All Forum Posts by: Alexander Merritt

@Tejas Kotecha 

Cool application you have there. What was your reason for making it? Personal? Or are you looking to turn it into a paid service (aka business)?

@Mary Joe Just remember she JUST stated her own business and doesn't have a stable income. There is a risk that you may not get month 4 or 5 or 6 rent, etc....

What is her business? Why did she decide to start her own business? Was she employed by someone else in the same business she is starting and learned every aspect of it and now wants to go out on her own? Or, did she just decided on a whim to open some business she knows nothing about? I would find out the exact circumstances.

A safer thing to do is to have someone with a stable income co-sign with her for the first year. If everything goes well then you can just have her sign alone for year 2. You might also consider a 6 month or even month-to-month lease. That way you would only loose 2 months rent on a 6 month lease.

@Ciara Quam 

Congrats and welcome to BP! If you are are ever in need of another opinion on a property you are looking at in Maui, I'll be happy to have you fly me out there and look at it with you :p

again.. i'm assuming the triplex has tenant paid utilities.

Now here's my analysis using your market rate rent assumptions.... a very good deal IMO.
BTW the $500 insurance is a total guess on my part.

Asking Price: $74,000.00
Purchase Price: $66,600.00
25% Down Payment: $16,650.00
APR: 5%
Revenues
Rental Income: $27,516.00
10% Vacancy: -$2,751.60
Gross Income: $24,764.40
Expenses
Property Taxes: -$3,897.00
Insurance: -$500.00
10% Maintenance & Repairs: -$2,751.60
10% Capital Expenditure: -$2,751.60
10% Property Mgmt: -$2,751.60
Total Expenses: -$12,651.80
NOI: $12,112.60
Mortgage (P&I only): $3,217.71
Cashflow: $8,894.89
Cash on Cash Return: 31.79%
Cashflow per door per month: $247

Oops... let's try that again...

Purchase Price: $66,600.00
25% Down Payment: $16,650.00
APR: 5%
Revenues
Rental Income: $21,000.00
10% Vacancy: -$2,100.00
Gross Income: $18,900.00
Expenses
Property Taxes: -$3,897.00
Insurance: -$500.00
10% Maintenance & Repairs: -$2,100.00
10% Capital Expenditure: -$2,100.00
10% Property Mgmt: -$2,100.00
Total Expenses: -$10,697.00
NOI: $8,203.00
Mortgage (P&I only): $3,217.71
Cashflow: $4,985.29
Cash on Cash Return: 17.82%
Cashflow per door per month: $138

@Ken Collins 

This actually looks like a pretty good deal. Here's my analysis using the pro-forma numbers you were given by the agent.

@Brandon Turner A lot of podcasts seem to be more of success stories and a few that give some good starting information about a specific topic like how to flip a house or how to wholesale or how to be a good landlord, etc... But nothing on how to structure your business to be successful.

My question is: How do you structure a Buy & Hold Real Estate Business? What are the specific steps and "ingredients" that you need, or should, do before purchasing your first property? How do you protect your assets (every property gets it's own LLC)? What type of insurance do you need? Do you have a parent company which has your brand logo/name which then ownes all of the subsiderary LLCs which contain the properties? etc....

#AskBP

@Ben Leybovich Is that the only advantage you can see? Have you ever done it before? If not, would you?

@Roy N. Thanks for your input. Can you just briefly explain what you mean by holding company. If I have an LLC where the title to one or more properties is in the LLC name and I am using that LLC to pay bills, etc.... is that then defined as a holding company? Or are you talking about a "parent company" where one LLC owns multiple subsidiary LLCs?