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All Forum Posts by: Tim B.

Tim B. has started 9 posts and replied 36 times.

Post: First Duplex Analysis - Am I missing anything?!

Tim B.Posted
  • Blue Springs, MO
  • Posts 36
  • Votes 8

@Charles Kao, thanks for the response! I appreciate the feedback. I've been looking into the BRRR strategy and am hoping to utilize that on properties, unless I can find a deal that makes sense.

Post: Any KC investors want to grab a beer and talk shop?

Tim B.Posted
  • Blue Springs, MO
  • Posts 36
  • Votes 8

Hey guys! Just found this thread. I'm looking to buy my first rental this year and would love to network with others in the area. Anything set for next meeting?

Post: WTB First Rental KC Metro

Tim B.Posted
  • Blue Springs, MO
  • Posts 36
  • Votes 8

Looking to buy my first rental property in the KC metro. I'm looking for a duplex, triplex, or fourplex. Let me know what you've got! I don't mind properties that require some work, but not a complete rehab. 

Post: First Duplex Analysis - Am I missing anything?!

Tim B.Posted
  • Blue Springs, MO
  • Posts 36
  • Votes 8

The numbers have actually changed a little bit from what I initially wrote down. Here's the changes: 

I spoke with my bank and they quoted me 4.5-4.625% with a 25% down payment. I got a quote on insurance ranging from $57-72/month. After inspecting the property, I was able to figure the repairs needed to be only $500 for a patch to tile in the kitchen. I removed property management from my numbers. I did this as I figured it would just go into my cashflow. I thought I could pay for property management later as I get more equity in the property and grow weary of managing the property myself.

Post: First Duplex Analysis - Am I missing anything?!

Tim B.Posted
  • Blue Springs, MO
  • Posts 36
  • Votes 8
Originally posted by @Charles Kao:

Tim B. Are you buying Blue Springs area? I am familiar with that market as my sister lives there and not excited about this deal. At a minimum I like 1 percent of rents unless its practically a new build. I also think that you really need to post the why or background story in addition to the what or the numbers. Lastly if this is a MLS deal that should tell you its not a deal because it would have sold by time you finished posting deal.

This is a deal in the KC metro and on the MLS (I too thought it would be gone if it were a good deal being on the MLS). The property follows the 1% rule, but I see several people talking about 2% or $300+ per door and over 20% ROI. That seems unreasonable (perhaps because the market is so high atm) unless you're buying a distressed property and rehabbing it.

The property is right at 11 years old with several new items (water heater, HVAC, appliances, etc). The only thing it really needs is a roof in about 10-15 years and HVAC on one of the units in 9-10 years. 

Post: Looking for my first rental property

Tim B.Posted
  • Blue Springs, MO
  • Posts 36
  • Votes 8

Upgrade to plus or pro and use the calculator. It's a great tool if you're just getting started. I'm just getting started as well and have analyzed tons of deals with their calculators being a plus member. I've heard of some people shooting for $300+ per door and greater than 20% CoCROI. Also, call the bank to get REAL numbers on closing costs, interest rates, etc. Check with insurance to figure their rates. Figure out the taxes, comparable rents, and be conservative in your estimates for Capex, repairs, vacancy, etc. It's better to know hard numbers than to guess or speculate as that's when you go from what you think to be a good deal into one that's negative cash flow or not as good as you had hoped.

Post: First Duplex Analysis - Am I missing anything?!

Tim B.Posted
  • Blue Springs, MO
  • Posts 36
  • Votes 8

So I've run the numbers again... the best I can get is around 15% CoCROI and just over $200 per door. Are people really getting $300+ per door and greater than 20% CoCROI? This is the best deal I've come across between the MLS, Facebook, and Craigslist in the last week or two.

What numbers do you guys shoot for? I also went to a courthouse auction today (showed up 5 minutes late due to poor directions and it was over). I'm hopeful that perhaps I can find a good deal there. Does anyone have any experience with auctions?

Post: First Duplex Analysis - Am I missing anything?!

Tim B.Posted
  • Blue Springs, MO
  • Posts 36
  • Votes 8
Originally posted by @Jason D.:
I feel like the numbers are OK. If the property is in good shape, I reserve 5% capex and maint., but I reserve 8.3% vacancy for the first year to have a one month cushion in case the tenant stays only one year. $200 per unit in a multi family is what I shoot for as a minimum, $300 On a single family.

 Thanks for the feedback. I'm going to tweak my numbers a bit for future analyses. 

Post: First Duplex Analysis - Am I missing anything?!

Tim B.Posted
  • Blue Springs, MO
  • Posts 36
  • Votes 8
Originally posted by @Filipe Pereira:
Originally posted by @Tim B.:

Good evening. I've been a lurker on this site for about a year or so. I'm finally in a position where I feel that I can successfully purchase my first property. My plans is to buy and hold rental properties. That being said, I've found a property that I feel is a good deal (assuming I did the numbers correctly) and want to get some feedback to be sure I'm considering everything. I've used the rental property calculator through BP and it seems good. Here's what I've got....

Asking price: $124,900 (I'd like to offer less to get a better COCROI)

After repair value: $124,900

Closing costs: $4,000

Repairs: $5,000

Down payment: 20%

Interest rate: 4%

Amortization: 30 years

Annual taxes: $1,423

Income: $1,300 total monthly

Utilities: $0 (paid by tenants)

Vacancy: 5%

Repairs and maintenance: 5%

Cap ex: 5%

Property management: 10%

Annual income growth: 2%

Annual property value growth: 2%

Annual expense growth: 2%

Sales expense: 6%

Am I missing anything here? With those numbers, I get $1,300 monthly income. $920.62 monthly expenses leaving me with $379.83 monthly cashflow. I'm also seeing a 13.4% COCROI (assuming I pay the full asking price). 

Please let me know if I'm missing anything. I'm pretty excited as this could be my first property to get me started in real estate and the first step towards financial freedom!

While I certainly don't know your market, or what is available, I can't say these numbers get me all that excited. At full asking, this is around a "1%er" (as I call them), which means it will likely carry itself, but not much more. 

Some of your expenses seem a bit low, which makes me believe the property is relatively new, or in excellent shape - is this the case? The rule of thumb around here from what I have gathered is to do a 10% cap ex, 10% maintenance. This might not be the case every month, but the idea is that when you look at the property through a multi year window, this tends to become the case. Is trash included in taxes?

I hope that helps!
Filipe

Thanks for the advice Filipe. It's a newer property at 10-15 years (though I assume HVAC and water heater will be needed soon). I did not include trash. I was assuming it was paid by the tenant since they paid for the utilities. I will check into it. What number do you shoot for when evaluating deals?

Post: First Duplex Analysis - Am I missing anything?!

Tim B.Posted
  • Blue Springs, MO
  • Posts 36
  • Votes 8

Thanks for pointing that out. Adding insurance brought my monthly expenses up to $1003.62 with a monthly cash flow of $296.38. The deal came down to 10.47% COCROI. The monthly cash flow isn't bad, but I'd like to get at least 12% ROI. What number do you shoot for? I ran the numbers again with a purchase price of $114,900 and that brought my COCROI to 12.55%. Not too bad...