All Forum Posts by: Neel P.

Thank you for the feedback all! Super helpful. The summary I got is that the numbers seem reasonable so I'm not calculating it incorrectly at least, so that does give me some comfort.

I'll see if putting more down drastically changes the interest rate, which might affect the deal cashflow.

Hey everyone,

I was introduced to a friend of a friend who is selling a small multi-family unit. She is listing it on the MLS and therefore has an agent, but sent me the deal directly in case I want to purchase it.

I suspect this deal will go for asking price, if not more, due to demand.

I have an agent I have been working with in this market (its out of state for me). Its a non-exclusive agreement, he has just been sending me deals that come across his desk...I like the agent though and he'd be a good contact long-term. However, he didn't bring me this deal as it came organically.

Is it beneficial for me to rope in this agent? Or is that not needed? What value-add do agents provide outside of sourcing the deal? 

I would love to reward this agent with a deal, but I'm just not sure if roping him into the deal for the sake of making him some money makes sense. Especially because I think this property MIGHT get bid up, and "not" having an agent on my side would save the seller money (aka she is likely to go with my offer).

Any advice or feedback you have would be great. Thanks!

Hey everyone,

I’m relatively new to real estate investing but really excited to start getting into some cash flow properties.

I’ve been analyzing deals in Kansas City, MO and am using the goal of getting $200/door in cash flow in my model. I’ve heard this number thrown around (typically it’s even higher) for what people look for in deals.

The problem is, all the math I’m running on my model is showing up as LESS than $200/door even when I’m hitting the 1% rule in rent and putting only 20% down.

Am I doing something wrong with my math?

Example unit below:

Quad for $360K

Rent Roll: $3600/month (1% rule)

Vacancy: 8% ($288/mo)

Maintenance: 5% ($180/mo)

CapEx: 5% ($180/mo)

Property management: 8% ($288/mo) + leasing fees ($30/mo estimated)

Prop tax: 1.35% ($4860)

Insurance: $2000 on a quad (estimating)

Loan payment: $1392/mo (4.1% interest rate)

FINAL CASH FLOW: $732/mo.

It’s not far from the $200/goal, but this is assuming everything fits my model perfectly. Rents are already priced at the top of market so they can’t go higher.

How are people getting OVER $200/month? I hear stories on here of people saying they would never go under $250/door...how is that possible with the 1% rule?

Am I looking at this math incorrectly?

Hi all,

I'm evaluating a duplex deal right now in Kansas City, Missouri. It's my first ever multi-family deal, so learning a lot right now.

1. The broker says that tenants pay gas & electricity, and the owner pays water, sewage, trash. Is this normal?
2. The water meter is a single meter. The broker is claiming that this can be billed back to the tenants. Is this true? I can't figure out the exact answer for whether its legal to bill back water if its a single meter.
3. If its a single meter, can I change this to individually metered? Or is the cost for doing this typically a lot? This is an older building (1954).

Thank you for any insight!

Hi all,

I'm evaluating a duplex deal right now in Kansas City, Missouri. It's my first ever multi-family deal, so learning a lot right now.

1. - The broker says that tenants pay gas & electricity, and the owner pays water, sewage, trash. Is this normal?
2. - The water meter is a single meter. The broker is claiming that this can be billed back to the tenants. Is this true? I can't figure out the exact answer for whether its legal to bill back water if its a single meter.
3. - If its a single meter, can I change this to individually metered? Or is the cost for doing this typically a lot? This is an older building (1954). 

Thank you for any insight!

Hey @Ali Boone, great article! Very informative. I am curious on your opinion on Dallas for out of state investors. Lots of pros, but Texas property taxes are pretty insane. Since you're involved in turnkey operations, do you personally recommend out of state investors to stay away from Texas and go towards more tax-friendly environments? Or is the tax consideration a pretty small piece of the pie?

 Thanks for the insight Lane! I was thinking of starting with 1 TK purchase then doing it myself after. Are you glad you did TK first, or do you think you should have just gotten your feet wet immediately by doing it yourself?

Thanks for the input Kyle. So here is the situation I'm looking at:

Turnkey Property

List Price: $99,000

Cash Flow: $250/month

Size: 3BR, 1300 sq ft. 1980 Property

The turnkey company bought this property in May 2017 for $50,000 and did renovations, now selling for $99,000

No too far from the turnkey house, there is this property (not by a Turnkey provider, but a normal sale):

List Price: $120,000

Size: 4BR, 2500 sq ft. 1990 Property

This property is almost twice the size (by sq ft) and newer, and doesn't need much renovation....its pretty ready. What it does NOT have that the turnkey property is providing is existing tenants and existing deal with a property management company to manage it.

So basically....how much of a premium are we paying a Turnkey provider for existing tenants and a built-in property management company? Or is the vast majority of the premium paid for the renovations?

Full disclosure - I have not done either of these yet, but from my understanding here is my opinion.

You said "both companies that will do the work and manage the property are vetted and reliable.". The biggest pro of a turnkey property is that the work is done for you....you pay a premium bc of this and get less cash flow. No hassle bc you don't need to find  team yourself to do the renovations, its done for you.

If you already have a reputable company who will do the work for you (assuming you are rock-solid on them), then you're already replicating the value-add from a turnkey provider. So why not do the BRRR property and reap more rewards?

Hi all, 

I’m a bit of a novice and these forums have been fantastic. I’m specifically looking at out of state investing because of where I live (Los Angeles). This led me to research turnkey providers and that strategy of buying from them. 

From my understanding, TurnKey providers are geared towards investors who want to do the least work possible (less time / less return). They rehab the property and find tenants, and therefore charge a markup. The other end of the spectrum are investors who do the buys/rehabs themselves (more time / more return). 

I am somewhere in the middle....I don’t want to do an out of state rehab, but I have more time than the typical TurnKey investor. What I don’t have is insider knowledge on out-of-state markets and which neighborhoods to invest in vs avoid. 

Is it a viable strategy to find an almost ready-made property (minimal repairs) in the same neighborhood as a TurnKey property, buy it, and then find my own property manager? Essentially piggy-backing off the TurnKey providers market research to find the good market and neighborhood...specifically looking at market data that companies like Jason Hartman’s group or The Real Wealth Network are in. Could even use the same vetted property management companies that those networks pitch. A bit more work on my end, but (hopefully) with more return.

Would a semi-TurnKey strategy like that juice up returns? Any holes in this strategy?

Thanks all!

Neel