All Forum Posts by: Account Closed

Wow I am truly impressed, everyone was so helpful. I re-analyzed based on everyone’s advice and even added another property to compare and contrast. The hint about comparing apples-to-apples on CL was a great idea. I ran into one issue with the first property though, it was by far smaller than all the other comparables. How much does Sq Ft come into play- is an equal quality house with 5 bedrooms justifiably the same rent (give or take) even though one might be smaller? As much as I like the idea of building more equity than I am losing to cash flow each month I really want to shoot for a positive cash flow house. I am going to shop around for better personal loans and see how big of an impact that can make, for some odd reason I have peace of mind doing all my banking with USAA.

I agree my expense are high. Naturally I tend to over exaggerate them to prepare for the worst. To help justify my thought process I offer the following:

In South insects are a huge problem, to protect the property I feel like annual pest service is a must.

I agree I will not pay water/sewer/trash. +460

Landscaping helps keep the curb appeal in between tenants?

I made an error in my taxes I believe they will be more along the lines of $300/year.

USAA quoted me a 7.99% APR on personal loans.

BTW the rent was determined on rentometer.

With these changes I see a more accurate mortgage of $340, and the same personal loan payment of $234 for a total monthly debt service of $574/month. But that still leaves me with -$41/month uhg!

Why am I ALWAYS generating a negative cash flow? I already own a home I live in, and want to invest in another property nearby. However no matter which house I look at I never can seem to come out positive! This video is just one example, I don’t love this house nor do I have any commitment to it. Feel free to point out all the flaws in my “formula”.

I assume part of the reason in this example is I am putting no money down. I would finance it 100% along with the renovation budget. Besides this fact, what else can I do to tweak my strategy and at least break even?

Some general things you may consider in your cash flow equation.

• Insurance
• Services/utilities- pest, water, sewage, trash
• Capital replacement cost (cost of item/ life expectancy)- roof, carpets, appliances.

What unit are you with down in Texas?

Hey everyone thanks for all the input and advice! The seller of the Wilma Duplex agreed to fix everything in the Home Inspection Report, including putting a new roof on the property. I have about $12,500 for rehab. I need to starting researching, what is the most cost effective ways to raise a rent values.

Extra info and analysis on the Wilma Duplex, created as if I was not living in the property:

Gross Annual Income at 750/door- 17,400

Less 6% Vacancy- 1,044

EGI- 16,356

Annual Expenses

Pest Control-300

Casual Labor – 100

Interior Paint- 100

General Maint (calculated at 10% of the rent, what does everyone else use?)- 1,740

Property Managemen (10% of rent collected)- 1635

Supplies-100

Replacement Reserves- 1296.25 (stoves, refrigerator, dishwasher, AC units, HW heaters, roof, carpet: based on replacement cost/remaining life x number of units)

Total Expenses- 5271.25

16,365(EGI)- 5271.25(expenses)= 11,084.75/12= 923.72(monthly income)

923.72-1014(debt service)= -90

So if I have to pay 90 a month for 360 months that’s a total contribution of 32,400 for a 150,000 property that generates 923.72 a month (in a vacuum). I know I am not the investor of the year but at least I am in the game and building equity.

@Jason Minnich my wife and I budget our BAH into our overall budget, and then allocate certain amounts for different purposes. I have never used 100% of my BAH for solely for rent and utilities. I will however charge myself as if I were a tenant. This way the income stream reams a constant, I will just plug an actual tenant into my unit and have them make the same or greater amount.

Are there any specific books you would recommend? I was planning on looking up some reviews on Barnes and Noble, for Home Maintenance and Landlording.

“Next, you may or may not need a property manager. If you are local, it really doesn't make sense, use an online program that pushes bills and allows for easy correspondence (that is tracked) generates your 1099's and don't bother.”I don’t understand how or why this is used? Since I will occupy the other half of the property I was planning on managing it myself until I PCS elsewhere. I budgeted for a Property Management Service as soon as I am gone on the above Operating Income Statement.

I was planning on doing the Home Warranty for those exact reasons. I mean for a $34/month payment its cheap insurance.

I was under the impression that the VA load was good on only one property, until paid off or refinanced. I am going to have to look into this, that would be a huge break for a second property.

@Joseph Weisenbloom No unfortunately the Yellow Duplex is just that. To clarify they are two separate structures 2302 units A&B and 2304 units A&B. They are identical in size,shape,color and are adjacent from one another. Both are foreclosures and are for sale.

