All Forum Posts by: Blair Boan

I am waiting to hear back about that.  Didn’t put that on the estimates yet and point taken. 

Can we say-$125/mo should suffice?

Yes. I am an agent in greenville and we have a property management division and they charge agents 7% rather than their normal 11%. 

Thomas-are you saying since the rent is $550/mo now on each side-the value should be set at $110k?

I️ just kept vacancy at 5%, and maintenance and capex a bit lower because of all the updated “big ticket” items. Maybe I️ should bump maintainer to 10%.

Taxes are high in that particular county but that’s the accurate number. Insurance may be another story. I️ can only go off of what my mortgage broker is quoting me but I️ will call my insurance company to verify. It’s not on the market. Which I feel like it’s a goner once it hits. But good point-plenty if deals out there.

This would be my first purchase as a buy and hold.  Currently working on a flip, which should work out nice, but it won't sell before I would need to jump on this one.  So it scares me a bit but the numbers look good to me, but the one thing that holds me back so to speak is the rental rate not currently set at what I am "told" the rent should be and then resale value if I need to get out for some reason.

Duplex - Spartanburg SC

2068 sqft 2/1 on each side.

Asking price - $95k

Currently getting $550/month each side (owner rents to family) but from talking to property managers, etc, the rate should be around $700-$750/mo.

taxes - 2400/yr

insurance - $1500/yr (I'm told by mortgage broker)

management - 7% of rent

cap ex - 5% of rent (built in the 60s but very good shape with new (4yrs old) windows, roof, hvac.  Brick construction.

maintenance - 5%

vacancy - 5%

monthly principle and interest - $354/mo (if purchased at 90k)

lawn - $35/mo

Rough monthly expenses - 1022.15/mo

Rough rent - 1200-1500/mo

And just so you know - Im the type that will analyze something to death.  Perfectionist of sorts I suppose along with being nervous that if this unit doesnt rent at what I am told then how easy is it to off load a duplex?

Anyway - thanks for any help and Im sure I left something off so please ask any questions.  

I recently signed on as a PRO member and it is definitely worth the investment.  Glad to be here.  

I am currently working on my first fix and flip and things are looking good, but I didn't really have time to look at the numbers as if it were a rental unit to hold on to, but now that I am about to finish and sell the property, I am diligently looking for my first buy and hold rental.  My end goal is to acquire as many as possible for long term passive income.

My question, as the title suggests, is how to properly analyze a deal and what MOST folks like to use as a measuring stick to be considered a good deal.

Brandon Turner says he only jumps on a rental that will bring a 12% cash on cash return after everything is accounted for (PITI, vacancy, maintenance, cap ex, management, etc.) But then he also says that to cash flow $100-$200 per door is a winner as well.

From my many many many calculations here in the Greenville, SC market, I am not hitting on anything close to those numbers.  The 12% cash on cash that is,  There are plenty of homes that I can accumulate $100+/mo cash flow but the return is no where near 12%. 

So a few questions - should I hold out until that "perfect" opportunity presents itself, or do I just live with the fact that it is few and far between in this hot market.  I am a real estate agent and can buy properties at a 3% discount on top of anything I can work out in negotiations, but even still - I have seen nothing that hits above a 9% cash on cash return.  

Some people tell me to go after homes that hit the 1% model which I have found 2. One is $54,000 and rents for $550/mo but after those calculations, it ends up only being a 6% return. The other one is a duplex that is $100,000 and rent is a combined $1100/mo but those numbers only become a 12% cash on cash return if I can buy it at $80,000 which simply won't happen. The market is too hot. There are two duplexes and not on the market, but once they hit the MLS they will sell in a heartbeat.

Follow up to these questions:  What do most of you do with the vacancy reserves if the house has none in a year period.  Do you put it towards the house, do you pocket the cash, or do you keep it stored away year after year?  Same goes for maintenance reserves.  If there are no repairs over, say, a two year period, and you have $3400 saved up, what do you do with that?  

Thanks for any and all responses and glad to be here.  

Just signed on as a PRO member and well worth it. I️ am currently working on my first fix and flip home but really just dove in and didn’t really run rental numbers because it was such a discount buy, I️ had to act fast. But with that said, I️ am now diligently looking for my first buy and hold rental. My end goal is to acquire as many properties as possible for long term passive income. But my question as the title suggests is about analyzing a deal. Brandon Turner says he personally never picks up a rental home that doesn’t have a cash on cash return of AT LEAST 12% after everything is accounted for (PITI, cap ex, vacancy, repairs, management, etc). But then he also says if he can cash flow $100-$200 per door, that is a winner as well. I️ am in Greenville, SC and have been calculating many many deals. Nothing seems to fit this mold. Sometimes the numbers work out that I️ could cash flow $150+ per month, but the cash on cash return in sub 7%. Other deals that fit the mold of the 1% model ($54,000 purchase price with a $550/mo rent) ends up only being a 4% cash on cash return, so then that doesn’t make sense to me. I’m curious what would be more important? A better return (because the point here is to get better returns than the stock market) or higher cash flow? I️ simply have not found a deal yet that hits the 12% cash on cash return. Most homes that can charge 1200+ costs about $215k But on the other end of the spectrum, homes that are more on the cheap side (50k, 60k, etc) only call for about $550/650/mo. and more repairs, etc. Follow up question while I’m here: When a whole year goes by and there have been no vacancies, what do you do with that built up reserve? Put towards the house? Pocket it? Keep it in case there is a long period or vacancy? The same goes with repair reserves. Thanks a lot.

Simple question that has been nagging at me.  Im sure there are multiple caveats to the question but I will try and keep it simple.  

Why do most investors say that the money is in multi family?

Example:

I have an opportunity to purchase a duplex, great location, decent return, 18%.  Or I could simply pick two single family homes from the list that return the same rate of 18%.  Obviously the initial thought is replacing one roof rather than two, but other than that, in my opinion, the two single family homes have a better chance of appreciating quicker if I decided to sell down the road.  

So did I answer my own question? Duplexes are for your long term buy and hold (10 years or more) where as SFR are quicker turnover once that market gets hot?

Thanks in advance.  If I need to throw out any specific details, please let me know.  

You know-just out right selling never really crossed my mind. So-don't even refinance-just fix it up and put it back on the market?