All Forum Posts by: Steven L.

@Patrice - Thank you for offering your assistance, it is greatly appreciated.

Hello, I am in the process of purchasing a well kept 8 unit in West Dundee, IL.  4 - 2 bedrooms, 4 -1 bedrooms, basement laundry room.   I have an inspection quote for $1,400.   Does this sound like a reasonable number?

I hate cats.

@Peter - I wouldn't care about other condo complexes for comps. I would talk to the guy and ask him why he is selling. Tell him you are open to a competitive price but will not overpay. Is he motivated, what might motivate him? Provide him comps. Then run your numbers. $900*12 = $10.8 K gross rents - .03 vacancy (optimistic) - $10,400 = $10,400 / 50% rule for expenses = $5,200. Therefore the NOI # is also $5,200. Divide by desire cap rate - 8% equals a property value of $65,000. An alternative property value calculation over comps. Sharpen your pencil to get actual expenses (HOA, insurance, taxes, management (even your time), allocations for CapEx (appliances), Repairs, Rent Ready, etc.) remember your taxes would be jacked up based on the new purchase price. My 2 cents.

@Erania_Brackett - good for you in getting familiar with the numbers. I am at the same stage. In Illinois, I have found that homes converted to multi-family don't work unless you can buy at a huge discount. Additionally, on any like form factors, my concern is that the electrical and plumbing are/are not upgraded to support multi-family. Unless I am missing something, the proforma numbers provided (dubious), specifically the NOI, has something that is off: Income (3,225*12) - Expenses (2,310*12) approximates = NOI of $10,980 vs. the $27,595 provided. Also monthly cash flow * 12 / total cash needed = the provided Cash on Cash ROI of 20.45%. I don't think this is the correct way to look at the numbers. Monthy cash flow (and thus Cash on Cash ROI) needs to carry P&I.

Something like this at 25% down.

@Steve Vaughan - Awesome thanks.   Right now looking at a 2 unit - actual taxes are provided and used in calcs. w/o the 50% rule.   Just taxes blow this deal up.  Just getting a feel for the numbers.   I will keep looking.

Hi - For 1st pass analysis on 2-4 units when estimating expenses and the 50% rule.    Does 50% typically account for EVERYTHING?  Taxes, Insurance, Utilities, Repairs....we will leave management fee out of the calculations for now.

Normally for these properties, I am finding that only taxes are provided.    This is for first pass only.   If the numbers are close, I would do further analysis and estimate actual expenses.

Thoughts? (and thank you).

S

Shaun - Really nice work, you have broken through and are on your way.  While only having 1 remote VRBO property at this time, I hope to join you very soon.

Cool - Thanks Nick.

Thanks Sam !