All Forum Posts by: Shane Starr

Sorry to miss this one. I'll be at the next one.

@Jeremy Tillotson Had something come up for that Sunday. Hate to miss, but I'll be at the next one.

Good idea, @Jeremy Tillotson  

I'm interested. Sounds like Sunday afternoons are a possibility -- that could work for me.

Thanks again, everyone. The duplex ended up selling for $99.5k. I was prepared to go $91k. Appreciate the help running the numbers.

I'm curious to know whether this duplex would meet @Ben Leybovich's $1000 rule — or whether it fails, due to the fact that you have 2 tenants, 3 toilets, etc.

@Kurt Brumfield -- Thanks. I definitely will.

Thank you, @Kurt Brumfield and @Mike Rodriguez I really appreciate the advice. 

I'll be getting a firm insurance quote, so I know that number for sure.

Thank you @Steve Smith Yes, those estimates would be with the tenants paying utilities.

I'll be sure to account for those additional expenses as well. I really appreciate your input. What do you think of the 7% cap rate? Is that reasonable, or would you be looking for something that returns better?

I’m looking at a duplex that will be sold at auction, and trying to determine if it has potential as a buy-and-hold rental (and if so, what my max bid should be). I’m new to analyzing properties, so I’d appreciate any advice from the community.

If I purchase, I would pay cash. I realize I could make more by using debt, but I like the idea of paid-for rentals.


DETAILS:

It’s a 1-story ranch built in 1984. One side of the duplex is 2BR / 2BA. The other is 2BR / 1BA.

Est. market value: $110-120k (Last sold for $100k in 2000).

Est. rent for Side A: $675/mo (with tenant paying utilities)
Est. rent for Side B: $600/mo (same)
--------------------------
$1275/mo gross rent X 12 = $15,300 annual

At a potential max bid of $91k, here's what I’m seeing:

$15,300 annual gross rent
- $2464 property tax (2% assessed value of $123k)
- $1000 insurance (estimate)
- $1530 maintenance (10% gross rent)
- $1530 CapEx (10% gross rent)
- $765 vacancy (5% gross rent)
- $1530 property management (10% gross rent. I plan to self-manage, but want to allow for future PM.)
-----------
$6,481 profit / year (or 7.12% cap rate)

Is that a decent return? What am I missing, doing wrong, and/or not considering?

Thanks!

We're new to BP and investing, so we're researching and learning, in order to better define our strategy.

Long-term, we're interested in buy & hold single-family rentals. We live in Indiana -- so cost-of-living is reasonable -- but like most parts of the country, the market has really heated up. We've saved some cash to get started, but I'm hesitant to jump into buying houses, not wanting to pay top dollar. I'm wondering if purchasing tax liens would be smart strategy for right now -- a way to earn a decent return, while waiting for the market to cool off before jumping into purchasing houses.

I would appreciate any input from the community. Does my line of thinking make sense? Or would I be better to focus on finding deals for houses, even in the hot market?

Or, are there other strategies you would suggest in a hot market?

Thanks in advance for any advice.