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All Forum Posts by: Jason Bedsaul

Jason Bedsaul has started 2 posts and replied 4 times.

Post: Would you do this deal?

Jason BedsaulPosted
  • Fargo, ND
  • Posts 4
  • Votes 0

Hello Allyssa,

Thank you for the feedback. The 10% was least year's total for vacancy based on seller-provided rent rolls, but I agree to play it safe and bump that up to 12.5% or 15%. The areas are upper midwest rural < 2000 population in each town with the nearest city about 2 hours away. Population 'growth' is relatively flat over the last 30 years and changes to the macro economy really don't impact these rural towns like they do in the cities; but there's always the worry on the micro level of the railroad depot closing or a processing plant moving out of town.   

It's mostly agriculture based, but the energy sector plays a role in demand from time to time (when fracking is cost-effective). It's currently not one of those 'boom' times; and I don't intend on counting on that to occur in the future either...so I'm treating it like a nice bonus if it does. Otherwise, the economy is mostly service based beyond a processing plant here and there for  agriculture/ranch production (meat processing plant, grain mills and elevators, equipment sales, etc.). 

New residential build is non-existent, but there have been a few commercial new-builds go up recently (think Dollar General, Convenience stores). 

Hello BiggerPockets Land,

I posted this to a different thread so I apologize for the cross-post. 

Looking to do a deal that would assume another investor's portfolio in a rural community that already has renters, property managers, etc. The towns are really rural, but stable with some growth; think working class C+.

Here's the top line numbers (rounded a bit):

  • Current Valuation: approx. 495k (little hard to determine in rural markets)
  • Offer: 400k
  • Current Monthly Income: $7250
  • NOI: $3200
  • PITI: $3625 (assuming 5% on a 15 year)
  • Monthly Cash Flow: $650
  • Vacancy assumptions based on 2018 rent rolls: 10%
  • Allowing 15% for Repairs, Maintenance, Cap Ex.
  • CAP 9.53%
  • GRM 55

The portfolio is 5 apartment units, 1 duplex, and 8 SFR. Units are in rentable condition, but all could use a cash infusion so the opportunity for limited forced appreciation is there; capped by market valuations for the area.

Does this look like a deal you would do? 

Is it crazy for a first time investor to jump into 15 units off the bat or is there strength in numbers that spreads the risk around a bit better than one or two?

Thanks for any input.

-Jason 

Just getting started in REI. This thread is sparse, but thought I would post anyways just to make myself known. Ever want to chat over coffee, let me know.

Post: Would you do this deal?

Jason BedsaulPosted
  • Fargo, ND
  • Posts 4
  • Votes 0

Hello BiggerPockets Land,

Longtime lurker, first time poster.

Looking to do a deal that would assume another investor's portfolio in a rural community that already has renters, property managers, etc. The towns are really rural, but stable with some growth; think working class C+. 

Here's the top line numbers (rounded a bit):

  • Offer: 400k
  • Current Monthly Income: 7250
  • NOI: 3200
  • Vacancy assumptions based on 2018 rent rolls: 10%
  • Allowing 15% for Repairs, Maintenance, Cap Ex. 
  • CAP 9.53%
  • GRM 55

The range is 5 apartment units, 1 duplex, and 8 SFR. Units are in rentable condition, but all could use a cash infusion so the opportunity for limited forced appreciation is there; capped by market valuations for the area.

Does this look like a deal you would do? Is it crazy for a first time investor to jump into 15 units off the bat? 

Thanks for any input.

-Jason