All Forum Posts by: Tara Kinney

Yes Chris.... Actually I am looking right now as my first property sold last week and my second property closes tomorrow and I have to find replacement properties within the next 45 days.

I have around $28K to use towards a downpayment on one property and around $56K to go towards another one... both 1031 exchanges. I really have no desire to do a ton of maintenance right away, so looking for a "turn-key" type property with good cash-flow (COC ROI - 14% or more). Let me know if you have any current properties in the wings!!

Thank you for all your suggestions.  I do not have an property management company in mind.  I will take a look at some, I think that may be the deciding factor on if I would take this property or not.   

Lowered the rent on my analysis to $425 per month, changed my downpayment to 25%, upped my insurance to $250 per month, and upped my vacancy to 15% - leaves me with a COC ROI - 11.5% - sounds more realistic. But still not a bad profit. Thoughts? Take it with those numbers or ditch it cause it's a slum?

Other question - what are your preferences? SFH vs multifamily - for a building a large, semi-passive portfolio? I'm not interested in fixing up - did that, not interested...just looking to buy/hold/rent.

Very little grass of any kind - so this guy quoted me at $15 per mow - so I figured it in at $25 per mow and about once per week.  I actually have a friend that does lawn and snow so I am sure I can get a deal with him for that part.  

The person that bought it - just aquired it in April as a flip.  He bought it for $108K off the previous owner that was upside down with getting payments.  He bought it and negotiated new 1 year leases with all the tenants and to have them drop their deposit in turn for a slightly lower rent.  They set up a PO box for the tenants to send their cashiers checks too and has said they have all been on time since he has taken over.  He fixed up the upstairs apartment with new flooring, bathroom and appliances.  He bought it with cash, and is looking to sell it for $139K so he can cash out and work on another property.  

 It's not students, poor area of town, but near a lot commerical properties so work is in walking distance.  Haven't personally met the tenants, but apartment smelled like marijuana, which given the neighborhood...I'm not too surprised.  Not sure what I could do to turn it not into a slum.  I can fix up each apartment as they become vacant, but even at that - but it's more about the surrounding houses/area.

I will take a look at getting my own insurance quote - but even with upping it to $250 per month - that still gives me a 44% return.  (Deleted gas expenditure as I guess that is included with electricity which the tenants pay).  Anything else I am missing?

Thank you for your comments!  Very helpful!!

Welcome Joe!  I am also in the quad cities area!  I've been doing single family rentals for a few years - sort of by accident...and now getting a bit more active.  So I'm no expert, just a fellow investor in real estate!  I hope you enjoy the forum, and if you need any local advice or suggestions, give me holler...we can at least compare notes! :)

Okay - so here goes.  I have two single family home rental properties that I am selling because they aren't cash-flowing and am looking at using the equity and a 1031 exchange to possibly get into some mulit-family housing.  

So I found a property - that looks to be structurally sound (all brick) 6-plex.  Very small - I believe all efficiency or one bed-room. 

I did an analysis on the property using some conservative figures and the numbers look good.  However the property itself looks like a slum.  

Purchase price is listed at $139K, the 6 units all rent for mid $500s.  The highest for $599.  5 of the 6 units are rented with new one year leases and all tenants have agreed to forfeit their deposit.  The 6th unit is currently being remodeled - with laminent wood floors and stainless steel appliances.  Looking at the 6th unit, I'm shocked they are getting $500's for rent on these units as I wouldn't think they wouldn't go over $400-$450.  (Efficiency).

Income: $525 *6 = $3150 (conservative as the owner says mid $500's and one going for $599.)

Monthly expenses

Cap Ex - 5% $160

Repairs 5% $160

Insurance - $75

Taxes - $210

Trash - $60

Snow/Lawn - $100

Water/Sewer - $150

Gas - $100

Property Management (11%) - $355

Vacancy - 7% - $225

Mortgage - P&I - $470

NOI = $1100 (monthly) - Annually ($13000)

(rough figures - but all rounded conservatively) - Downpayment 20% would be $28000 - so $13000/$28000 = 46% cash on cash ROI.

My questions are: 

1. Is there anything I am missing here in my analysis.  Seems to be well worth it from the money perspective.

2. When figuring repairs - should I be using 5% PER UNIT or just $5% of the gross rents?

3. I have no intentions on managing the property myself - I would have a property management company to handle it for me... so based on that - even though in my standards it seems to be a slum, would you purchase it anyway because the numbers work?

I'm actually looking for properties that are between the $100K-$215K range and I've found a few so far on craigslist and the MLS in my price range but as I'm still very early in the selling phase...I haven't pursued those properties yet.

Depends on the equity I return from the sales of my current two SFR on how much of a down payment I will have - but somewhere between $40-$60K for a down payment is what I should have. If you hear of any other "plex's" for sale let me know. :)

Hi Leslie,

I have never heard of DSTs.  I'm really don't understand this concept.  I looked over your website, my understanding is that I'd basically by one of many people financing a larger property?  Are there any other resources that explains this concept a little clearer?  

Thank you!  

I have noticed that as well... slim pickings it seems.  Are you both doing Single Family homes?  I was thinking of "true" duplexes, but honestly...it's not a question I had considered.   Do you have a reason you would choose one over another?  

Thank you for your comments. :) I have run my two rentals that I currently have like a business already. Separate account for my rental income and expenses than my personal account. Keeping all the receipts. Documenting visits to the units in order to deduct mileage. I just don't have them currently under an LLC... I know I'm "going" to put them in an LLC, I just wasn't sure if I should do it now, or after I sell and purchase the new properties. Not sure if there are pro's or con's to doing it now or waiting.