All Forum Posts 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!

@Jim Adrian

That's what I was afraid of. Just wanted to make sure my numbers were accurate (assumptions on vacancy, repairs, capex, etc). I'm afraid I'm going to have to pass unless they are willing to come down on price.

Good afternoon! I'm looking at a property here in KC and wanted to run my numbers by some others who have more experience and insight (this is my second analysis). 

I'm looking at a 4 BR, 2 bath SFH. From what I understand, it currently rents for $780/month, but the owner was advised that she should be able to get $850-900/month. Selling price of the home is $90,000 (I'm hoping I can get that number down a little). Owner says that the tenants want to stay until summer of 2018. They are aware that she wants to sell and rent may go up. She advised that current tenants have a good rent history. I have not had a chance to inspect it yet, but she said I could whenever.

Other items of importance, many appliances are about 14 years old.... however, the roof is only 2 years old.

Taxes - $125 ($1500/year)

Insurance - $75 ($900/year)

Vacancy - $45 (5%)

Repairs - $45 (5%)

CapEx - $90 (10%)

PM - $0 (I’ll manage)

Total $380

Mortgage $343 ($72,000 over 30 years at 4%)

Rent = $900/month - $723 = $177 profit after expenses

My investment strategy is to simply purchase 4 or 5 properties and own them free and clear. I hope to buy one at a time and pay them off then move on to minimize my risk and headache. I'm debating on doing a HELOC for the investment to minimize closing fees etc. If you guys have any advice, please feel free.

Thanks!

@Max Householder, That's definitely stuff to consider. It's easy to forgot the non-normal things. I'm thinking we can live on about $2,000/month. Naturally, I'd like a bigger buffer through rentals and also plan to do some sort of work that I enjoy to keep me busy and earn extra money.

Sylvia, I'm looking at 250 for me, not a rental. Im figuring about 120k invested for 1300 month on rentals.

Thanks for the responses guys.

@Dawn BrenengenYou made some great points. Given what you and @David Faulknerhave said, I'm going to save up and wait for a cold market again to buy several properties and then consider consolidating once the market gets hot and depending upon my portfolio. In the meantime, I plan on searching for properties off the MLS as the MLS is very pricey at this moment.

@William JenkinsI am pretty young (30) with a wife and 3 kids (1 on the way). I have seen our expenses increases a bit (primarily in food) with the three (all under 5) we have now. My hopes are to make enough to live on and have some extra spending money. I'm going to shoot for about $5,000/month net, but may try to increase that because.... why not?! 

Charles,

I plan on buying my next home for about $250,000. What I will likely do is stay in my current home after it's paid off to save up more money to pay for our next home. I may just wait and buy a rental first to help afford a bigger home. I plan on buying one property at a time and paying them off. However, if the market drops then I may try and buy as many deals as I can.

My current cost of living is about $1,500-2,000/month. I'd like to have about $4-5k income/month. I intend on handling management myself, but that may change as my net worth increases. I'm open to buying any kind of rental at the moment, but leaning towards those that don't need too terribly much work (carpet, paint, flooring, cabinets, etc).

I'd love to have this done in about 5 years or sooner if possible.

I've been browsing the forums and it seems that many people are into leveraging their money by buying numerous rentals looking for long term wealth. That sounds great... However, I want to retire ASAP. My SFH will be paid off soon. I'm considering renting out our house ($1,300/month based on two rentals across the street) and getting a bigger home as we're quickly outgrowing our current.

As I mentioned, I'd like to retire early. I'd like to own 2-4 rental properties renting for approximately $1,300/month. My plan is to pay them off as soon as possible. I figure this should go pretty quickly given that I have one property paid already. I like this idea as it reduces my risk and increases my monthly income very quickly. Not only that, but that's only 2-4 families that you have to deal with. My trouble with leveraging numerous properties is that you deal with that many more people, drama, vacancies, repairs, etc. I also plan on continuing to work part-time which will pull me about $24k/year.

Has anyone else done this? If so, how did it go for you? 

Thanks for the information Chris and Kim. I'm going to try and attend a meeting in February.

Quick update... Evidently that was a good deal as they had 15 offers on it this week and one has been accepted. I'm getting about a 15% IRR when I run the numbers on this site, http://www.rentalpropertyreporter.com/resource-center/investment-property-analyzer/.

$77,500 purchase price

$110,000 ARV

$75,600 loan amount with 30 year term on a 5% note (94k - 20% down; should allow about 10k in repairs and 6k closing fee)

$1,000 income/month rent with 3% annual increase and 92% occupancy rate

$2,000 property tax

$600 insurance

$756 for maintenance (1%)

Everyone else getting the same?