All Forum Posts by: Robert Leonard

@Erik Pfundstein My team and I are based out of Nashua, NH and invest in Manchester/all of NH - I'm happy to connect and talk real estate/potential deals any time.

Honestly, that all varies depending on the lender, loan product, area, etc. The appraisal alone for a property of this size is going to run $4k+ if I had to bet. That doesn't leave much for pre-paid taxes, insurance, closing costs, etc. with a $10k budget. If this was a property you were seriously considering, I'd call a local lender or two and ask for a rough estimate.

I'd estimate about 15% for Capex + Repairs.

Vacancy is a pretty subjective measure and depends on the person. If you're comfortable with your estimates, keep it - I just like to be more conservative.

That's perfect. No better way than to have an actual tax bill - leave it then. I wish our taxes were that low where I live, ha.

@John Wahba On the surface it looks interesting, but after adjusting some figures that I believe are low, your returns will be decreased.

First, $10,000 in closing costs seems low to me. Also, your vacancy, management, property taxes, and CapEx (non-existent) are too low. I'd shoot for closer to 8-10% on vacancy. Management is usually closer to 9-11%, in my experience. Property taxes seems too low at under $8,000 per year; this could be right, but it seems low for this expensive of a property. In my area, houses worth $250k pay this amount in taxes. You also didn't include any CapEx estimates. You did include repairs, but you need CapEx, too. CapEx + Repairs should equal about 15%.

Robert Leonard

@Bart Charkow hit the nail on the head. You're analysis is right from a very high level, but there are many lower level costs that you're not considering, that Bart illustrated. Your analysis appears to be "gross profit", not "net profit".

Robert Leonard

@Sebastian Dombrowski I personally think that's a very good initial approach. Everyone has their own opinion and their own characteristics they look for. You'll develop some as you gain more experience, but I'd say you have a good starting point. Once you've found a few areas that interest you, I'd drill down a little deeper, but you're off to a good start

Robert Leonard

I am looking to add to this post - what is the "Premium" membership? I am familiar with the Pro and Plus memberships, but I saw someone the other day with a Premium membership. I was curious as to what this is.

Robert Leonard

@Tyler Pharr In this type of situation, one of the biggest questions I look to answer is "why hasn't someone else bought this yet?" It is likely that many other investors have looked at, and passed on, this property with it having been on the market for 4+ months. That doesn't mean it isn't a good deal for some people, such as yourself, but I always need to be comfortable with the answer to that question before I move on a property that's been on the market a while.

Robert Leonard

@DJ Dawson Vacancy, CapEx, repairs, and management are all a bit low for me. I usually estimate 8-10% for vacancy, 15% total for CapEx + repairs, and 9-11% for management. I'd be very surprised if you were able to find a PM to manage an 8 unit property for 3%. Your rents seem reasonable on the surface, about $670 per unit on average. However, its tough to say without knowing the area.

Robert Leonard

@Domenick Llanda Absolutely, that makes complete sense and is a great way to get started. I was just trying to get a better understanding of how you saw the property and what you were planning to do with it so I could give specific feedback.

Robert Leonard

@Dorian Phillips On the surface, your numbers look pretty solid. As Kyle mentioned, your vacancy is a bit low, but that depends on your risk tolerance and the market. I personally would bump that up to closer to 8-10%.

For capex and repairs, they look good to me and I probably wouldn't adjust them much, but the biggest thing to remember when using percentages to estimate costs for repairs/capex is that many costs are almost "fixed". They're not truly fixed, but they don't fluctuate much. @Brandon Turner talks about this on the BP podcast from time to time. The cost to fix a roof on a $100k property isn't significantly less than it is on a $300k property. However, on the $100k property, you'd need to allocate a SIGNIFICANTLY higher percentage towards repairs and capex than you would on the $300k property to be prepared for the same cost repair. 

Stepping away from the input data and looking at the results, the CoCROI is strong, but the monthly cash flow is weak, for me. It's less than $150 per door per month, which is too low in my opinion. I need at least $200+, ideally $250+. 

Robert Leonard