All Forum Posts by: Ryan Sanders

I have definitely noticed finding something to fit the 2% rule is tough! I will start looking further south and east in fountain, widefield, and possibly down into pueblo.

Sounds like a great idea. Thanks everyone for all of this information! I will not be going for this property and I will continue searching for a better deal

Not a bad idea. I will do that, thanks!

I mistakenly estimated the insurance based off a 6 month premium rate rather than my 1 year term rate. this would change my insurance estimate above to roughly 1200 annually (i pay 1015 for 170000 of coverage).

@Evelyn Roper, I believe you're right about the taxes going up with a higher assessed value. The assessed value from 2015 is based on the property before the extensive rehab.

@Colin Smith Thank you very much, I have sent off emails to both!

Taxes were determined by the county assessor with money added on to be sure i wasn't under. Insurance was an estimate based on what I currently pay for insurance on my primary residence, but I don't know how accurate that is. I'm trying my best to learn how to do this properly before I dig myself a hole too deep to climb out of.

The CapEx was neglected due to the entire property being redone, but I should have had some allocation for monthly cash flow going into a fund for WHEN things break instead of assuming that won't happen.

Thanks again for the help

@Matt Leavell what type of rehab costs do you usually see when a tenant moves out? Other than if the tenant wrecked the place of course...

@Stephen Chittenden The property taxes were verified on the assessor's page, but the assessed value was before the rehab. Would the rehab cause the taxes to go higher because the value of the property would jump up? Also, I have looked at somewhere between 10-15 properties so far (i know not a lot), and I have not found any that meet the "2% rule" of rent:purchase price. Is this rule realistic? If so, maybe I am just finding 'bad' deals?

@Logan Hassinger How do you determine how much a property should be worth per unit?

Thanks for the help/advice guys!

A duplex in my area is listed for 197,000. The following information is provided: "This duplex has been totally renovated inside and outside! The kitchens have new cabinets, new counter tops, and new appliances. The bathrooms have new tubs, new vanities, new toilets, and new mirrors. All carpeting and linoleum floors are new. Fresh paint everywhere inside. All the lighting and faucets and outlets are new. More importantly, all the electrical wiring and plumbing and heating is all brand new! Outside has new windows, new doors, and new stucco. Even the sidewalk is new. This place wont need to be updated for decades. All work was done with permits and by licensed contractors. Each unit has laundry hookups for full-size washers & dryers. Plenty of parking."

More info:

Unit 1 rent: $810

Unit 2 rent: $800

Each unit is a 2 bed/1 bath. Last year's taxes were $408.

My biggest concern is that I will not estimate my expenses correctly. I made assumptions that could be completely wrong but here they are:

Property Taxes: $450

Insurance (annual): $500

Property Mgmt: 10% rent

maint. and repairs (annual): $1200

Advertising: covered by property manager

Utilities: covered by tenants

Vacancy rate: 10%

Do these assumptions look sound? If so, and I can find 4(ish)% financing with no money down (i have some creative ideas), then i would have in the neighborhood of $180/month cash flow. Cap rate comes out at 6.72%. Cash ROI: 56.17%. Total ROI 297.22% (only high because no down). GRM: 10.40 (don't really know what a good number here would be). DSCR: 1.20 (also don't know what a good number is here).

I would love any and all feedback on this property and I would also love if anyone is willing to give a bit more info on GRM and DSCR, what they really mean, and what good numbers in those area mean and how important they are on a deal.

Thanks!

I'm hoping to sit down with a CPA and a real estate attorney in the Colorado Springs area to discuss some strategies I've been reading about on here. i want to be sure I'm doing everything the best legal way possible, but I have no idea how to find a real estate investment saavy attorney or CPA. Can anyone help/make suggestions?