All Forum Posts by: Jason Jones

OK, so based on 40%... my numbers should look something like this

$175,000 purchase price
$1200 mortgage payment

Rent at $1500:
$900 NOI (based on 40% expenses)
-$300 NEG cash flow

Rent at $2200:
$1320 NOI (40% expenses)
$120 POS cash flow

Guess I need to do a rent analysis on the area to see what the rents are like there.

Many here use the 50% expense rule when evaluating rentals. Is this true even on new construction? I mean, if you buy a brand new home then I would image you won't have a lot of expenses for the first few years (other than renter damange, etc.).

Should I stay firm and only buy if I can get positive cash flow of $100 per unit using the fomula: rent/2 = PI

Or

Should I be happy with positive cash flow of $100 per unit on a brand new home?

Funny... I just moved out of Ohio about 6-7 years ago. I was in Lima, or as they say, "Lost In Middle America".

Crackhouses, deadbeats, feces, and roaches... hmmm, you've got me interested :)

Thanks guys... I did pass on it.

I sure would like to be an apprentice to one of you. I could offer services in return (I wouldn't just be a leach). It's hard starting out with little capitol and experience, but I've got tons of passion and I'm gaining knowledge every day.

Anybody have a use for a young, eager IT guy that wants to break into REI?

The response I got was:

You're missing something... Lower the loan to value ratio to 75 on the spreadsheet and it roughly meets your ratio while still kicking out over $3k at the end... It's a tradeoff.. Your investor friend is no doubt basing their rule of thumb on some assumptions like 20% down payment, etc. These properties are LESS THAN NO DOWN when all is said and done...

Still not worth it though, huh? Hard to pass up a deal that is positive and gives cash back at closing, but I'm new and I'd rather pass up a deal than buy a bad one.

Deal or No Deal? I think I know the answer already, but I figured I'd ask.

Purchase Price $48,500
Rehab Costs $7,500
Closing Costs $600
Hard Money Cost $2,845
Total Costs $59,445
After Rehab Value (est.): $87,540
Refinance Amount 80% $70,032
Loan Costs $3,000
Cash back after refi $7,587

Instant Equity: $17,508

Avg. Rental $725.00
Prin & Int. @ 7.3% $477.74

PM Fee 10% $72.50
Tax/ Ins. $125.00
Net cash flow $49.76

I know... rents aren't 2% or PP and negitive with 50% expenses, huh?

If I'm getting $1300 cash back at closing, doesn't that easily cover the $48 loss based on 50% expenses?

This is also just finished being rehabbed, new appliances, HVAC, etc. and is already rented. That should keep my expenses down at least for 6-12 months.

APPRAISED VALUE: $73,000
Purchase Price $53,500
Closing Costs $600
Assumed Loan $53,000
Refi % of ARV 80% $58,400
Loan Costs $3,000
Cash Out $2,400
Net Down Payment -$1,300

Instant Equity: $14,600

Avg. Rental $700
Prin & Int. @ 7.3% $398

PM Fee 10% $70
Tax/ Ins. $100
Net cash flow $132

APPRAISED VALUE: $73,000
Purchase Price $53,500
Closing Costs $600
Assumed Loan $53,000
Refi % of ARV 80% $58,400
Loan Costs $3,000
Cash Out $2,400
Net Down Payment -$1,300


Instant Equity: $14,600

Avg. Rental $700
Prin & Int. @ 7.3% $398

PM Fee 10% $70
Tax/ Ins. $100
Net cash flow $132

I'd love it if you guys commented on my other thread in the "Ask About A RE Company" sub-forum.

I think this is the direct link:

http://forums.biggerpockets.com/viewtopic.php?p=58462#58462