence?

Nothing wrong with accepting a second job as a handy man on your own rentals but that's how I'd think of those types of things... not something that provides a return on your investment. 

Thanks, have not considered moving in the near future, but should always keep that in mind.  Would probably hold this property along with my current residence.  Current tenants are responsible for mowing and shoveling..

Have not looked into cost of shoveling and mowing, but should do that.            

There's another duplex in Stillwater for half that price.  The other one needs some rehab but would be somewhat more profitable.  Of course, turnkey has it's advantages.

Yeah, I have been in the one that is half price, estimating putting in ~$100k to get it in as nice shape as this one.

In Woodbury (nearby city to the South), water is about $100 / 3 months.

Importantly, you won't be able to find tenants (at market rate) until February.  November through January, no one here wants to look for new places to live.  Try to push-out your closing to February or March.

Thanks!  Did not know about this...

I have a good resource for local title company (no affiliation); they could help you avoid real estate agent commissions if you choose.  I also have mortgage broker and real estate agent contacts.  Let me know if you want any of those. 

Trying to do it without getting a realtor, but we'll see.  Might want to drag it out a bit in order to get closing in February.

How much are you estimating for insurance? and what would the property taxes be? How long will the loan be for 20 or 30 years?

Water must be cheap there, I pay $100 - $140 a month on a duplex in Utah...

Estimating based on my current bills next door, we pay $80/qtr based on family of 5 and quite a lot of irrigation, so not quite doubling would be reasonable.

2.5% for CAPEX and repairs? $500 a year?

I meant 2.5% based on purchase price of $200,000-->$5,000

You'll spend that just getting the unit rent ready you expect vacant each year. What about grass and snow (generally LL responsibility on a multi)??

Live next door, so I would be doing that...

Taxes should be 5 - 10% ideally...

Can't do anything about it, great school district and taxes are roughly 15%.

Insurance should be about 5% ideally...

Property Management will be 8 - 12% dependent on doors and how much their leasing fee is.

Plan to manage myself

Water runs me about 10%...

Then you have vacancy, repairs & rent readies, and CAPEX... Keep that around 20% and you've hit the 50% rule.