All Forum Posts by: Santosh P.

Try @Sanjeev Advani! He is smart, super responsive and very knowledgeable for Bakersfield area! Good luck!

@Ryan Scott Isacksen, Thanks for all the tips! Very useful!

Experts,

Looking for referrals for following vendors in Bakersfield CA area,

1. Property Inspector - Who can provide detailed honest property inspection with photos and cost estimates. Preferably somebody who has been working with investors and expert in inspecting multi-family properties. (Looking for somebody who is licensed and who is quick and responsive)

2. General contractor - Available on demand for the different type of small repairs. Reliable and cheap. Should be comfortable in speaking English (sorry I don't understand Spanish). Being a remote investor, I would prefer somebody who can take a photo of before and after the repair and send me over phone/email.

3. Appliance/Material Vendor - Flooring, carpet, appliances are discounted price

Do let me know if I should be looking for any additional specific criteria while picking these vendors (especially property inspector and GC)

Thanks for your time and referrals.

Hi All,

I am in contract with one small duplex in Bakersfield CA area(zip code - 93305) and need some guidance from expert investors to see if these numbers make sense.

Offer Price: 100k (1bd/1ba and 2bd/1ba) - 1500 sq ft duplex
Current Rents: 495+650 = 1145 per month
Expenses = $500 pm
(Maintenance, Property management, real estate taxes, replacement reserve, Insurance)
Mortgage (Interest + Principal ) = $405 pm
Cash Flow = $240 per month
CoC = ~ 10%

There is deferred maintenance of $10k-15k on the property which I might negotiate to split 50-50 with the seller.

The market rents are around $650(1bd) - $750 (2bd) so there is a possibility of increasing rent by another $250 which will increase my cash flow even further.

Why am I interested in this property,

- With small down payment, I can get my feet wet into REI and learn the overall business (working with property management, tenants, maintaining investment property away from your hometown etc.)
- Within my state so I can drive there in 4 hours if I have to.
- Planning to buy and hold for multiple years and initially check if it really cash flows (and passively) or not

My Concerns/Questions

- The property is 1939 so what if big expense like HVAC or Roof comes up in few years? Since cash flow is so small, there is no room for big expenses. I will order property inspection and will check each and every item carefully. (What are due diligence should I do?)

- General anxiety about investment property in C grade area and buying the first time. Am I missing any angle to consider while making this move?

- Tax assessed value of this property is around $98k. So my purchase price is close to assessed value and I am not paying any premium on top of it. Is that good sign? or is this because of deferred maintenance?

- If I do all the repair work, Will the price of property increase to 125k? Is so Can I refi and take out my investment for future investments (BRRR possibility here?)

 BTW on various websites, the estimated value of this property is shown as $125k - $145k (redfin, zillow, realtor etc.)


What do you guys think? Appreciate any expert advice. Happy to connect with other investors in Bakersfield area and talk on phone/PM

Thanks

@Brie Schmidt Sorry for late reply ... was away on vacation with my family. Thanks for your review. It means a lot to me!!

@Jimmy S. those are some great pointers! It's certainly useful to pay close attention to deferred maintenance!! 

@Account Closed

One more to add is vacaceny factor! Typically to consider 5-7.5% depending on local market. It's unfair to assume that all 4 units will be 100% occupied for 12 months while calculating annual ROI!

Congratulations for taking action after reading and analyzing!! Good luck for your REI adventure!!

Hello Friends,

I wanted to find out ROI on my investment and I have come up with basic calculator. I wanted someone to review my personalized calculator and suggest any edits.

Monthly rent (and other additional perks)

(less) vacancy loss

Gross monthly operating income (A)

(less) Monthly operating expenses (B)

• Property management
• Property taxes
• Utilities
• HOA (if applicable)
• Repairs and maintenance

Net Operating Income C = A-B

Net Annual Operating Income D = C * 12

Cap rate = Net Annual Operating Income / Purchase price

Down Payment = (This is my own investment)

Monthly Mortgage (Principal)

Monthly Mortgage (Interest)

Cash Flow Annual = (Gross Monthly operating income – Monthly Operating expenses – Monthly Mortgage (Principal + Interest) ) * 12

Cash on Cash Return = Cash flow Annual / Down payment

Taxable deduction

• From Interest deduction
• From operating expense deduction
• From ownership expense deduction(Depeciation) = Purchase price / 27.5

Saved in Taxes = Taxable deduction * (your income tax bracket)

Increased Equity = Annual Monthly mortgage (Principal component)

Total returns = Annual Cash flow + Saved in Taxes + Increased Equity

ROI = Total / Returns Down payment

What typical ROI is reasonable to expect from 2-4 unit multifamily rental unit?

Thanks

Hello Friends,

I wanted to find out ROI on my investment and I have come up with basic calculator. I wanted someone to review my personalized calculator and suggest any edits.

Monthly rent (and other additional perks)

(less) vacancy loss

Gross monthly operating income (A)

(less) Monthly operating expenses (B)

• Property management
• Property taxes
• Utilities
• HOA (if applicable)
• Repairs and maintenance

Net Operating Income C = A-B

Net Annual Operating Income D = C * 12

Cap rate = Net Annual Operating Income / Purchase price

Down Payment = (This is my own investment)

Monthly Mortgage (Principal)

Monthly Mortgage (Interest)

Cash Flow Annual = (Gross Monthly operating income – Monthly Operating expenses – Monthly Mortgage (Principal + Interest) ) * 12

Cash on Cash Return = Cash flow Annual / Down payment

Taxable deduction

• From Interest deduction
• From operating expense deduction
• From ownership expense deduction(Depeciation) = Purchase price / 27.5

Saved in Taxes = Taxable deduction * (your income tax bracket)

Increased Equity = Annual Monthly mortgage (Principal component)

Total returns = Annual Cash flow + Saved in Taxes + Increased Equity

ROI = Total / Returns Down payment

What typical ROI is reasonable to expect from 2-4 unit multifamily rental unit?

Thanks

Santosh

@Jason E. Thanks for the info. I will reach out to you in case I decided to explore Fresno area. My current focus is Bakersfield and surrounding area.