All Forum Posts by: Mike Evans

@John Buzzard that is definitely something to think about. It has worked for me before though. 

@Joseph Gozlan Good Catch, I should raise the CapEx higher than 2%, maybe to 5%? And I will call to get closer estimates on the HOI. PM? Maybe I'm not familiar enough with the acronym, I thought it represented Property Management which I included above. Please correct me, Im still learning all the lingo and acronyms you guys use. Thanks for the advice.

@Eric M. I put 5% based off of some other SFR properties I currently own and from what I've seen others do. Also, I only have the past year of history from this property to look through so Im not sure how high to go. But you have a great point I should include a higher vacancy rate just in case.

@Vida Novak I put ARV because this is what I believe the retail market will bring. But I haven't looked at the property yet to know weather it is going to need any repairs or not. Maybe I should put retail value of the property instead. But to answer your question, no sir, I didn't factor those costs in.

@Zach Quick That is a really great point, so maybe this "Deal" is only disguised as a deal and I should offer quite a bit lower after seeing the property. 

Thank you all very much for your opinions, I feel I have a way better starting point than I did before. Any more advice would be greatly appreciated.  -Mike

Hey bigger pockets! I have a few questions for some of you more experienced veterans who have bought Quadplexes in the past. I found a fourplex in a neighboring town with a good chance for positive cash flow. I did some quick calculations and even used the Calculator here at BiggerPockets and have been digging for detailed numbers ever since. I intend to take a look at the property in the near future as I have already contacted a realtor and made contact with the owner of the property. I would be extremely grateful if you can spot check my numbers and show me where I might be off-track. 

Here are the numbers:

List Price - $129,900

ARV - $160,000

Monthly Rent - $2,450

Assumed Average Vacancy - 5% (currently 100% occupied)

Homeowners Insurance - $500

Property Tax - $2,700 (Annual) = 225 (Monthly)

Water/Sewer/Trash - $300 (High Estimate)

Management Fee (10%) - $245

Landscaping Fees - $60 (monthly)

Financing Costs (5% Interest, 20% Down, 30-yr Fixed) - $623

CapEx 2%, Repairs 2%, Vacancy 5% = $196

Total Expenses - $2149

Monthly Cash Flow = $2450 - $2149 = $300/Month

Yearly Cash Flow = $3,600

The Cash on Cash Return is about 11%.

I am very excited to hear your feedback!

-Mike

Thanks @Roy N. for the tips. 

@Dave Foster Thanks for answering my questions! I really appreciate all the help. 

Sweet! Thanks for the quick response @Dave Foster! That's exactly what I needed to hear. So, Just to clarify, I can sell a SFR say around $150,000 and buy a four plex for $400,000? As long as I intend on keeping the property with plans to rent.

@Dave Foster and @Bill Exeter Can either of you answer this question? If I have a SFR that I've been using a a rental property and decide after 4 or 5 years to sell this property, can I use the 1031 Tax Exchange to buy say a 4 plex? To my understanding the IRS treats 1 to 4 the same. But I would love clarification. If this is the case, am I allowed to sell multiple SFR for one four plex? Or does it have to be one for one? Thanks in advance - Mike

Would anyone be willing to elaborate on this a bit further? Am I looking for deals first then trying to find funding for the deal? Or should I be trying to line up funding first, say in my price range so that when I do run across a deal then I can pull the trigger so to speak after doing a little due diligence? If I am supposed to find the deals first then what is someone else finds this property and secures it before I can setup funding? Just trying to get a little more insight, anything helps...Thanks in advance.