All Forum Posts by: Mason Keith

@Chris P. That sounds great, my schedule is crazy for about a month, I'll definitely hit you up once I might have a free day and see what meetings are

@Justin B. Hey, I'm new too, in Macon. I've been wanting to invest for some time, did some reading, but just joined this site a few days ago. Hope to hear good things for you

Thanks @Dave Visaya I wish I'd joined sooner.

@Justen Ashcraft Yeah I agree, Macon can be very hit or miss. Original plan was to buy SF homes in Bonaire, GA area renting to military families, but there are no (or extremely limited) multifamily houses for sale in that area.

Thank you both very much, I'll start searching for the right term and actually am going to start attending local REIA meetings here in the near

Tried searching unsuccessfully, if there are articles you could point me to I'd appreciate it much.

I have a potential deal coming my way, but am hesitant to work on it much without understanding the loan process better.

The property is an 8-Plex so I know I need to get a business loan but that's everything I know.

I have no RE experience, very good credit, and enough cash reserves to cover down pay with 10% of purchase price left over.

Where do I start the lending process?

Honestly even at $13,500 those repairs just seen too much to overcome. That's a lot of tied up

As a learning point, total necessary repairs are $37,373.60.

I broke down the NOI in an excel sheet to $424.08/month ($5,088.96/year). You were really close with 40% estimate versus 42.83% when itemizing expenses, that's really neat to me.

So with a 10% Cap rate, 5,088.96/.10 = $50,889.60 with 0 deferred maintenance.

From this $50,889.60 would you subtract the entire 37,373.60? Leaving an offer of $13,516? It just blows my mind that the offer really does need to be this low.

And is 10% a good general rule of thumb for cap rate? I'm clearly quite new at all this and I'm not really sure how to get a good estimate of what a cap rate should be for a given territory.

Thank you so much, you've been so much help already in my short time on this forum, I don't know why I didn't come sooner!

Thanks so much for the input, when running the original numbers it had great potential, and was even marginally +EV under current rents. But once all these needed repairs were discovered, things looked pretty bleak.

Glad to hear others agreeing that this is no good, I'm out

So for anyone keeping score at home, or if you'd like to share your input here are where the figures currently stand:

Purchase Price: $74,250

Financed: $55,687.50

Down Pay : $18,562.50

Close & Inspection: $2,625

Repairs: $37,373.60 ($22,781 has to happen now; $14,592.60 can wait, a little)

Total Invested: $43,968.50 - $58,561.10 depending upon repairs calculation

NOI (Monthly/Yearly): $778.58 / $9,342.96

Debt Service/Month: $282.16

Cash Flow (M/Y): $496.42 / $5,957.08

With so much cash needed for repairs, I'm just not seeing how this can work...guess I should thank my inspector. Thoughts on any way to salvage this property or is it just straight up move on and not even try?

@Paul Danieli Sorry if I was unclear, but the $164 current cash flow and $494 cash flow after adjusting rents was monthly. So yearly cash flow should be $5928. However, the full inspection has been completed and delivered, and there are some additional critical items to replace bringing the total investment to about $58,561.....ugh

So then it'd be $5928/$58,561 = 10.1% cash on cash, which while better than 1% or 0.5%, is still worse than I get on my stocks which require no time effort whatsoever.

I realize that all of these items do not necessarily need to be addressed immediately, but I don't feel like that should change how I do my calculations right? I will have to perform these repairs in the somewhat near future, and about $20,000 absolutely must be done ASAP.

Which as you stated will tie up about $40,000 immediately, plus another $18,561 slightly deferred. Not looking so great