All Forum Posts by: Trey Kunkel

What are the specific changes in the market that have happened over the past two years that now need to be taken into account when validating expected returns?  Or the economics of the deal in general?

What is your confidence that deals will continue to support a 2x rate of return over 5 years?  This has been well and good for the past 10 years where real estate has done nothing but go through the roof but I am concerned this is no longer reality with the increased interest rates and home prices being what they are.  Median home values are pricing an ever increasing portion of the population out of the home market....

Welcome Nicole.  I recommend participating in the monthly CARPOA meetings held at the Camp Hill Giant on Trindle Road.  There are a lot of very experienced people that attend and the info is always top notch.

Shippensburg is a college town.  The university has over 8,500 students so most of the local rentals would be occupied by students.  This can be good and bad.   On one hand your vacancy should be very low, while on the other, tenants can cause a lot of damage if you choose poorly or get unlucky.  With that said, it an old town and property values are generally low with many houses built in the early to mid 1900's.    I would not expect high resale values, but if you find a deal with good cash flow then buy-hold would make sense.

If you want to see how easy it is to manipulate Zillow figures just go in and "adjust" your own residence.  You can add bathrooms, finish your basement, and create bedrooms with a few simple clicks.  This will immediately adjust the value assigned to your house without any verification. 

New to the whole process and I have been running numbers to try and get a feel for whether or not a deal is going to work out.  I recreated a spreadsheet to layout expenses and overall return and starting just plugging in numbers from Zillow on properties in the Harrisburg PA (front and second street) areas.  I assumed that I would find very few deals that would work out as everyone talks about how hard it is to find cash flow of +$200 per month for properties and most of their deals happen as a result of a special situation where they were able to pay like 1/2 the asking price.

However I am seeing like 5-6 properties in the 50k range that should rent for about $850 per month (again right off of Zillow). Some would likely need some refurb and I would avoid anything requiring over 10k in work, but even with this assumption I am still showing upwards of 15% COC for the first year alone and upwards of 25% if you include appreciation and any added value from improvements.

Am I missing something important like high vacancy rates or some other reason why I would not immediately want to move on these properties?  Is there a good online resource where I can verify rental rates and vacancy in the area?  I did a general Google search and did find some demographics sites that did confirm the Zillow numbers but not at the specific property/address level.

It just seems like I am totally missing something as it appears there are deals all over the place.

Here's a screen shot of my calcs.  Can anyone tell me if something appears amiss?  Are my expenses too low?  I swagged some of the percentages but overall tried to hit the 50% rule.