All Forum Posts by: Katherine Thorndike

Great info Victor.  Thanks.  my son is a contractor so I get good prices thru him.

The town is Meredith, NH.  Center Harbor and Moultonborough are also towns I prefer as they have low tax rates, good schools, etc.  Plus close to my home.

Thanks Kim, Dawn and Randy.  You confirmed what I probably already knew.  This town is highly desirable so it is difficult to find flips and buy and hold's.  I hate to let available properties go since they are few and far between but I will watch and wait a little longer.  Who knows, maybe this will sit and the bank will eventually let it go for the price that would make it worth purchasing.  A recent similar property worked out that way.

Kim,

The neighbor was approached by the bank before the house was put on the market, MLS, and they rejected his $80,000 offer. The real estate agent said that the executor of the estate just wants to get rid of the house. The bank is doing a short sale and taking offers this weekend. The bank is into the house for $124,000. I think that if the bank doesn't get a reasonable offer, they will keep taking offers for a while longer.

I just plugged in the numbers to a deal I am working on for a rental.  The following results that I don't understand are:

Proforma Cap Rate   6.05 %

Cash on Cash ROI 6.24 %

Purchase Cap Rate   9.04%

What are the acceptable results for purchasing a rental property and what do these terms mean?

thank you

Katherine

I a fairly new at this and panic every time I have trouble with the analysis.  Here is the deal:

A 1,126 sq ft cape with an attached garage.  2 bed/1bath built in 1958.  Hasn't had much done to it sine 1958.  No septic design on file, common for this small NH town. Located in a desirable area.  1/2 acre.  4 foot crawlspace/dry.

Similar rehabbed homes sold last year for $130-140k   Rental rates about $1,100 per month.

I know the neighbor and original owner of the home before he sold it in the 80's  He gave me some good info on the home.  Because the home was owned by a single woman with health issues, the home is in disrepair but not abused, other than her dogs ruining the carpets.  Here is what it needs and my calculations for investment analysis.

Needs a new roof, new windows, flooring throughout, new insulation in the attic, update kitchen with new cabinets, refrigerator, painting and other minor repairs.  The furnace is old but working (oil) and the well is ok.  To flip the house, a full dormer on the upstairs to put a bath on the second floor and increase the size of the two small bedrooms would probably be wise while doing the roof.  There may be some structural problem with the roof as the neighbor said he can see that the knee wall seems to be pushing up on the roof.

I have no idea how to quickly get the numbers on all these renovations.  Although my son is a carpenter, it takes him a while to get estimates to me as he is busy.  I can't get anyone to give me quick estimates for auctions or other fast sales.  This one is a short sale and multiple offers have been put in since it went on the market 2 days ago. Houses sell fast in this town.

 Is there a standard way to figure on things like flooring for a house with 1,126 sq ft? This cape is like all the other capes I see.  Nothing unusual in the design.  A dormer would be 32 feet (the cape is 24 X 32. 6 or 7 windows.

As for figuring out what to give for an offer.  My numbers for income for a rental are $9,737. If I mortgage 60,000. I will have to deduct that payment from the income so the yearly income would be $6,293.  The house is listed for $125,000. but that is unrealistic.  The neighbor offered the bank $80,000. for the short sale but that was rejected.  I can't imagine offering much more than that.  But if I figure that the rehab costs might be $30,000. (just a wild guess at this point) If I offer $85,000. the cost of the house after reno would be $115,000.  How do I do the calculations for Cap rate or cash on cash return?

I know this is lengthy.  I have to put in an offer by tomorrow to be considered.  Need some help.  Thanks to anyone who can give me some advice.

