All Forum Posts by: Ryan Lam

@Tyler Gibson

This would be Marion Oaks specifically.

Rent estimate was $1,450 on the low end provided by the broker, I took a quick peek at similar type properties currently for rent (though just a quick Zillow search) and figured $1,425 would be pretty safe on the low low end.

I don’t know why that didn’t even cross my mind figuring vacancy to come out to be minimum 1 month. I’m assuming this would be a no brainer to assume 8% at the lowest?

The no fridge part, i thought that was odd as well. Everything else I came across would have come equipped with kitchen appliances. Now a thought just came to mind, washer/dryer need to be considered?

Should be no HOA to my understanding.

What would be a better estimate for taxes?

Hi! I am getting closer to making offers and was hoping to analyze a live example to make sure I am offering on the right properties. Any advice would be appreciated!

Single Family Home
Rental, Buy & Hold (of course would need to cash flow positive)
New Construction
Requires Property Management (out of state)
Central Florida
Beds/Baths: 3/2
SqFt: ~1,300

List: $183,900
Mortgage Amount: $147,120
Down Payment: -$36,780 (20%)
Closing Costs: -$4,597.50 (assumed 2.5%)
Repair: $0 (new construction)
Updates: -$1,200 (needs fridge)
Rent: $1,425 (should be a conservative estimate)
Vacancy: -$57 (monthly figure, assuming 4%)
Principal+Interest: -$668.87
Property Taxes: -$230 (about 1.5%)
Property Management: -$114 (8%)
Leasing Fee: -$89.06 (assuming required annually with turnover, this figure is assuming it were broken down monthly)
Insurance: -$65
Repairs/Maintenance: -$114 (8%)
CapEx: $0 (new construction so assuming a few years should go by without it?)

If I am understanding and calculating everything correctly...
Initial Investment: -$42,577.50
Cap Rate: 4.93% 
Cash on Cash: 2.45%

Not sure if I am approaching it a bit strict. For example if rents came in at $1,450, Cap Rate: 5.29%, Cash on Cash: 4.01%

@Shawn McCormick Definitely appreciate the input. What would you suggest as a more reasonable ballpark for interest rates and closing costs? 

Echoing off of @Mark Rosenberg's question, would we assume 0% or a significantly lower rate for Cap Ex on a new construction? Then would that also allow for a reduction in dollars set aside for repairs/maintenance?

@Matt Leber That makes sense. It does seem I should be focusing more on the surrounding Orlando areas.

Brevard County looks like that would be a great contender. Should I be looking pretty much around Palm Bay? Any particular areas to look into or to avoid?

@Matthew Rolf I took a peek around the Katy area and it looks like there is a lot of new construction going on out there too. 

If I am calculating correctly, with lower rents and higher property taxes compared to my original estimates, it seems Houston and the general area would be a pretty tough market to cash flow in at these levels?

Interesting point with the rehab in FL. I noticed a good amount of the new constructions were single lots as opposed to tract developments. The fear would be jumping into a rehab out of state on a first deal. That would probably take up more time/resources than I could allocate. Glad to hear it worked out well for your sister! Sounds like a pretty nice deal! I'll have to look into the Eustis area too. 

@David Pierce

Sounds like prices are rising. Would you say the area is still capable of being profitable? How has your experience been overall in those areas when it comes to placing tenants and vacancies?

@Matt Leber

Goal would be to cash flow maybe $100-$200/month if possible, and appreciation. I was thinking at least cash flow positive and have the option to sell for a reasonable gain in the next 3-5 years, or use equity to get into another property within that time frame. 

How are those areas as far as growth?
Thinking about property management, is there still a good amount available being a bit further out?

I also noticed a pocket of new construction around Sanford so was also going to look into those areas just north of Winter Park too. 

@Bradley Scruggs

I was thinking the same thing and aiming for at least $100/month in cash flow. I noticed a lot of the numbers I crunched resulted in negative cash flow so I was thinking maybe I was overestimating expenses a bit. 

Definitely will keep updates along the way. Unfortunately living in CA it seems my only reasonable option would be to look out of state since the budget stretches a lot further. 

I have been looking into my first investment property as a buy and hold rental. I started doing some sample simulations of potential properties to get a better understanding of how to analyze a profitable investment and of course doing this as an exercise helps with the learning curve. Recently it seems it has been relatively challenging to identify properties with positive cash flow.

Narrowed down areas between Houston TX (The Heights, Rice Military) and Orlando FL (maybe Winter Park). The thought process was that as a first investment property, these may be a bit safer compared to other areas considered such as Cleveland and Indianapolis. I am a CA resident so the Sacramento area may be included as well since that is a more manageable drive from the Bay Area. Any input on location selection would be appreciated as well. Surfed the forums and it seems there are different opinions about properties out of state and unseen (especially for first deals).

Budget was thinking around the $300,000 range, plus or minus maybe $50,000. Would be financed. Lowest down payment would be nice especially since the cost to borrow is so low at the moment. Already have a mortgage on the primary residence so I would assume I would need to coordinate to make sure additional lending would be approved. If I could reasonably find better value in other areas with maybe half the amounts, that might make decisions a lot easier.

Here are some examples of two examples I recently reviewed.
Pulled rents from Zillow estimates so not sure how accurate those may be.

Houston TX
List: $329,000
Loan: 30 year @ 3.125%
Down Payment: 20%, $65,800
Closing Costs: 1.5%, $4,935
Rent: $2,450/mo
Vacancy: 8%
Principal & Interest: $1,127/mo
Property Taxes: 2%, $548/mo
Property Management: 10%, $245/mo
Insurance: $125/mo
Maintenance: 10%, $245/mo
Capital Expenses: 10%, $245/mo

Orlando FL
List: $275,000
Loan: 30 year @ 3.125%
Down Payment: 20%, $55,000
Closing Costs: 1.5%, $4,125
Rent: $1,600/mo
Vacancy: 8%
Principal & Interest: $942/mo
Property Taxes: 1%, $230/mo
Property Management: 10%, $160/mo
Insurance: $125/mo
Maintenance: 10%, $160/mo
Capital Expenses: 10%, $160/mo

Am I being too conservative with rents and expenses? Should I be looking in different areas?