All Forum Posts by: Tim Herman

@Elijah Jay Dangerfield A quick google search shows that land contracts are valid in TN.  To be sure consult a real estate attorney in the area.

@Tyler Benton missing some expenses. No insurance, won't get a loan without it. No PM. No repair costs. Vacancy of 5% is your tenant staying an average of 20 months. Are you going to repaint and deep clean between tenants. Here would be a simple repair budget. Assume $1500 to paint and deep clean + the number of service calls(I usually average 1 per year) 1.5 @$150. $1750/20 month=$87.50 per month per unit. You would also need to run a capex budget to see if what you are using is enough. If you look at the financial projections it shows you losing $500 per month after refi.

@Aditya Vaishampayan tell him you will see them in court. Let them justify 17 year old laminate countertops. Not a tax expert but I believe countertops would fall under the 7 year depreciation schedule and so have a zero basis at 17 years. If I am wrong and it is 27.5 years you would only owe 10.5/27.5 or 38%. They have to provide you with an itemized copy of all costs deducted from your security deposit. Check and see if they deduct the countertops or try to bill you. 

@Jeffrey Myers Did you run repair and capex budgets? $37 each is low. No PM. Unlikely that low of a mortgage the rate will be 5.5%. Vacancy of 2% is your tenant staying an average of 50 months. I analyze at 8% or 1 turnover per year. Less than 20-25% down should have pmi. Don't know how many units this is so hard to say if your numbers make sense. This is a simple repair budget using your 50 month vacancy. Assume $1500 to repaint and deep clean between tenants. Add 5 service calls @ $150=$750. $2250/50 months=$45 per month for repairs per unit. Already exceeded your budget. Let's look at a 1 item capex budget. Floors. Go to your favorite flooring store and ask for the commercial warranty. 10 Years or less. My area it is $6 sf to replace. Assume 1000 sf per unit of flooring. $6000/120 months=$50 per month per unit. Already exceeded your budget with just 1 item in a capex budget. Still need to save for appliances, roof, hvac, hot water heater, bath annd kitchen remodel, etc. Might want to rework your numbers to see if this is a good buy. 

@James Knight Hard to give insight when the description is vague. A multi: is it 1 or a 100. Each unit a 2/1 unit or studio. Vacancy of 2% is your tenants staying an average of 50 months. Banks will underwrite at 5%, I use 8% or 1 turnover per year. Taxes seem low for 520k property less than 1/2 %. Did you run repair and capex budgets and they came out to $330 each. Most of the time when I run a capex budget it is double my repair budget. Are all utilities separated.

@Ramsey Hantash if it is truly an ESA you cannot charge an additional security deposit. Petscreening.com is an independent verification. Free for property managers. You have to be careful about what you ask, so have a service do the job for you.

 I see you have two choices. Get on the board and change the rules or litigate showing how str benefit the association. I see several problems with str benefits. Strangers coming in and not knowing the vetting process of str. Parties. Only vetting is the agility to have a credit card. If the number of rentals exceed guidelines for warrantability then that can depress prices as it takes out the ability of buyers to use low downpayment options, ie fewer buyers. I see an uphill and costly battle if you decide to pursue litigation.

@Miguel Vazquez you have to know if the numbers you are inputing make sense. My 1 input capex budget already takes up your whole savings. If i ran a whole capex budget I would guess it would be twice what your are saving. On the report there is the 50% rule and it shows you will be losing $235 per month. Did you run a repair budget and it came to $200 per month. Better numbers make better decisions.

@Miguel Vazquez Where did you get your numbers? GIGO. Taxes seem high, insurance seems low. Have you found the only property that has no vacancy and you never have to evict. Banks will underwrite at a 5% vacancy. Did you run budgets for capex and repairs?  Let's do some assumptions. Assume 1000 sf of flooring per unit. Ask what the commercial warranty is for your choice. Most will be 10 Years or less. That's your lifespan. My area it is $6 sf to replace.4000 sf*$6 sf=$24000/120 months lifespan=$200 per month for 1 item. Still have to save for roof, hvac, appliances, hot water, remodels, etc. One item already uses your capex budget. No pm costs so I should assume you are managing and your time isn't valuable. Are all the utilities separated.

@Tammy Ginsburg Not much detail. Hard to give an opinion. Does the mortgage include taxes and insurance. Are you including vacancy, repairs and capex in the calculations. They are costs just not occurring monthly.