All Forum Posts by: Thomas Brady

@Linda Weygant haha I audit  applications for the bank, very much on the technical side of audit. I mainly work within databases. But I know what depreciation is.....I was just making 100% sure it didn't pertain to something different than I thought in this situation. Wasn't looking to risk something like that! Lol

One more thing, 

Will the schedule E pretty much give me most of the information I need to know about expenses in order to make a decision about the viability of this property? 

Hey, 

I'm new to the investing world and just requested the 1040 Schedule E from the seller. 

As I was reading through it, all the numbers looked good to cash flow with, until I came to depreciation expense, which was $9,175. I'm just making sure that it is just what the government depreciated the building by this year, and not an actual expense paid by the homeowner....if so, this property is a NO GO! 

if it is just depreciation, then he profited $4,850 this year. 

Thanks 

@JR T. Very true, the seller shouldn't be paid on potential.

The numbers start to look REALLY good at 240-245k, but my realtor was telling me the seller currently owes 255k on the property, (He paid 313k for it in 2013) so that is why they are set at that price point. I can always try to get it for less (it doesn't hurt to try)

Thanks for the advice man!  

hey, I should have mentioned that the previous quote (30k) was to make 2 separate units out of the basement, whereas this one is to make one 3/2 unit. There are also two bathrooms already down there so we wouldn't have to out anything like that in. The contractor said it was pretty much putting a small kitchen down there, new paint, and carpet. 

One more thing is that the basement isn't the traditional style of basement. It is underground at the back of the basement, but above ground at the front (with a deck) 

I definitely agree with not counting your profits on conjecture so thanks a lot for reminding me of that. I was trying to be conservative with my numbers, but you never know till it is set in stone. 

I requested the 1040 Schedule E from the seller so that will tell me more. 

Hey Everybody, 

I made a post about buying a duplex a few days ago and have a few pretty big updates I'd like to share and get any feedback I can. 

I was able to talk the seller down to 255k on the duplex which was a huge win for me! 

It looks like the city will also allow the basement to be turned into a separate 3/2 unit. 

This would add an extra 15-20k to my loan, so the numbers below are for 275k

after the 3rd unit is added my units and rents would look like this: 

two 3/2 units that are both 1308 square feet (each would rent for $1100-1200)

one 3/2 unit that is 1550 square feet (it should rent for $1000-1100)

EXPENSES

Mortgage: $1320 (without tax or insurance) 

50% rule $1600-1750 

Note: This duplex is relatively new construction (2003) so cap ex might be on the lower end (I still accounted for more) and the vacancy rates in the area are VERY low, lower than the 10% I accounted for. Just trying to be conservative 

That has my monthly expenses anywhere from $2920-3070 

My rent is in the range of $3,200-3500 

By my math, it looks like an absolute worst case scenario is $130/month cash flow and a best case scenario of $580/month (this is of course assuming the 50% rule holds true.)

My question to all you investors, is should I pull the trigger on this Duplex? 

(Sorry if this post looks similar to my other one....I think the numbers look a lot better with the lower price point, but I definitely want as many opinions as I can get) 

Thanks!!!!

thanks Ronan, I will definitely take that into consideration. The numbers are more important than not pissing the seller off. 

The house is relatively new (2002) so I don't foresee the cap ex being too high for the next few years. The area is C.....probably C+ to be honest, and is definitely not in a declining area. 

Wow, I can't believe how much helpful information I have received. Thanks for the input! 

The area I am buying in is definitely on the rise, and isn't far from a lot of new retail development. 

I like the Idea of throwing out a number that works for my cash flow, and they can either take it or leave it. 

I'll update the post on what I end up doing, and thanks again to everyone. 

Thanks for all the great input!

I was definitely on the fence about this one after running my numbers, I will contact the owner and see what the actual expenses were on the property, and I'll make sure the city allows 4 units on the property. 

The overall impression I am getting is that the numbers on this property are too risky at 265k. 

I doubt I would get this offer accepted, but any thoughts on if I were able to get it for 240k?

that would have my mortgage payments close to $1,500. 

I know that the tax value on this property is 230k 

My realtor told me that this seller is motivated to sell, so I figure it is worth a shot to get it as low as I can......without pissing the seller off of course. 

Hey Everybody, 

I am a newbie to the real estate world (although I have probably spent 90% of the last month researching real estate investing, mainly on bigger pockets) 

I am very interested in buying a Duplex and I think I found one that meets all the criteria necessary to have positive cash flow, but I really would like to get some advice from someone that has done this before. 

Here are the numbers on it. 

Asking $270,000 (shooting to get it for 250-260k) Numbers below are for $265,000

each unit is 4 bedrooms, 3 bathrooms, and 2,100 square feet.

Current rent is $1,150 for each unit (however it has not been raised since 2011)

I would say the area is a C class area 

Comps in the area are much closer to the $1,300-$1,450 range for 4/3 

My costs would be: 

Mortgage (PITI) $1,750

Maintenance/Vacancy 20% of rent, so around $550 

I would be the landlord, so that eliminates any management fee. 

Tenants currently pay for all utilities

So the total comes out to $2,300 for my monthly costs

I know I can rent the duplex for at least $2,600-2,700 (some comps as high as $3,000 but I am trying to be conservative) 

That leaves me with at least $300 cash flow/ month, and that would be on the low end of my predictions. 

I just want to make sure there aren't any huge expenses I am failing to see that will kill my cash flow, and if you seasoned investors think it is a good buy?

BTW

I talked to a contractor, and for around 15k I could turn each basement into its own separate unit, making it a fourplex. Basement units could rent for $500-600 and upstairs would be around $950-1100. Like I said, I am new to the game so I don't know how I feel about that route, but it would increase my cashflow by at least $300/month while only increasing my mortgage by about $150. 

Anyway just let me know what you think! 

Thanks