All Forum Posts by: Brian Phillips

Coc returns matter more as your debt/equity ratio increases, and matter less as your reserves increases.

Those are the main situations from which coc returns should be evaluated vs just return or investment. If you have minimal reserves and no equity to cover your debt, coc return is more important than roi as immediate cash flow is important in this situation. If you have 10 million in reserves and your debt is covered with sufficient equity to cover, you have plenty of flexibilty and coc returns approaches worthlessness as roi is a better investment tool.

The real question is: why would you be putting your money in a deal that was 9% yield if you invested it all upfront. 9% is terrible. The goal of investing is to make the best investment, and if that investment isn't real estate, then don't buy the real estate! The same applies with people wanting to cash flow $100 per month on a property as a goal. The return on that isn't all that great for a lot of properties. Aim a lot higher. Aim for the stars. Then if you fall a little short, your still a winner! Aim a lot higher that $100 per door if that is going to be your main strategy!

Your are right this isnt an all bills are payed via owner. . tenant pays water, electric, gas, alarm system.I'm starting to think my estimate was a little too generous. It looks like I need to see what the actual cost of the rehab is going to run me and get estimates from 1-2 groups. Depending on the rehab price and how much i can get off the list from the owner, might still be worth it.

For what its worth, this is 110% a warzone property. 85-90K noi could be worthwhile if I can it at the right price, but any lower than that I dont see this deal worth pursuing. I'm also assuming 92% occupancy, and if occupancy decrease, I'm out the bill. If occupancy increases, though, and I can get this place rehabbed at a good rate, could be looking close to 20% roi. At least I dont have to worry a crazy amount if occupancy decreases slightly, as no mortgage.

The previous owner had a group come in and give him an estimate for their rehab and then their operating costs to run it. They wanted a property manager, plus they wanted 1-2 handiman kind of on salary/fixed payment. Is that normal for this many units? That is kind of what I am wondering. Also, their 36,000$ per year reserves I am assuming is for capital expenditures. I guess that would kind of be lumped with the maintanance.

I think the group that wanted to come in and manage this just wanted to charge way more that what is going rate and the owner had no idea what was going on.

Im a light dabbler in real estate. Looking to move up to commerical. Thanks everyone for previous help. I have enough capital to get this property with no loan required. 600,000+ capital. Also 20% reserves for capital expenditures and enough additionally to cover 6 months with 0% cash flow before dipping into my 20% reserves would be required.

Im looking at buying a 36 multifamily plex just wanted someone to double check my numbers 1st before taking the plunge. Owner has land and units listed for 199,999$ total.

36 Units in 9 buildings, originally built 1963. 0% occupancy right now. average rent for area is $550 per this type of unit. I confirmed the rent myself.

Previous owner posted an estimate and got an estimate from a group on what the rehab would cost:

400,000 total with each unit metered separetely for water, gas and electric

I will have my own group come in and get an estimate on what they will charge, but using the 400K right now as rough estimate. They expect taking 6 months for the renovation.

his is the owners accouting of what he thought income/expenses would run:

projected income

36 2 bedrooms x $550/month = 237600 per year

minus 8% loss rent 19008 per year

total income 218,592 per year

projected expenses

taxes: 21988 per year

insurance: 10000 per year

maintenance/supplies: 12000 per year

legal/administrative: 3000 per year

salaries: 20000 per year

Misc. expenses: 10000 per year

Reserves: 36000 per year

Utilities: 6500 per year

Management Fee: 36000 per year

Total expenses: 155488 per year

Net operating income: 63104 per year

think the projected expenses are way high. 36K for management....i thought closer to 5% was normal for this type of project. I am thinking expenses maybe closer to 120,000 tops per year. which would put me around 100,000 noi per year. Seems too good to be true. What am i missing?

Run away. Better investments will show up.

BP

Anyone else have any experience with gsa. Im currently bidding on a property. Will give details it I get it. Dont know how low the government will go!

also u might want to lower the 94% occupancy expecting....but dunno it would be pretty close to that i'd think. Might want to be a little more conservative on estimates, but sounds like good deal!

Go for it. Bexley is a really good area of columbus dude; the millage on county taxes i think is 140, and in my area of pickerington (somewhat wealthy area of columbus) the tax there is 110. (franklin county is like 80-90 btw on average). Bexley is one of the wealthiest areas of columbus.

Also in bexley there are certain codes you have to follow when repairing houses. Not sure on the duplex situation, but did you notice how the houses all have a certain exterior. It is more expensive and required; one of my friends' family grew up in that area. Not sure if that applies to duplex.

If she goes 500k take it and run! Motivated sellers == profit. Dont push too hard and lose your seller. Be willing to come up slightly if they counter ur 500k pretty hard (assuming they will).

Too bad these sales in my county in ohio only happen once per year as a lump offer. Last year someone bought everything for 6 million. :0

But yeah can be really good deals. Make sure to do your due diligence. Ohio doesnt allow single selling of tax liens "over the counter" like other states unless the county has a population of > 200,000 I think. My county has 120,000 population.

Although there are still good deals from irs seizures from time to time....