All Forum Posts by: Rodney Kuhl

@Wesley C. Thank you, Wes!

@Matt R. The property is 1,924 square feet. It is much larger than a lot of houses in the area. I got comps from two agents and that came back with an average $/sq ft of $30. At $50k for this property, that's $26/sq ft.

Floors are good to go. Everything is set for it to be rented out. The seller is another investor who is looking to free up additional capital for a larger purchase. But it is ready to rent other than needing the fridge and stove. Brand new mechanicals were installed and floors are all good.

I think it's possible to find something at $50K that would rent for $950/mo, but it would be distressed and would require a lot of rehab costs upfront (which I don't have).

@Ali Boone Thanks! Yeah, I'm totally OK with wholesaling being another job. The point of it all for me is to work my J.O.B., work wholesaling, etc to build capital for down payments on rental properties. I think the sooner I start on the end goal, the quicker I learn how to make those work. Exactly, that's just the returns on cash flow too. The returns on equity, debt paydown, tax benefits are all exciting! Thanks!

@Joseph Weisenbloom Thanks! I've talked with a few investors and I think I can find a stone and fridge for about $600. They won't be brand new but still in good condition.

I agree the cash flow isn't spectacular, but I've learned from the podcasts that @Brandon Turner looks for $150 per door (or close to that), which this also has. Plus, 18% returns sounds good to a first-time rental owner. I've invested in the stock market and I know I can't get that there!

I am also wholesaling, but my plans are to use wholesaling to build capital to buy more rental properties, and ultimately owning a bunch of rentals bringing in passive income every month.

@Scott E. Thanks for the input! Yeah, the 2% rule is attainable on some deals here (Indianapolis area), but a lot of those require a lot of rehab. Extra capital isn't my strongest suit, though I have enough for reserves in this instance. I've basically taken my money out of the stock market and looking to invest in real estate. Most of the deals with minimal rehab up front that I'm looking at are at about 1.5% to the purchase price. Still pretty good I think. Also, I'm conservative with these numbers but the house is 1,924 sq ft and is much bigger than the other houses in the area, so there shouldn't be any problem renting it out. I still factored in a 10% vacancy factor, but that shouldn't be too high.

I posted a forum on here before asking whether it was best to purchase a duplex or SFH as my first rental property. I got a split answer with a lot of great insight. But after analyzing my situation and goals, I've decided to look at SFHs for now. I have come across a property that I think is a great potential rental, and wanted to see if you all could offer any advice. Thanks in advance!

Asking price: $50,000
Tax assessed value:$57,500
Down payment: $10,000 (20%) -- seller paying all closing costs
Rehab: $1,000 (really just needs floors vacuumed/scrubbed and stove + fridge)
Total initial investment: $11,000

Projected rent: $775/mo
Vacancy factor (10%): $77.50/mo
Total Income: $697.50/mo

Property Management (10%): $77.50/mo
Maintenance (10%): $77.50/mo
Legal: $25/mo
Taxes (capped at 2% of purchase price): $83.33/mo
Insurance: $45/mo
Total Expenses: $308.33/mo

Net Operating Income: $389/mo --- $4,670/yr

30-year Mortgage at 5.5%
Debt Service: $227.12

Net Cash Flow: $162/mo --- $1,944/yr

Cap Rate: 9%
Cash-on-Cash Returns: 18%

Do you think this would make for a good first rental property? I'm wondering if the 18% is a good start or if my money could be better used in other endeavors, like wholesaling.


What do you think? Thanks!

Hi, Peter and welcome to BP! I also live in Fishers, IN. Looking forward to interacting with you.

@Jason Munck That is a great way to look at it. I always try to look further down the road, and that's why I think the duplex totally make sense. But after the down payment and the closing costs, I wouldn't have much left for reserves in case anything happened, not to mention having to pay the mortgage/bills. I'd consider maybe a short-term loan just to help with reserves that would be able to be paid back quickly with that cash flow. I think lendingclub.com or something like that could offer a rather low-interest loan that I could pay off quickly. Partnering up would also maybe work, but I was thinking of doing the first one on my own.

@Marcia Maynard - Awesome info! Thanks a lot!

@Jason Munck - Great point, I'll have to look into that.

So here is what I am looking at:

Duplex - Asking price is $64,000 (from a turnkey company - I assume they don't negotiate on the buying price??)

Rent - $1,350/mo
Vacancy - $135
Operating Income = $1,215/mo

Taxes - $106.67
Insurance - $60
Management - $135
Legal - $25
Maintenance - $135
Other (Utilities-Trash, etc) - $100
Operating Expenses = $561.67

Net Operating Income = $653.33
Debt Service = $257.67
Cash Flow = $395.66

LTV = 75%
Down payment = $16,000
Closing Costs ~ $2,000 (really not sure about these)

COC return = 26.4%

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SFH - Asking price is $59,000

Rent - $825/mo
Vacancy - $82.50
Operating Income = $742.50/mo

Taxes - $85.75
Insurance - $45
Management - $82.50
Legal - $25
Maintenance - $82.50
Other (Utilities, Misc) - $50
Operating Expenses = $354.25

Net Operating Income = $388.25
Debt Service = $253.38
Cash Flow = $134.87

LTV = 80%
Down payment = $11,800
Closing Costs ~ $2,000 (really not sure about these)

COC return = 11.7%

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Am I missing anything in these analyses? What else should I consider? The duplex seems like the best choice (not only for COC returns, but cash flow is higher, and also for other reasons discussed earlier in this conversation). But I have to look into whether all of the utilities are metered separately.

The biggest difficulty comes down to the duplex has to have a 75% LTV (which means a higher down payment, which would be most of my cash on hand).


Any thoughts here? Thanks!

@Chris H. Thanks! Hope that's the case.