Updated Anaysis Yellow Duplex, as a duplex:

Gross Rent- 1300

Vacancy at 6%- 78

GOI- 1222

Expenses at 50%

NOI-611

Debt Service- appx 550

Monthly Cash Flow- 61

Can someone check that over please?

I at least feel more comfortable with the analysis part, but not so much with the deals available.

To shed more light on my goals, of course I’d rather contribute to a mortgage than throw money away on rent. I’d like to purchase a self-sustaining property (a property that a tenant’s rent covers all expenses, but not does have to generate an income) at each assignment. Then cash out when I retire or manage the properties myself.

You are welcome, I appreciate that! I will contact your friend, I am sure he would be able to understand exactly where I am coming from.

I believe a made a mistake in my post, by NOI I mean total rent.

Hello everyone, this is my first post. I am serving in the Armed Forces and currently in the Georgia/Alabama part of the country. I am 23, married, and have no kids. Financially I have little debt to income ratio, and have about 3 months of my monthly budget set aside in savings. In addition I have about $12,500 in liquid that can be used for a real estate investment. As of now I have been preapproved for a 0 down VA loan.

I would like to purchase my first piece of real estate. This will be my primary residence as well as an investment property. I am interested in buying a duplex/triplex/quadplex. Due to work and time constraints I feel like I would be able to manage a tenant in a duplex, but not in a triplex or quad and would instead hire a property manager.

I understand the 50% rule as well as the 2% rule, and unfortunately cannot find ANY property that fits these standards. I am tied to about a 30mile radius outside of my base due to strange working hours and the commute associated with them. Therefore my search is rather limited. All of the golden deals have been scooped up by BP’aires already. However I feel like the time to invest in the market is now with interest rates on the rise. To compromise, instead of setting a goal of $100 positive cash flow per door, if I can have ANY positive cash flow I would be interested. I know some of you are shaking your head but my rational is if the property can pay for itself after 30 years I can still collect the reward, I do not necessarily need to be generating an income off each door every month. I have found 3 interesting properties I would love to share with you. Any insight would be appreciated.

The Wilma Duplex- In a nice part of town, 1990 construction, needs a face lift to maximize rent potential up to $750/ door. Brick construction, 1200 sqft perside, nicely landscaped with a large lawn. The purchase price is $150,000 with a 30yr fixed at 4.25% APR. There is a long term tenant inside now paying $650/month who has expressed to stay. She has not had a rent increase in 3 years.

My analysis: IF I can rehab the property and generate $750/door in rent my NOI is $1500. My debt service is $753.77, making the estimated monthly cash flow -$28.77 or -$14.40/door.

Extra info: I am under contract for this property but the VA has flagged it for a new roof. I am trying to have the seller put one on. If she does not then I will walk away from the deal.

The Yellow Duplex- In not as nice of a neighborhood, it is mixed between a couple eye sores and some other average, and above average properties. The property is 5 years new. Each unit is just over 1040 sq ft and has 2br/1.5 ba. It is a duplex next to a sister duplex, both are identical and have been foreclosed. 3 out of the 4 units are being rented for $650/month. It does need some landscaping, a lawn is nonexistent. I am certain I could purchase this property for no more that $110,000. I would use a VA loan, 30 yr fixed, at a rate of about 4.5%

My analysis: NOI is $1300. After the 50% to expenses I would have $650-557(ds) for a total cash flow of $93 or $46.5/door.

The Monster Quad- Next to the best part of town. Has a Home Owners Association. Listed for $269,000 I am assuming I could close on it for no more than $260,000. The neighborhood is only Quads, each one is unique in the sense they are different bright colors and the staircases and balconies are all in different places. It has a tropical Key West feel inside the premises. They are all two stories, and share a common pool, all are provided; pest, water, and lawn service through HOA. My building as of now is being rented for $620/door. The neighbor next door is paying $675. Each unit is just under 1000 sqft. They are 2br/2ba and built in 2004.

My Analysis: NOI generated monthly is $2,480. After 50% go to expenses there is $1,240 for DS. The estimated principal and interest payment at 4.5% would roughly be $1351.77 leaving a total monthly cash flow -$111.77 or -$27.94/door. However after 360 months of contributing around $40,000, I would still own a $260,000 investment that is still generating monthly income. That's what I put into my mutual fund each month, jeeze I hope I get that type of return on it after 30 years.

So in a nutshell that is a little about me, my goals, and my prospective real estate deals. Any knowledge shared, comments, questions would be a greatly appreciated!