All Forum Posts by: Victor H nieves

@Patrick Shawn Faherty @Garrett Haefele @David Fawcett

Nov 11 - I've unhidden all of the Operating Costs, etc in my Proforma and I've also updated and added 2 costs that I will  may want to incur: (a) AC preventative maintenance and (2) pest prevention which increases my projected Operating Costs and therefore affects my Cash Flow.

The big hit in this Proforma was my credit score forcing me to pay for Points. Maybe I should have gotten a 5.0% vs 4.75% rate but that would have lowered my Cash Flow so not sure that would have been a good idea.

• Thoughts?

@David Fawcett if it performs as anticipated.....first drink is on me!!!

@David Fawcett are you serious! oops :) but I hope it does perform as anticipated.

Yes, above, I do include those in my Operating Expenses.

Im still confused about Prepaids & Reserves on the Lenders Loan doc. Maybe I will post it.

@Garrett Haefele you are absolutely correct, it is $ 22,770, I have an actual excel sheet (on Google Drive) that totals this amount. I incorrectly input the $ 24,149 into this table when i posted it. Good eye!

Also, under Operating Expenses, I do have:

• Property Tax $ 83
• Insurance $ 40
• Mgmt Fee $ 76
• Maintenance Reserve $ 76

TOTAL $ 276

But im still confused about Prepaids & Reserves .... I thought the Lender will require me to pay some of these upfront?

Prepaids

• Insurance $485
• Mortgage Interest $ 150

Reserves

• Insurance $ 121
• State Taxes  $ 234
• County Tax $ 335

@Patrick Shawn Faherty oh yes YES I have hidden all those details (vacancy, maintenance reserve, mgmt fee, insurance) ... haha, i would have REALLY been starting off on the wrong foot!!! (ps: I could still be starting off on the wrong foot!)

What about Reserves &  Prepaids....should I calculate that into my Cash on Cash return? I was but now im not sure if I should because thats cash I need to pay anyway but I just pay it upfront.

Thoughts?

A few weeks ago, when the Lender provided me with the Loan details, I was able to compare the MIP team's Proforma with my Proforma.

Issues that affected its performance:

• I had to buy Points! My credit was 688 (I thought it was better...but if it wasn't maybe I would have never tried to invest in Turnkey)
• Actual Loan Fees were much higher that original projected (another learning lesson!)

Question? 

• Is it correct of me to not add Prepaids and Reserves into the Proforma so that it affects Initial Cash Investment? I know it is Cash that will come out of pocket but I am just not sure if it goes "under/after" Initial Cash Investment so it doesnt affect the Cash on Cash Return calc. Answer is _____?

Thanks for the comments @Dawn Fawcett and YES, I have a flight scheduled for Dec 12 and 13 to visit the Memphis area, meet with the MIP team and the see the final renovation of the property after it has had its Home Inspection and its open items have been addressed.

• Should I have visited prior? Probably.
• Should I visit today? Probably.
• Should I not visit? Definitely not.

Through the research that I have done, I have no doubt that MIP is a professional company and I chose them because of that name recognition and the fact that they acquire, renovate, sell and manage which is the type of Turnkey operation I am looking to invest in in Memphis, Indianapolis and elsewhere.

Scope of Work - ADDITIONAL ROOM

• Floors - replace with new resilient plank vinyl flooring
• AC Unit - replaced with new unit

This wasn't a room that I was expecting in the house before I started to understand the floor plan. At first, I didn't know if it was a Bedroom or something else. To my surprise, it was an additional room! $$$

Scope of Work - KITCHEN

• Cabinets - the knobs will also be replaced

Scope of Work - BATHROOM

• Fixtures - If I remember correctly, they will be replaced.
• Floors - If I remember correctly, they will be replaced.
• Tube & Toilet - I was told they we're in great condition.
• Sink - I forgot what I was told about this.

Scope of Work - LIVING ROOM  & DINING NOOK

• Floors - Carpet will be removed to expose wood floors which will be refinished. 

Scope of Work - 3 BEDROOMS

• Floors - Carpet will be removed to expose wood floors which will be refinished.