Katherine

I have not invested in any mobile homes but the town that I prefer to do the majority of my investments in is difficult to find properties and they go fast. (Lakes Region of New Hampshire) I looked at a nice lot yesterday in a good location. Beautiful trees, open areas, small brook on the edge, nice gardens and landscaping. It has an older mobile home, 1968, on a foundation with septic and fairly new drilled well 2008. private septic. Oil heat. 1 car garage built 1994. Older couple lived in the home for the majority of the time and took good care of the property but the mobile home has not been touched since 1968! Outside is fine, inside very dated. Metal roof and metal siding. A little damp in basement with spring melting. 704 sq feet 3 small bedrooms 1 bath

Purchase price list is $64,900. Taxes 1,072. Lots in the same area go for $50,000. Thinking I would rent the home and later may either sell or build a new home on the lot then sell. I would need to build a larger 3 bedroom 1 1/2 bath at least 1,000 sq ft to compare to other homes in the area that sell for under $200,000.

If I cleaned up and painted the inside of the mobile home, perhaps $2,000-4,000 repairs, I should be able to rent it for $800 per month. No utilities included.

Any advice?? This is a new one for me. Don't know what to offer as the well, garage, septic are pluses but is the mobile home a minus?

And a checklist for a flip would also be great. My notes are scattered at the moment and I would like to put them in order.

As a newbie myself, I have an additional question as I am deciding on my target areas too.

I hear a lot about property tax rates when realtors are trying to sell properties. We have tax rates anywhere from $9.00 in some towns to $27 in others. But, I have noticed that in two towns that have comparable populations, amenities, etc, that similar houses in each town have a big difference in taxes. A three bedroom may cost $2,000. in one (tax rate of $12.62) and $3,500. (tax rate of $18.30) in another. Is assessing a house pretty uniform or all over the place?

Question is: Should I eliminate the higher tax rate town on a flip for resale or just do the numbers and forget about the tax rates if the numbers work.

Andy, the other house on the market for 150k has been on for a few months. Was not sold last summer. The ability to rent in a small town is more difficult. I am guessing that $950 per month with tenant paying utilities is conservative. One rental in the main house is year round. The other one is a summer rental and that is more difficult to find a tenant. Hikers and hunters may rent on a weekly basis.

Also, I imagine this house has lead paint. Looks like it.

I need advice from you more experienced folks. I am only recently getting involved more aggressively in rehabs, (flips and rentals) and possibly wholesale deals if the property is ripe for that.

Here is what I found:

Small New England town (population 2,000) about 45 minutes from the nearest small city (pop. 16,000). Lots of larger colonial homes, known for wealthy summer residents. The locals have to travel to work as no industry in this small town.

Here's the details:

Bank owned, sold as is thru an online bidding site. Auction ends Monday afternoon. Town hall closed until monday so couldn't get any info yet except online tax card. Tried to find the previous owner but no luck. (I usually try to call them and ask questions about property)

Single family, 6 bedrooms, 3 1/2 baths, 4767 sq ft.

drilled well, private septic

Taxes almost 6,000 per year….yes six thousand.

Good school district. 3 acres, much of it wetlands but dry around house.

Built 1865. Colonial, wood frame and siding. Needs paint and possibly a new roof.

Stone foundation, cellar appears dry. dirt floor in cellar

100 amp circuit breakers. New wiring in barn and ell.

Heat. wood, electric baseboard in some rooms, oil furnace which is a lennox giant behemoth that does not look like it is in working order. No service on it since 1996.

Huge 3 story barn in great shape. Looks like someone was starting to put an apartment in the barn and a summer apartment in poor shape is in the ell. The main house has essentially no kitchen as the small kitchen is in poor shape. The main house has few upgrades but is classic new england with 3 fireplaces.

Bathrooms are small and seemed to be redone in the last 15 years. Would need cosmetic.

Price? Assessed at $512,800. Listed for $135,000. One bid online so far at $99,000.

If I were to bid and get the property, I would want to wholesale first but have never done this and don't have anyone I know who is an investor. I could pay cash for the purchase but if I could not wholesale, I estimate the house needs about $20,000. to get it ready to rent if I need to hold it. About $30,000-40,000 to flip.

The only other comp I see locally is another large colonial that has no insulation, no upgrades, no kitchen, needs just as much work if not more, listed for $150,000.

Please advise, those of you with experience. I slept rather fitfully last night thinking about what I should do.