All Forum Posts by: Tim Herman

@Emily Schultz use the BP rental calc. Where you would put in the mortgage the seller is financing. Just a different name. Put in your down payment and terms  in the calculator.  They use the same amortization schedule unless you are paying interest only.

@Brock Fitzsimmons Your sister should look at FCS(Farm Credit Services). That is their job to provide loans to farmers, especially if she is already renting some of the land.  Some local lenders might provide ag loans.

@Thripura Vemireddy the title says it all. Mobile will be handled by department of motor vehicles. If it is attached to a permanent foundation it might make it real property. I think it depends on the state.

@Catherine Davis if you are going to be on the forums you need to learn to tag people. Use the @ sign and start typing their name. Click on the name and it will populate the comment box and they will be notified that a response has been made. You asked a question and I didn't know you wanted more information.

The only percentage I like to use is for vacancy and PM. You can use % to get a rough idea for repairs and capex, For my analysis I use 8% vacanct,5% repairs, 10% capex and 10% pm. You need budgets for repairs and capex. You will need better numbers for closing costs. Insurance seems high for a single unit. You will lose money each month you own this so this might be better as a flip.

@Catherine Davis May need to rework your numbers. 3% vacancy is your tenant staying an average of 33 1/3 months. 3/100=1/33 1/3. Banks will underwrite at 5%. If you have to evict and it takes you 3 months to get them out your next tenant will have to stay 100 months. There is no description so I don't know if your are buying 1 unit or 10. How far do you think $26 will go on capex. My area it costs me $6 sf to replace flooring. Go to your favorite flooring store and ask for the commercial warranty. It will be 10 years or less. So you put in brand new flooring when you buy. Assume 1000 sf of flooring. $6000/120 months lifespan=$50. You are not even saving enough to replace flooring. What happens when the hvac, roof, hot water heater, appliances, etc fail. Where are you getting PM for 5%. Most charge between 10-12% when all fees are added in. Your repair budget is light. It may allow a couple of service calls a year but not the ability to rehab the unit between turnovers. You need to make budgets for both capex and repairs. I want to hire your contractor where a 10k investment yields a 90k improvement. The bare minimum for vacancy, repairs and capex should be $230. You are less than $100. After your refinance you will be losing over $250 per month. Closing costs seem low. 

@Joshua Milam what equity are you talking about, The only equity you will have is the amount you put down plus any appreciation. Substitute sellers name where the banks name goes on the mortgage. On a contract for deed you don't even get legal title and the seller can encumber the property. The only obligation of the seller is to provide clear title when the last payment is made.

@Christian Johnson not much description. Hard to analyze. Is it a 400 sf tiny home or a 3000 sf duplex. Each will have different maintenance and capex numbers. taxes seem low for 200k property. The homeowner may have a personal exemption that lowers the tax. Where are you finding a PM for 7%. With rent up fees it normaly comes out to 10-12%. As a landlord are their any utilities paid.

@Joseph De Lorimier it is all about the numbers. Have you run it through BPs calculator. 5 free uses. income minus expenses plus reserves for future expenses. Analyze as if you are not there and analyze househacking and see if it lowers your cost of living.

@Roger Turner use the @ sign to tag people. they are notified that their has been a response and will check to see if their is another question to be asked. How did you arrive at 25% vacancy, That is a turnover every 3 months. Unless this is a D property then the highest I see is 10%. I am conservatives and use 8%. Unlikely the numbers you are getting  are correct over long periods of time. $83 per month for 5 units is extremely low and they gave you $104 and that is low for maintenance. Let's run a maintenance budget on 1 unit. Assume a turnover every year and a repaint every 3 years. These are made up numbers but you get the idea of how to construct a maintenance budget. Repaint $1500. Touch up the other 2 turnover @ $200 . Number of service calls 3@$150 each(1 per year)=$1500+$400+$450=$2350/36=$65 for 1 unit or $325 per month for all 5 units.  Your capex budget looks light. You would build out a capex budget just like the maintenance budget. Quick 1 item capex budget. Floors. Go to your favorite flooring store and ask for the commercial warranty. Most will be 10 years or less. The building size is 3000 sf. Assume 2500 sf of flooring. My area it is $6 sf to replace, $15000/120 months lifespan=$125 per month for 1 item. You have 5 sets of appliances, 5 water heaters, etc. 

@Ilena Napoles you need to learn to tag people. Use the @ sign and start typing their name. It should appear and you click on it. It will populate the comment box. Then the person is contacted. Especially important if you have a question. If you learn something it is also nice to vote for the post.