All Forum Posts by: Tom Shepard

@Trina Seever

Likely the boot camps attendee has not really taken any action like you two have.  

When you get ready to rent check out Mike Butler's book "Landlording on Autopilot". Fantastic book and lots of great tips.  And if you buy the book you get access to tons of great forms, etc that you can make your own.  Tons of info on BP as well l, whether or not you decide to go with the pro membership at this time.

welcome @Account Closed !  

We just bought our first auction foreclosure in Clarksville, have it under contract and should be closing in a few weeks!  We are out of Nashville but investing in other nearby areas due to the high prices here!

depending on expenses you should be able to at least break even, just quickly using the 50% rule, depending on what your actual expenses are.  @Scott Weaner is right -- gather all your data and crunch it through the calculator.  Sounds like you may have your first but and hold!  If you do decide to finance I have a mortgage broker who I can give you the name of.  Also have a great agent if you decide to cut your losses and sell.  Chattanooga really is a great market and after a few years of the tenants paying the rent and a little appreciation you should be right side up.  We got our first property in Chatt as well.  It's a great market-- hang in there!  Hey -- you could have paid thousands for some guru boot camp and not learned as much as you have through this process!

@Brandt Fanion

Welcome to BP and Nashville!

We've been here for 11 years and its a fantastic place to call home.

Would be happy to get together and talk real estate anytime!

@Jeremy Shinall

Nathan Torgeson is a fantastic agent we used to buy property in Chattanooga. PM me and I will give you his phone # or you can just google him. He works primarily with the MLS but he is great. Tell him I sent you-- he'll take great care of you.

@Wei Huang, @Brandon Turner

Ha Ha!  Wei you are right on...epic rap battle!

Have showed some of the kids the video (3 of 5 at least) and they all agree Heather won, but Brandon came on strong at the end!

Camrin (9 year old daughter) has only one question that will determine if she wants to come with us to meet up with you... is Charlie with you on the trip???  :)

@Brandon Turner

I can NOT believe no one has commented on the video!  That.Was.Awesome.

The musical selection alone was amazing...pop, rock, country, praise, even some old school Reliant K!  Too fun...

Oh, also, we just completed our first fix and rent in Chattanooga, you will need to drive through there from Atlanta to Memphis most likely, so let us know and we will show you around the coolest town in Tennessee!

@Micah Copeland

Ok Micah-- thanks!

What are your thoughts about this deal if you don't mind looking at it:

Looking for advice on offer/max price.

Also looking for what I missed in calculations.

First the hard part:

This property is in rural TN in a town of about 20k population.

Current owner has been renting to local college for basketball players/coaches (both boys and girls teams have used it). Has been giving below market rent due to this fact ($500/mo), market is easily $600. HOWEVER, the basketball team is/has moved out and that will leave 8 of 11 units vacant at end of June. With 2 of them stated as "rent ready" Owner has been self-managing due to ease with rent payments being automatic.

Here are the numbers once stabilized:

Asking Price: $529000 (Last sold May 2006 for $510,000)

Offer price? (Thinking $425,000 perhaps go up to $450?)

Units: 11 connected townhomes (one building, one roof)
(All 1280 SF 3 bed / 2 Bath units -- 2/1 upstairs 1/1 downstairs) on 0.46 acre

Built in 2000, metal roof, brick and vinyl exterior. Separate meters for water and electric.

Monthly Rent: $600/mo (estimated based on market)

Annual Rent: $ 79200

Vacancy: 10%

Effective Gross Income: $71280

Taxes: $11,126 (actual 2014)

Insurance: $4800 (Slightly more than current owner is paying)

Management: 9% ($7128)

Repairs/Maint/cap ex 15%.: $11880

Marketing/Promotion: $1000

Total Expenses: $35934

NOI: $35346

Debt Payment (P&I): $2227/mo or $26724 annual
(based on $450k purchase 25% down and 20 year am at 5%)

Cap Rate: ~7.9%

Cash on Cash: ~29% (based on 25% down and 20 year at 5% and $7k closing costs)

DSCR: 1.32x

1% Rule: 1.76%

GRM: 6.31 (using AFTER vacancy Gross Rent)

Debt Yield: 10.47% (based on 25% down $450k purchase price)

Wondered what other items I should be asking the seller for in order to evaluate properly?

Also wondering if any bank in their right mind will loan on this property with 8 of 11 units empty? I may also ask for seller financing, especially since it seems in discussions with his agent that he is more worried about the hassle factor than needing the money.

Appreciate any and all comments and critiques of my numbers!

@Gregg Gannett

Appreciate the input!

The agent emailed me today with a few more tidbits and said the seller was "very motivated" whatever that means.  Of course who wouldn't be motivated with about to have 8 of 11 vacancies!  

According to the agent owner really doesn't want the hassle, it's been really easy for him wih the athletes in there.  

If due diligence pans out I am going to initially offer low and with 80% seller financing and see what they say.  We will find out how motivated he really is.

Great tip on the sewer too.  That could save some big bucks and headaches.  

I am going to get a list together of info needed and get this figured out soon!

Thanks @Mike Gross

I will check it out and let you know!

Thanks for sharing that and for confirming some of the numbers.

Do you think the maint/capes numbers look reasonable?