All Forum Posts by: Dee Y.

All the previous tenants were paid to vacate at foreclosure. There is one other unit awaiting foreclosure. I spoke with the tenant and he said they are paying $650 per unit. I checked some of the local listings and units in this size range go from $625 - $750.

When you say your going to manage does this mean these units are in the town you live in?

Help me out somebody!!!

Would you do this deal for 4 full duplexes:

Asking: $241K
Sales/Offer: $220K + $40K rehab = $260K ($32.5 each)
Monthly rent: $650 (average)
Monthly estimated expenses: $1,325 (including taxes and insurance)
PI: $957 monthly (30 year, 5.75%, $164K, 25% down)

My calculations:

2% - Must generate $5,200/month Actual: $5,200 (gross)
50% - $2,600 Estimated: $1,325

Annual Return based on est. expenses = $30.2K, 30.2% or $299 per door
Annual Return based on 50% rule = $16.5K, 17.4% or $172 per door

I tried to do all estimates on the high side (especially rehab costs). Rent for 4 units is actually $700 (larger units) but I estimated on low side.

Questions:

1. Would you do this deal? Estimated expenses are lower because I will be managing.

2. I have a fully paid for property valued at approximately $300K which realizes only about 8% return (my first purchase which was a total learning experience.) Would you get financing on this property and make a cash offer at a lower amount? There are 2 more properties in this group that should be available in the near future. One is already foreclosed on but not on the market. This would leave me with more cash if I pull out almost enough to cover purchase and rehab.

3. What rate of return do you expect to get on your investments?

Please feel free to make ANY comments. I’ve done the numbers using the guidelines on this site, and in several on-line calculators and they all show that this is a good cash flow property. However, this is a lot of cash out of pocket.

Thanks.

Just pitiful.

There would be a mortgage covered by the rentals. I want something "different". I have looked in the area, and while there are several properties that I like and would be comfortable, they are in the $300-400K range. I think the value will definitely decrease during the next year. I think I can get the multifamily for about $400-450K (fingers crossed.)

Condos, i've thought about this but am too much of a control freak. Hate to give up control of my building.

I think i've talked myself into going for it as long as the repair/modification numbers aren't too bad. Thanks.

Having trouble making a decision. I have always wanted to convert an old building (i.e. warehouse, school, church, etc.) into a home. I have located a building that meets my needs but it is larger (over 8,000 sq ft) than I need for a single family residence.

The current layout lends itself to be converted to a great 4-6 unit (1 of them being mine). Here is the issue: I have determined, based on rents being charged in the area, I would just breakeven. No money to be made after acquisition cost + rehab + taxes + insurance. However, dependent on the final # of units (meeting with contractor tomorrow to discuss), I would either have zero cost for my unit or just a couple hundred dollars per month.

I have already located a source to provide acquisition and rehab financing if it is greater than 4 units (commercial) and another for a 4 unit (single family) property. I have sufficient cash for a downpayment. (I might have a problem meeting the ratios on the commercial financing if I occupy one unit, but no problems if this unit is leased.)

QUESTION: I am 50 years old, would be ok if I lost my job for whatever reason. Would you spend your cash on a property that would not make money but give you what you want? I have 4 single family rental properties so know the issues involved with tenants, pretty good savings and very few bills.

Another issue with this property is that I will end up with a 4 unit property and the cost will probably come out to be about $100,000 per unit. My unit will be substantially larger (approximately 2,500 sq ft) and upgraded finish out. There are a few plain, small, unexciting, small multifamily properties in the area going for $50 - $60,000 per unit.

What i've always wanted! Picture loft style units. Mine would be 2 story with an open loft.

Thanks for the advice.