All Forum Posts by: Robert Leonard

@Geoffrey Tanudjaja Welcome to real estate investing and BP! Getting started with a house-hack is a great idea.

When house-hacking, it is very important to run the numbers TWICE - once for what they'll be like when you're living there and once for what they'll be like when you're not living there.

It seems in your analysis that this is what the property would be like AFTER you moved out. If that's the case, it's not very attractive. CoCROI and monthly cash flow per unit is too low for me. That is with your vacancy, capex, and repairs all being too low. I'd estimate vacancy closer to 10% and the total of capex and repairs closer to 15-17%. Increasing these numbers will make an already unattractive property even less attractive, in my opinion.

Robert Leonard

@Braunda Anderson In my opinion, no. Your rents seem a little high to me for this area, your vacancy, capex, and repairs are all too low. I'd estimate closer to 10% for vacancy and 15-20% (closer to 20%) for capex + repairs total (you can split however you'd like, 10/10, 12/8, etc.) If you add in the $10k to the total cash needed, your CoCROI drops significantly and isn't worth it.

Robert Leonard

@Adam Wallen The numbers look interesting on the surface, but there are a few things I'd adjust. I believe your vacancy is a bit low at just 5%, especially for a single family. I'd be closer to 10-12% for vacancy on this property. Repairs and CapEx aren't bad, but I'd estimate a bit higher on a $100k house. Closer to 17-18%.

Robert Leonard

@Angie Shires Your estimate percentages look pretty good, CoCROI is low and so is cash flow, but not horrible. It's an "okay" deal, but not a homerun - not something I'd jump at. If your repairs are more than $20k, it could quickly turn this into a bad deal.

Robert Leonard

@Kyle Joseph Look forward to meeting you then (if I can make it that month).

Robert Leonard

@Savannah Lewison that’s a great way to do it. I analyze at least 5 days every day.

About your numbers, I like all of your percentage estimates. CapEx and repairs are a bit high, I usually use 15% total, but there's nothing wrong with estimating higher and being conservative like you have.

The number that’s a huge variable in this equation is your rehab costs. I can’t say if they’re accurate, but they’re certainly substantial and can make or break this deal. I’d make sure you’re 110% confident in this number. Even get some contractor quotes beforehand if possible.

All of that being said, cash flow is acceptable, but CoCROI is too low for me.

@Kevin Peters Based on your situation, I don't think the CoCROI matters. That's only for year 1 of owning the property. I wouldn't get hung up on it. If the cash flow is strong (rents - all expenses (including vacancy, capex, repairs, etc.)), I'd rent it and look into a cash-out refi.

Robert Leonard

@Kevin Peters I'd use the BP calculators (you should get 5 free uses as a non-Pro member) to determine if this is a good BRRRR candidate. You could do a cash-out refi, continue to rent the property and use the cash to invest in additional properties. It would all depend on the analysis/if it'll cash flow.

Robert Leonard

@Michael Green are you doing a VA (or similar) loan and that's why there's $0 down? I agree with Jaysen above that there isn't much of a deal here, some of your assumptions are a bit low for my liking. However, if this wouldn't hurt you in terms of adding new deals in the future, and you're only having to put up $3,000 in total to get this deal, it might be something to just add to the portfolio. Also, you could always try to negotiate a better price.

Robert Leonard

@Matthew Johnson I'd attend local REIA meetings and connect with agents to learn more about specific areas and opportunities. Real estate is a relationship game - start building those relationships now.

Robert Leonard