All Forum Posts by: Tim Herman

Look at your closing documents. You most likely got credited with the security deposits and prorated rents. So in another word you received the deposit from the seller.

@Angelo Llamas Lease to purchase means you are paying down the mortgage for the current owner. You do not have any equity. Sometimes there are credits given for on time payments towards the purchase price.

@Veronica Giggers How long can you support negative cash flow. That extensive of a remodel will increase your property tax. Googled average tax and it is .085 of ARV. You tax will go up to around $225 per month. Your all in is 280k for $2100 of income. Unlikely you can find PM for 5%.

@Jennifer Stammberger I personally use 8% vacancy or 1 turnover per year. You sometimes get a tenant that you have to evict.  A 3% vacancy is you anticipating that the tenants will stay an average of 33 1/3 months before moving. Most banks will underwrite at 5%. After you analyze a bunch of properties you will get an estimate of how much to save per month. In California it will be harder to cash flow as rent to price is so low. 

@Jennifer Stammberger why would you use a %. A $500 a month rental wont have the same percentage as a $3500 per month rental. Do capex and repair budgets. All the major components have a lifespan. An example for capex. Floors. Go to your favorite flooring store and ask what is the commercial warranty: will be 10 years or less, My area it costs $6 sf. Assume 1500 sf of flooring. $9000/120 months lifespan=$75 per month for 1 item in a capex budget. You do the same for repairs. When i do my repair budget I budget for interior painting every 3-5 years. Can touchup if less than that. 

@Reid Chauvin thanks for the clarification.

@Steven DeMarco My understanding of FHA states that 3 of the 4 units have to be enough to pay the mortgage to be underwritten. Your numbers show a deficit of $1700. Have you done a repair and capex budget. It might change your numbers. Variable costs don't follow a monthly savings plan so it is important to have reserves.

@Maurice J Gibson Why would you think your numbers should be different. You have a HOA fee of $542. If you aren't in a HOA you costs for capex will be way less than the fee. Unlikely you will get 5% loan. Unlikely your capex budget of $18 will be sufficient, unless the HOA pays for interior expenses. Take flooring; Ask what the commercial warranty. Be 10 years or less. Say you have 1500 sf of flooring. My area it is $6 sf to replace. $9000/120 months lifetime=$75 per month for 1 item in a capex budget. Look further down and see what the 50% rule. It shows you will make $132 positive cash flow. Why did you pick expenses rise by 5% and income and property growth rate only 1%.

@Atul Mohlajee use the Happy clause. Tell her that it seems the apartment doesn't meet her expectations and you will let her out of the lease. If she wants to stay tell her that the apartment she rented is how it will stay and only repairs necessary for habitability will be done.

@Zachary Bellinghausen cash out refi will be 75% of ARV or 243k. Taxes seem low. Most are at least 1% of arv. Are there any rent up fees with PM. Are all the utilities separated. Any grounds keeping? Did you run capex and repair budgets?