All Forum Posts by: Ahmad H.

@Aaron Thivierge Your P&I seems too high at $1800 for 240k (320-80) loan. Is this a 30 yr fixed? What's the interest rate? At 5.5 or even 6% your P&I should be ~1400.

Also water $440/mo is absurd, unless water in Jacksonville FL is very expensive. Do you know how many gallons are they using? How many people are living there? I would call the water company and find out average usage for the area or at least usage history to see if this is a recent increase.

I would also look into how much rehab is needed to get market rents for the other 2 units and add that cost along with lost income during rehab to purchase price and figure out your CoC, ROI, ROE, and MIRR if you have an idea of when you'd refi or sell.

@Chris LeMay This is a good opportunity to update your lease to include a clause that determines what happens in such a case. Here's one you can reference and tweak as you like.

LEASE CANCELLATION BEFORE POSSESSION: If resident requests that the lease be cancelled before move in, all deposits will be refunded minus a third if cancellation is more than 30 days prior to lease start date, half if cancellation is between 10 and 30 days prior. If less than 10 days prior, deposits are non-refundable.

Min cashflow per door varies a lot due to many factors. Min CoC% is a better measure which is also a snapshot of a more complete IRR & MIRR analysis.

For the sake of completeness, here's what I deem as min cashflow/door in my market:

$250/door if 25% down and 75% leveraged

$150/door if BRRR and have $0 left in deal

$500/door without debt

@Katie Sorensen No wonder they got them rented so quickly. Gas, water, sewer, and trash are included and rent is low. They should have reached out to you to let you know that those utilities can't be separated and advise on an appropriate rent increase to offset your cost.

@James Reed I am in a upstate NY where taxes can be as crazy as you're seeing. First off, 15% for capex and 15% for maintenance is very high. Both should be 20% max.

Tax can be grieved based on your purchase price, so if you end up buying it for 60k, when grievance time rolls around (typically in May) you can reduce taxes for the following year by 40%.

If I were to do the numbers assuming rent is $1325, they would be:

Vac  106

Maint 132.5

CapEx 132.5

Mgmt 132.5

Mtg 228

Ins 60

Tax 280

Cashflow $253

But as Mike Borek mentioned, if the ARV was 100k and asking is 79k and all that's needed is paint and carpet, it would have sold already for someone to fix and live in or flip.

@Doug B. That's a great way to do it! Can you recommend any lockboxes with this functionality? 

@David N. Thanks!

@David N. Do you apply for this kind of LOC as an LLC or personal? Are they typically offered by smaller community banks?

@Kim Durst It depends.

Here's a link to one of the best rent vs buy calculators out there. The output obviously depends on the assumptions for appreciation, opportunity cost, etc.. but it lists most if not all items one should think about and runs the numbers. It's also fun to see how tweaking things changes the decision.
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

@David Zheng LOL. I remember you saying that you will NOT purchase a Lambo using the refi money from that property you fixed up :P 

Please feedback after a few months of ownership if it's still worth having or if you would have preferred to put the money down on a commercial property. Sometimes you just need to get something out of your system, keep in mind that you can always sell it and recoup a good chunk of cost if you bought it properly.

Nice looking car though! Enjoy it!