All Forum Posts by: William S.

@Joe Villeneuve @John Leavelle

Has there been a time where you've used your LOC? What's the interest rate? Seems like you need a sizable portfolio to pay it off due to interest.

@Joe Villeneuve

$10k in reserves won't cover my replacement costs for the next 25-30 years. That's where the $182/m comes from.

@Joe Villeneuve

I agree. I don't use percentages. I built a spread sheet of all the items and cost of each.

Currently I set aside $182/m for CapEx and have $10k in reserves per house for the unexpected. The $182 is actually 10% extra in buffer than the original figure.

However, it is hard to see that $10k sitting there not doing anything. Especially when you are trying to grow.

@Joe Villeneuve @John Leavelle

Are the LOCs personal or business? Can you provide more details?

@Joe Villeneuve

What are the terms on the LOCs for unexpected expenses. I'm intrigued by this. Always good to have access to more funds if needed.

Are you saying that once you've scaled a significant amount of rentals and let's say 1 roof needs replaced, you take LOC money/income from let's say 19 other rentals to cover things?

@Cara Lonsdale

To make sure I understand if I cashed out... I would run my numbers on a mortgage of $100,500 (75% of $134k).

Anyone use equity for future CapEx expenses instead of buying more rentals?

@Mike Dymski @Cara Lonsdale

Turnover - I always estimate turn over once a year for worst case scenario. However, I think this will not be the reality going forward.

Maintenance - I currently have spent a total of $140 in the 10 months on this. Both calls were not serious. One cost I am uncertain is the turnover cost / make ready. Any suggestions on this figure?

I have some equity in this home. How can I leverage it to grow my portfolio? My strategy is buying below market value with light rehabs (under $20k). Simple, nothing fancy.

@Cara Lonsdale

Had a typo. Expenses are $1,246.

Taxes are high in WI.

PM monthly fee is 10%of rent. If there is turn over they charge $500. So I am calculating vacancy one time a year.

I have $5-10k in reserves. It fluctuates pending on how aggressive I want to be.

On the forums I see successful investors who discuss their high ROI's / financial independence, but they always seem very light on their expenses... Doesn't seem real to me.

Below is my best performing property (SFH) I currently have. It's in a nice suburb of Milwaukee with a good school district (B+ Neighborhood). The area has a nice mix of cash flow and appreciation. It took some minor repair work, but the biggest expense was filling a pond. I've had this for about 10 months and bought the property under value and have experienced forced/natural appreciation due to the time and minor rehab.

I’m seeking a second opinion to gauge if this was a good investment or not and why. Next year I will be making another purchase, so I need some confirmation or not on this. The market has risen so finding another property in this area at a similar price will most likely result in a $20k rehab budget.

CapEx always gets me in my analysis. The figure below comes from a spreadsheet I put together. I took the year, replacement cost and lifespan of all major items to arrive at this number, then added a 10% buffer.

My closing costs were a little high due to 25% down and paying points to hit 4.125% interest rate.

I have some equity and would like to keep growing my portfolio. Can I use this for my next purchase? How? I can save about $20k/year so it is slow growth for me.

Thoughts?

Purchase Price $112,000

Rent $1,450

Appraised Value $134,000

Rehab $7,500

Vacancy $120.83

Mortgage Payment $407.11

Taxes $257.50

Insurance $41.97

Maintenance $50

Future Cap-Ex $182

PM $145

Lease Fee $41.67

Total Monthly Expenses $1,264

Projected Cash Flow $203.92