All Forum Posts by: Mike Cartmell

Please give me your opinion on this property I am considering. It is a side by side duplex and seller is asking for $135k but I'm thinking of offering 125k. Both units are currently occupied renting for $650 and $700. Numbers below:

Purchase price: $125,000
Down Payment: $25,000
Mortgage payments: $6,084/yr (PI $507/month @ 5% 30 yr)

Rental Income: $16,200/yr

Vacancy 5%: $810
Property Tax: $900/yr
Insurance: $800/yr
Property Manager 12%: $1,900/yr
Maintenance: $2,400/yr ($100/door per month)
Utilies: $300/yr water
Advertising: $200/yr

Total Operating Expenses: $7,310
Net Operating Income: $8,890
Less Mortgage Payments: $6,084

Total Cash Flow: $2,806

Cash on Cash Return: $2,806/$25,000 = 11.2%

Any errors in my numbers?

Thanks in advance.

Mike

Adrian,
I am not sure whey there aren't many members from the New Mexico area. I no longer live in NM but I am originally from Abq. I would like to do some investing in the Abq area. Please let me know if you find any investing association down there.
Thanks,
Mike

Does everyone feel that splitting the profits evenly shouldn't be considered? I guess I feel that I will learn something from him since he has been through the hurdles I will most likely see during my first flip. His experience should hopefully streamline the process.

Thanks for all the great advice guys.

@ Luis - I agree that I will be taking on most of the risk. I believe I could rehab a property on my own but feel more comfortable partnering on my first deal. He has contractors lined up and will be finding the property as well. We will also be splitting his commission.

@ Financeexaminer - I am not a realtor so he should not be "splitting his commission" with me. When you say net his commission are you stating that if we make $20k profit I should deduct half the commission from that profit and then split the profit down the middle?
Example:
Sale: 140,000
Profit: 20,000
Commissions: 5,000 (buying/selling after broker split)

I would deduct 2,500 from his portion of the profit and pocket 12,500, while he would pocket 7,500 from the profit spread plus the commission he has already earned.

@ J Scott - I will definitely perform my own due diligence and will be very active in the property selection and purchase. I want to learn as much as possible from this endeavor and will question all numbers I am presented by him.

@ Bryan - I will make sure he discloses whatever is required here in Colorado.

Thanks for the quick reply Bryan. He will be splitting his full commision both on the buying and selling side. We'll be buying around the 80-100k range with around 25k rehab budget. How much cashe do you think he should bring to the table? Should I ask for him to pay for the rehab?

I would like to partner with an experienced investor to flip a property. I have connected with a Realtor/Investor who is willing to partner with me for my first flip. He has flipped many homes in the past by partnering with out of state silent partners.

We intend to split the profits 50/50. I will purchase the property and fund the rehab and he will manage the entire project and split his commissions as part of the deal. Do you feel that this is a good way to split profits? I will be more or less a silent partner but would like to learn as much as possible during the process.

I will be meeting with him in a week to discuss details of the joint venture. What questions should I be asking during our meeting?

Thanks,
Mike

Great thread Danny and congrats on your first flip. I'm actively looking for my first flip as well.

Can you give me an idea of how much time you spent at your property managing the construction yourself? I hold a full time job and would like having a bit more control of the construction by managing it myself but I feel I may be pressed for time with a 9-5.

I am a Civil Engineer and began my career in land development. Not a developer but an engineer who designs housing developments with everything from roads to water lines. I took a job with the local Department of Transportation when the housing market crashed and began studying investing.

Can I be an agent under Your Castle Real Estate even though I will be working in Colorado Springs?
Thanks.

Bill- Both mortgages are held by a local credit union. No I do not know Sarah Mason. What type of business is she in?

Solid Returns - That is a great point about the refi. I was hoping to refi so I could increase the spread on the interest. Also to reduce the balance on my 1st so I don't have to pay out of pocket to cover the interest on it.

Is there a better way to approach it so I can reduce my payments on the first to be less than his payments on my note of 115k?

Thanks!