All Forum Posts by: Thompson Gooding

We used Cabinets.com for a kitchen remodel for a (very nice) rental last year, and were very pleased. We went with their pre-assembled cabinets, and they were the best deal I could find. I looked at using Home Depot prefab cabinets, but by the time you purchase and paint, it was more expensive than the pre-assembled and pre-painted ones from Cabinets.com. They do a really slick FREE design service (I made them change the design three times, no charge) including presentation quality renderings, that was really nice. They offer RTA cabinets as well, but I was trying to avoid the labor.

Way to go, Brent! Congrats on your success, especially the multifamily property. I'm in Valdosta, and its always great to see new investment and property improvement here.

Hey, Jerry. I am also in Valdosta, so maybe I can bring a little local knowledge to bear for you. (Sorry in advance for the long post, but I hope the detail is helpful for you.)

First and foremost, ignore the Zestimate! It sounds like you've looked at the actual rental and sales prices in the neighborhood, which is great, but be sure to really dig into them and adjust for things like age, condition, size, features, etc. Really analyzing and over-analyzing the comps (sales and rental, regardless of your exit strategy) is the MOST important thing you can do on the front end.

Second, without knowing anything more than what you posted, here is how I see your pro forma breaking down for a rental:

- Gross Rent: $600 per month / $7,200 per year

- Vacancy: ($50)/($600) - I like to use one month of vacancy per year (8.33%). 5%-7% is more typical on average for apartments or a portfolio, but with just one house you can figure it will take at least a month from listing to move-in. 

- Insurance: ($42)/($500) - (Hint: a brick house is much cheaper to insure than siding!)

- Property Tax: ($70)/($840) - Based on Valdosta millage rates and $60k value

- Repairs: ($50-$60)/($600-$720)

- Cap Ex: ($50)/($600)

- Property Management: ??? (For just one rental, I'd recommend self-managing. Its not that hard, and you will learn/save a TON!)

NET INCOME: $338 / $4,060

Finally, you asked about financing. I was really surprised how easy it was to set up an LLC and get a loan for a new business. We started at a regional bank, but for reasons unrelated to our rental(s) quickly moved to a local credit union. For an LLC, you will be limited to a 20-year amortization and will need to show income 1.20-1.25 times the mortgage payment. Using the numbers above, you would have a loan around $40,000, not including any other income you may have (which does count!). You will likely have to sign a personal guarantee.

You can (although I don't recommend) also purchase the house in your own name with a conventional mortgage and get a 30-year amortization. You could more easily get to the $50,000 you need this way. This type really won't consider the rental income, but can be a good route to go if you have enough personal income to qualify. I would still recommend starting at a small bank or credit union, and they can help guide you through the process. You will also personally guarantee this loan.

Best of luck, and please keep us posted on your progress!!

Bernita,

I may be able to recommend one. What sort of work are you looking for? Buying/selling? Rental? Flip? Price point?

Thompson

Hey, Richard. We have had great success with BRRR in Valdosta. We've done 4 now, and typically lease them up very quickly. We spend a little more on the rehabs, then are able to capture higher rents and better tenants as a result. Lots of crap houses available to rent, but they sit on the market for a long time.

We struggled with our first flip. I chalked it up to not having an agent list the house, but now I have a buddy doing one with a "top" agent, and I don't think they have even given a single tour.

Major employers/economic drivers are a university and an air force base, so lots of people who are here for a few years, but may leave and not want to buy. Others are a hospital and the city and county (including school systems), so there are a lot of permanent residents too, but renting is probably the best way for an investor to go.

I am a local (Valdosta) investor, and familiar with the area you are talking about. I'm guessing this is in Homerville. I would be very wary of this one, or at least give yourself some easy outs in the contract. As an out of town wholesaler, this will be a tough community to find buyers in. I don't see much demand to buy houses there, and unless you luck out with one of the neighbors, it will be tough to sell.