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All Forum Posts by: Matt Rauer

Matt Rauer has started 3 posts and replied 24 times.

Post: When would this property make sense?

Matt RauerPosted
  • Jericho, VT
  • Posts 24
  • Votes 8

@Jassem A. What do you mean "at the courthouse steps"?  

Post: When would this property make sense?

Matt RauerPosted
  • Jericho, VT
  • Posts 24
  • Votes 8

Too funny.  Price dropped $42k today, down to $545k.  I wonder if they found this thread :-)

Post: When would this property make sense?

Matt RauerPosted
  • Jericho, VT
  • Posts 24
  • Votes 8

@Michael Fischbach Flat roof, in Vermont with winter, I can't even imagine!!  This place is definitely out of my price range, but I wanted to use it as an example to make sure I understand the concepts of analyzing a deal.  I'm most likely looking for duplexes in the $250-$300k price range for my first purchase.

@Christopher Phillips Thanks Christopher.  I've chatted with a couple of lenders so I'm getting a better lay of the land as far as financing goes.  I've been told 25% down for an investment property from one lender.  As far as the state of this 4unit, I completely agree that some money would be needed to rehab this place.  When looking at this place, I think the rents are under market rates (probably b/c state of building).  I think this place could conservatively gross $70k/year if the units were updated.  Again, lots of capital to make that happen, on top of a over priced building, so I'm not touching it, but just wanted to chat about this to learn.

@Kevin Siedlecki Thanks Kevin for your feedback. The listing showed $8k/yr for maintenance, so you are right, the 15% of rent was actually lower than what the owner says it is. I'm not sure if that includes CapEx or not, but that would lower the NOI even more. 1 question for you though Kevin, how/why would someone get into a 4 unit like this, as all 4units are in that ~$500k range? They are in for over 6figures, so when would it make sense as an investor (ignoring the state of this building)? Would it need to be $300/unit/month so $14k cashflow yearly?

I completely agree that this is not worth it, hence why its still on the market for almost 3 months when a duplex went in under 3 days this past weekend.  Thanks again for the comments so far, I definitely learned a lot in the past hr or two.

Post: When would this property make sense?

Matt RauerPosted
  • Jericho, VT
  • Posts 24
  • Votes 8

@Christopher Phillips Good question Christopher. My wife and I aren't 100% sure yet as we own a SFH right now in a rural area. We do have interest in getting back into the city (food, theater, shopping, etc), so that may be in the cards.

So in short, I'd say yes, but I don't know if I want to base the numbers on requiring us to live there to make it work.  I like to keep my exit strategies open and plentiful :-)

Post: New Member from Vermont

Matt RauerPosted
  • Jericho, VT
  • Posts 24
  • Votes 8

@Michael Dumont II Thanks Michael for the great feedback.  I too never thought about real estate until a family.  A little after college I thought of buying a condo, got preapproved and everything.  Then I bought a boat instead.  Dumbest financial decision, but what a quality of life it provided.  I was on it 3-4 times/week for the 5 years I owned it.  Now I'm kicking myself b/c I could be renting that condo out while we live in our current house.  Oh well, live and learn.

I wasn't looking for a 2% property (though I sure would take one!), but I was hoping for 1%.  It does seem as though 0.8% is where our market is at right now.  

That's a good piece of advice/info on the schools and the type of tenants they would attract.  

Post: When would this property make sense?

Matt RauerPosted
  • Jericho, VT
  • Posts 24
  • Votes 8

Hi everyone.  I'm new to deal analysis so I wanted to give this one a try and see if I'm at least in the right ball park for analyzing deals

  • Purchase price - $587k
  • Yearly gross income - $42,461 (though for current listed rents it would be $60k)
  • Yearly Expenses (50% rule) - $21,230 ($30k w/ listed rent rates)
  • pro forma expenses - $24,700
    • Insurance - $2,400
    • Taxes - $12,000
    • Maint / CapEx - $6,300 (15% of rent)
    • Utilities (snow/lawn/water/sewer) - $4,000
  • NOI (50% rule) - $21,230
  • NOI (pro forma) - $17,761
  • P&I w/ 10%down - $30,000 ($2,500/month)

Obviously this is a negative cash flow w/ a low DP mortgage, so this house isn't worth it to me.  But would it be worth it if I got it for $100k less and the rents were at the $60k/year?

Then its $30k NOI w/ $24k in P&I payments = $6k cash flow/year ($125/unit/month).

Am I missing anything else?  

Post: New Member from Vermont

Matt RauerPosted
  • Jericho, VT
  • Posts 24
  • Votes 8

@Peter Amour Thanks Pete.  I agree that the many new units being built is a risk to the vacancy rate (and appreciation and rental prices).  Do you know when the new report from Allen and Brooks comes out?  

I have talked to some of my friends that own 30+ units in Burlington and they are still seeing crazy demand for the key central areas (college, bradley, buell, etc) that the colleges students want to be in the central action vs more the outskirts. 

MFH purchase prices are still insane, I'm seeing the 1% - 2% rule being invalid for almost all properties. ~$3.8k/month for gross rental income for a $500k MFH. Insane. It just won't cashflow with little downpayment. I'm really beginning to understand the posts I've read that say 99% of MLS listings are not worth it. I just need to find that 1%

Post: New Member from Vermont

Matt RauerPosted
  • Jericho, VT
  • Posts 24
  • Votes 8

@Katherine Rossell Thanks Katherine!

@Tom S. Thanks Tom

It is great to see a bunch of people in Vermont on this site.  I feel investing in Vermont has many options.  Burlington is sitting at ~2% vacancy rate, though purchase prices are very high.  And then there is outside of Chittenden County where you can find the MFH for the ~$100k price range. Plus condo's galore ~$150k in South Burlington.  

So many options, I"m just trying to narrow the scope and focus so I can learn and pull the trigger sometime early next year.

Post: New Member from Vermont

Matt RauerPosted
  • Jericho, VT
  • Posts 24
  • Votes 8

@Blair Knowles Thanks Blair for the info.  My wife and I will try to attend tomorrow!

You are correct in that I do own a SFH. We have young children, so renting our SFH and moving into a MFH isn't really in the cards. I think I'm stuck with the 'investment' grade lending (ie. 20% down), but I am very interested in learning more about using OPM for this and how little the banks would tolerate for my 'skin in the game'.

@Joseph Studebaker I'm glad you enjoyed Vermont.  I sometimes forget how beautiful Vermont can be.  Pretty amazing to live within 30min of skiing, boating, mtn biking, hiking and I can't forget the BIG city of Burlington (~40k) HA!

Post: New Member from Vermont

Matt RauerPosted
  • Jericho, VT
  • Posts 24
  • Votes 8

@Dmitriy Fomichenko  Thanks Dmitriy for the welcome and the links.  I'll check out the local meet ups for sure.