All Forum Posts by: Michael Standish

@Enrique Santana I recently bought my first SFH rental in Muncie. I used Kramer group and would recommend them. Their agents own rentals and therefore understand what matters to investors. The contractor scene in Muncie isn't very strong but I had some structural repairs done by Cox and Son Remodeling and it was done well at a reasonable price.

@Javen Bowman

Good for you! If I were getting ready to buy my first property I would make it my own. Buy something with extra bedrooms or an additional unit you can rent out. That way someone else is covering one of your biggest costs - housing.

I haven’t flipped in Muncie but I agree with @Dentric Vance. Be diligent on finding good properties and good tenants and you’ll learn the rest as you go.

@Jaysen Medhurst

@Calvin Ozanick

Thanks to both of you - I’m going to do some more research on the local cap rates and more on the expense side to back into my purchase price

@Sam B.

Northeast Indiana is where I’m located.

Good idea on tenant interviews - I’ll do that.

The vacant unit was a hairdresser for 30+ years that just retired so I don’t think the recent tenant changes were landlord issues...

@Jaysen Medhurst: wow. Sounds like I have some more homework to do the on the expense side. I'll dig into those other line items to get a better feel for the true NOI. I'll also reach out to some local brokers to find out true cap rates.

Thanks for the help on this - I feel like this is a good deal but I'm looking to validate that with numbers.

Separate question: Do you have a CapEx number that you carry on office spaces? I've been using 8% for my residential rental but commercial is obviously quite different. The property is in great shape (newer roof, HVACs, built in '65 so the plumbing, electric is somewhat modern, etc).

@Jaysen Medhurst

Thanks for the response! 

I think the NOI will be $10,200. That $150/mo is estimated but includes water/sewer for all tenants (not submetered) and also the exterior electrical service. Insurance will be another $100/mo

So gross rent-utilities-insurance-taxes=NOI? That would be $6400/yr

What’s the best way to find prevailing cap rate? Just use Loopnet or other broker sites to find comps?

Should I just be calling a commercial agent?

I’m evaluating a commercial deal in my neighborhood and need to insight into analyzing the deal and finding comps.

Summary:

Off-Market Deal - 4 unit office space

Each unit approx 825sqft

Currently 75% occupied

Asking price $95k

Current total rents $950/mo

Bills covered by the landlord ~$150/mo

Property tax ~$2000/yr

Located in a more residential area, about 1 mile from a main strip. There is a concrete contractor in the building next door and a dental office across the street. Current tenants are a message therapist, psychologist, and web developer. All tenants are on short term leases. The seller also offered to finance the deal, if I am interested.

My main question is how to I back into a reasonable purchase price? The property seems to cashflow as-is but I’m concerned with the short term leases and none of the tenants have been there for more than 1.5yrs.

@Patrick I'm new to this as well but I would recommend talking with a CPA. I've spent a lot of time reading and listening to the BP podcasts but nothing was more helpful than talking through this with my tax preparer. He gave me insight on tax implications of owning property in my name vs an LLC, managing the properties vs having a manager, book keeping practices, etc.

A good accountant will save you far more in taxes than what you’ll pay for their services.