All Forum Posts by: Tara Piantanida-Kelly

Yes, @Roy N. This is a duplicate of the info I entered on the Deal Analysis Forum yesterday. You gave great info, but yours was the only reply. I was hoping for additional input (which you gave here - thanks again!). @Kevin Brown , what kind of COC and/or cash flow would you want with $45k in? Just curious to see what others use as benchmarks... Thanks to both of you for your responses!

Hi All!

My husband and I just looked at two duplexes. We can buy them individually or as a package. Here are my calculations using the BP analysis tool if we buy them as a package:

Monthly Income: $2,795.00

Monthly Expenses: $2,222.31

Monthly Cash Flow: $572.69

Pro Forma Cap Rate: 10.36%

NOI: $13,983.00

Total Cash Needed: $41,250.00

Cash on Cash ROI: 16.66%

Purchase Cap Rate: 11.19%

Gross Rent Mult: 3.73

2% rule: 2.07

Debt coverage ratio: 1.97

Total monthly cashflow using the 50% rule: $804.94

Here's one of my many questions: I entered 10% of gross monthly rents as expenses for both CapEx and repairs. Of course, that affects the analysis pretty significantly. Am I using the wrong percentage? What do you normally use for these figures? A percentage of the gross monthly rents or a straight dollar amount?

Also, for the $41,250 to get in, would you take on an equity partner (what percent of the deal would you offer), or a debt partner (what interest rate would you offer to pay), or do it by yourself (even if it meant borrowing against your IRA)?

Thanks in advance for the advice!

Cheers~

Tara Piantanida-Kelly

Thanks, Roy N.!

Hi All!

My husband and I just looked at two duplexes. We can buy them individually or as a package. Here are my calculations using the BP analysis tool if we buy them as a package:

Monthly Income: $2,795.00

Monthly Expenses: $2,222.31

Monthly Cash Flow: $572.69

Pro Forma Cap Rate: 10.36%

NOI: $13,983.00

Total Cash Needed: $41,250.00

Cash on Cash ROI: 16.66%

Purchase Cap Rate: 11.19%

Gross Rent Mult: 3.73

2% rule: 2.07

Debt coverage ratio: 1.97

Total monthly cashflow using the 50% rule: $804.94

Here's one of my many questions: I entered 10% of gross monthly rents as expenses for both CapEx and repairs. Of course, that affects the analysis pretty significantly. Am I using the wrong percentage? What do you normally use for these figures?

Thanks in advance for the advice!

Cheers~

Tara Piantanida-Kelly

Tiffany, I went to my first FFREIA general meeting on January 9th. It was great, and I'll probably be joining at the next general meeting.

Hi Tiffany,

I'm in the Rochester area, and I saw that too. I didn't follow up on it, but I was curious. Since I'm learning the ropes too, maybe we can work together to find someone to mentor both of us. :)

Good luck!

Cheers~

Tara Piantanida-Kelly

Thanks for the excellent information, @Doug Smith, @Derek Faller and @Jeff Greenberg!

Hi All,

I understand that:

• CAP rate = NOI/purchase price
• Value = NOI/CAP rate

So, if I want to establish the VALUE of a property, how do I get the CAP rate?

I took the following notes in a commercial class I took: "You don’t know the cap rate. You get the cap rate for the area from the mortgage broker who specialize in the product you’re buying (multi-family). Ask them 'How should I underwrite this deal?' They’ll ask you questions, and then they’ll give you a number. They’ll say 'We can probably get you a loan at a 7 cap rate (or something like that).' If they are Fanny/Freddy approved, they can look at maps and give you the number."

But every time I put a call out to mortgage brokers to get a CAP rate (according to my notes), I'm told "you get the CAP rate by dividing the NOI by the purchase price". Yes, I'm aware of that calculation, but I'm trying to establish the VALUE... And around we go...

Any mortgage brokers want to chime in on this?

Thanks!

Cheers~

Tara Piantanida-Kelly

RogueSolutionsLLC.com

Hi Andrew,

We own a 4/1 in the war zone in Rochester too. Several years ago, we marketed it to DHS tenants on the County government website. Here's a link to that info: http://www2.monroecounty.gov/files/hs/Renting%20to%20TA%20Clients%20-%20Revised%20July%202013.pdf

Here's my advice if you want to go this route: Read everything carefully, follow every rule, dot every "I" and cross every "T". If you miss anything, the county will take it as an excuse not to pay you. We have lost thousands and thousands and thousands on this property. (This house wasn't initially purchased as an income property. It was purchased 30 years ago as a primary residence when it was a nice area.)

I don't mean to be a downer, but you can learn from my mistakes.

Good luck!

Cheers~

Tara Piantanida-Kelly

Welcome!