All Forum Posts by: Shannon Moore

Hi Scott, thanks for the reply!

The management we plan to do ourselves. It's only about 10 minutes from where I live.

The advertising we are hoping to get at a discount because my father works at the local newspaper.

We have a lady that keep our "books" for $25 a month. So I think we need to add that on to the cost.

We don't have gas in the area. We will be paying some of the water bill. 4 of the 6 units we will be paying for. The electric is the responsibility of the tenants.

Trash is included in the the taxes.

Grounds maintenance is not included so we would have to add $25 a month for that.

They are all good things to consider.

Thanks,

Shannon Moore

I have been reading all of your posts for the past few days and have decided to sign up to be a member. It seems as though many of you have a wealth of knowledge to offer. So here goes...

I have a letter of intent to purchase two triplexes in SW Florida on the same piece of property that we had subdivided so we didn’t have to get a commercial loan. They are located in a great area, about a block from the water and the city is building a big park, fishing piers, bike path, children’s playground, etc, along the water. My father and I are going in as partners on this deal and both of our credit scores are above 750.

We were planning to do a first mortgage with an interest only loan at 7% for 10 years and amortized over 30 years. The seller is going to take a second mortgage for 20% of the purchase price at 7.5% amortized over 30 years and balloons in 10.

Purchase price is $195,000 on each triplex each are bumping the purchase price up to $200,600 to include all closing costs. They should appraise at around $250,000 each. We had a home inspection and they are both in great condition.

As stated above, we are doing an 80% first mortgage and a seller held second mortgage for 20% at a rate of 7.5% amortized over 30 years and to balloon in 10. We won’t be putting anything down. So it will be 100% financing.

Each Triplex:
1st mortgage $160,480=$936
2nd mortgage $40,120=$281
Insurance= $204
Taxes= $312
Vacancy ratio at 5%=$105
Maintenance at 5%=$105
Water=$144 for 4 units, 2 units are on separate meters. When the leases come due we will convert the other 4 units to separate meters.
Expenses=$1943

Rents are:
2/2=$795 each triplex
2/1=$695 each triplex
1/1=$595 each triplex
Income is $2085

Any thoughts on this deal? Do I have all of the expenses covered? Does this sound like a good way to go with the financing? What would you do differently, if anything?

Hi Eric,

I did call around on properties within a few streets of the triplexes. This is what I found:

2/2, $800
2/1, $750--utilities included
2/1, $700
2/1, $650, furnished

So, it looks like I'm priced OK. Not great but not totally out of the ballpark.

I'm guessing the tenants probably wouldn't like the increase but I planned to increase it when they renew their lease. It would be about a $36 per unit increase.

The number I have down did come from an insurance company so it should be accurate at this time.

Like I said before, the county is making huge improvements to the area and I think it will increase the property value quite a bit in the near future.

Thanks for all the ideas and if you have anything else I'd love to hear more of your comments!

Thanks for the reply All Cash.

As far as the insurance issue, there are stories in the paper everyday about how Florida is going to DECREASE the insurance rates starting June 1 of this year. I just spoke with my insurance agent and he said it should be about $150 less come June 1 but I just plugged the old numbers (higher numbers) in to be safe.

The other thing Florida is talking about doing, although I haven't heard any definite yet, is increasing the state sales tax and lowering the property tax. We'll see if that pans out but I'm not holding my breath.

I think because the proximity to the bay and improvements the county is making that the potential for appreciation is great.

Unfortunately, the seller is elderly and didn't keep very good books so I'm kind of on my own with the figures, although I do have a copy of the leases.

Thanks again for responding to my post, it gave me a few more things to think of!

I have been reading all of your posts for the past few days and have decided to sign up to be a member. It seems as though many of you have a wealth of knowledge to offer. So here goes...

I have a letter of intent to purchase two triplexes in SW Florida on the same piece of property that we had subdivided so we didn’t have to get a commercial loan. They are located in a great area, about a block from the water and the city is building a big park, fishing piers, bike path, children’s playground, etc, along the water. My father and I are going in as partners on this deal and both of our credit scores are above 750.

We were planning to do a first mortgage with an interest only loan at 7% for 10 years and amortized over 30 years. The seller is going to take a second mortgage for 20% of the purchase price at 7.5% amortized over 30 years and balloons in 10.

Purchase price is $195,000 on each triplex each are bumping the purchase price up to $200,600 to include all closing costs. They should appraise at around $250,000 each. We had a home inspection and they are both in great condition.

As stated above, we are doing an 80% first mortgage and a seller held second mortgage for 20% at a rate of 7.5% amortized over 30 years and to balloon in 10. We won’t be putting anything down. So it will be 100% financing.

Each Triplex:
1st mortgage $160,480=$936
2nd mortgage $40,120=$281
Insurance= $204
Taxes= $312
Vacancy ratio at 5%=$105
Maintenance at 5%=$105
Water=$144 for 4 units, 2 units are on separate meters. When the leases come due we will convert the other 4 units to separate meters.
Expenses=$1943

Rents are:
2/2=$795 each triplex
2/1=$695 each triplex
1/1=$595 each triplex
Income is $2085

Any thoughts on this deal? Do I have all of the expenses covered? Does this sound like a good way to go with the financing? What would you do differently, if anything?