All Forum Posts by: Tim Herman

@Mars Dauer as a pro member you get the lease for free. One of the perks of being pro member.

@Timothy Yost Hard to give better answers without knowing the size of the property. Let's assume 1000 sf of flooring per unit. So 2000 sf total. My area it is $6sf to replace. Ask what the commercial warranty is. Most will be 10 years or less. That is your lifespan. $12000/120 months lifespan= $100 per month for 1 item in a capex budget. Still have to account for roof, appliances, hot water heater, hvac, kitchen and bath remodel, etc. I don't think the $9 per month excess will cover the rest. A bare bones repair budget. Cost to rehab between tenants plus the number of service calls. A 5% vacancy is the equivalent of your tenant staying 20 months. Assume you can repaint the whole unit for $1500 plus $300 in cleaning Plus the cost of 1 1/2 service calls @ $150. $2025/20 months= $101 per month per unit.  You can lower the cost by doing touchups between tenants and only do a complete paint every 3-5 years. Sub $1000 per month rentals need a higher percentage for capex and repairs.

@Shane Chapman This would not be a buy and hold rental. Might be okay for a flip. You do not have any variable costs. Vacancy, repairs, and capex. This will make this purchase more negative cash flow. i believe your loan amount will be 359k not 324k in the purchase. Taxes will raise on the rehab so need to account for that. Your loan fees in the refi will not be $2. Did not include any PM fees. If your arv is accurate and the repair number is accurate you might get 70k out of a flip.

@Timothy Yost just looked up current interest rates and apr was over 7%. Insurance looks low. Did you run capex and repair budgets.  When I rough analyze I use 5% repairs and 10% capex.  No PM expenses. 10-12%.  Are their any other landlord paid expenses. Landscaping , snow shoveling. 

@Malcolm James Just plugging numbers in a calculator is fine but you have to know if the numbers make sense. That is why you need to run budgets for repairs and capex, If you use percentages the amount you save may be too much or too little. Also if you buy a sfh all utilities will be the tenants responsibility.

@Malcolm James Are you looking to lose money every month. You have a negative cash flow. Did you run budgets instead of using percentages for repairs and capex. Who pays for the lawn maintenance and who does snow removal. Have you seen a t-12 or a pro forma?

@Amanda Chandler In my area FB marketplace is where I get the most inquiries. I have even had some luck with Craigslist. No matter where I post I watermark my pictures so a scammer won't take the pictures and create another ad and scam someone. I also think apartments .com has free landlord listing. 

@Siriphone Hernandez I don't think a 12 month lease break fee is enforceable. The most I have seen is 2 months. As a landlord you have to find a replacement tenant in a timely manner. 12 months would not be considered a timely manner. You can't double dip and rerent and collect from the present tenant. I don't know if your state is a triple damage state where you can be countersued. Have you read the landlord tenant rules in your jurisdiction. if you give proper notice you can inspect your property in most jurisdictions, If the tenant doesn't allow you to inspect then that would be an evict able offense. Give the proper notice to cure and proceed with the eviction. 

@Ashley Glinka I have properties in several states. I actual lived in Annville for awhile. I stayed with my daughter while she attended residency at Hershey Medical center. Visited the farmers market in Lancaster every other week until covid hit. There are several meetups in the area. I do believe one is in Lancaster. I went to one in Harrisburg and Potsdam. You can learn a lot attending meetups.

@Ashley Glinka a vacancy factor of 4% is your tenant staying an average of 25 months. How long to get back to 4% if it takes you 3 months to get the tenants evicted:75 months. Banks usually underwrite at 5%. Have you run a capex and repair budget. Here would be a simple repair budget. Cost to repaint between tenants+cost of cleaning+cost of repairs. Assume $1500 for painting+$300 for cleaning +2 repairs @$150 each=$2100/25 months=$84 per month for a repair budget.  You would do a capex similar. Take all the major components and estimate how much to save per month. An example of 1 item in a capex budget. Assume a roof costs $7500. Lifespan of 25 years. $7500/25 years lifespan/12 months in a year=$25 per month. What if you have a 15 year old roof. Your new effective lifespan is 10 years. $7500/10 years/12 months in a year=$62.50 per month for 1 item. On my rough estimates I use 10% for capex.  Refi in 6 months I would use 8% as the interest rate. Feds are looking to raise the prime 1/2 to 3/4% at the November meeting. Mortgage rates usually follow. You are not including any property management. Always good to include. Even making changes I think it will be positive cash flow.