All Forum Posts by: Tim Herman

@Kurt Martig cash out refi will be 70-75% of Arv to a conventional loan and will only be from 6 months of purchase. How did you arrive at the Arv. I only saw 1 house of similar size at 425k. Rental manager says ltr will be 1.7k per month not 5.2k. I must assume this is going to be a str, as you are including utilities. At 60% occupancy you will need to rent it almost $300 per night. I see a lot of airbnb for $150 per night. Property taxes are low. I don't know if they are reevaluated after major remodel but you need to project your taxes going up.

@Rachel Kim Did you receive a mortgage quote. I googled rates and it was 6.5%. I cannot comment on any other inputs. Size of the property and number of units make a difference in capex, repairs, and insurance. You have water, sewer, and garbage as landlord expenses. Are the other utilities separated? No PM expenses.

@Mohammed Nasser Your due diligence has already passed. You should have known the area before you offered. You may lose your earnest money. Unless their was a problem with that particular unit such as the appliances didn't work or other physical problems that should have been corrected you can't just have buyers remorse.

@Brandon Gillis Percentages are okay for a rough estimate if a property can cash flow. For a deep dive you need to run budgets for maintenance and capex. For my analysis I use 8% vacancy, 5% maintenance and 10% capex. Budgets are more accurate. A maintenance and capex budgets vary by the size of the property, a multi that has 4 studio apartments vs 4 3/2 bedroom will have different budgets. Hard to use a percentage on a sub 1k per month rental. Usually don't save enough for reserves.

@Andrea F. You can use the calculator to see return on equity. If you still have a mortgage that would be in the mortgage. Take the arv and subtract the mortgage and that will be the down payment. Most likely will be a very small return on equity.

@Brian Sawyer How did you discover the only house that doesn't have any maintenance. I touch up the paint and deep clean between tenants, Usually runs between $50-100 per month. How far do you think $36 will go to a capex budget? Go to your favorite flooring store and ask for the commercial warranty. It will be ten years or less. Assume you have 1500 sf of flooring. My area it costs me $6 sf. $9000/120 months lifespan=$75. I guess you won't be able to do any capex without coming out of pocket. Banks will underwrite with a 5% vacancy. Your two percent is the equivalent of your tenant staying 50 months, If you have to evict and it takes you three months to get them out then your next tenant has to stay for 150 months to get back to the 2%. I don't know if your taxes are reevaluated after major improvements, that would be something to keep in the back of your mind.

@Zachary Schreiber Did you do capex and maintenance budgets or use a percentage. Is it a multi and what is the size. Did you get a quote for insurance. Are taxes increased on purchase. All the other utilities are landlord paid so why isn't garbage a landlord expense.

@Matthew Brown Where are you getting 4.5% interest rate. No PMI for less than 20% down. Goggled property tax rate and it is 1.58% of ARV. Taxes will be over 1k per month not $100. Insurance is low unless maybe it is the fire station. No PM fees. Have you run capex and maintenance budgets. Looks like you will need to budget for grounds maintenance.

@Tammie Jones If you want to ask questions from someone you need to learn to tag them. Use the @ sign and start typing their name. When you see it double click and it populates the comment box and then they are notified. The only thing that matters to me is cash flow. I want a 10% return on cash invested. Using the rule of 72 how long does it take to double your money. At 10% cash on cash it will be 7.2 years. A 1% cash on cash will be 72 years. This only applies to the cash flow. Loan paydown and appreciation are the secondary benefits.

@Matthew Hall it is not your land but your mom's and uncle. Someone can buy your uncle out. Your mom could ask for reimbursement for the taxes. You could partition the land. 45 acres to your mom and 45 ac to the uncle.