All Forum Posts by: Zach Davis

I've come across a duplex in my area that is for sale for $125k. Both sides are 2 bedroom, 1 bath and approx. 780 square feet. It is a bank owned property and the bank is only accepting cash offers. My contractor and I have estimated that it will need approximately $20k-25k worth of repairs, mostly consisting of flooring, paint, and cabinetry as well as a few windows and doors and exterior paint. Much of the work will be done by me so labor costs will be low. It's slated to take 1 month. That will put me somewhere in the neighborhood of $150k total investment and the ARV will be $200k. Market rents on the finished units are $875-$925 per month. Yearly utilities are approx. $3000, insurance is $500, the vacancy rate for the area is around 6%, and property taxes are $2900.

The idea is that I could buy the property and rehab it for $150k, then finance it at $150k with a standard investment mortgage, pull my initial investment out and have a moderately cash flowing property with no money invested on a long term basis. I do have another duplex in the general area so I know the listed operating expenses are pretty close. Any input you have would be greatly appreciated.

Too many variables to really say, ceiling height, square footage, layout, etc will all affect it. Some basements have really low ceilings a feel like a dungeon with no natural light. Some attics will have weird layout issues and have to be big enough to make something usable even with the sloping ceilings. It’s totally dependent on the individual building. I will say you can usually get more usable square footage out of basements simply because you’re dealing with walls and not sloping roof lines. Taxes are totally based on assayed value so if you increase the value of the property taxes will go up. How much is based on how much the value goes up and what your area charges for property taxes.

Last time I dealt with that I worked it out with the tenant that I threw the excess in the back of the truck and took it to the dump, then billed them for the expense. In my area there is a minimum requirement for the size container you need to supply based on unit size and that's that. I have a lease addendum that states that garbage overages will be charged to them, whether it’s overflowing garbage cans or dump fees. Apartments are harder since its community dumpsters but we usually have some sort of surveillance that will catch people trying to dump mattresses and the like.

Thanks for the responses guys! I actually have already researched my nearby markets to see where its worth investing and I know basically what the stats are that I'm looking for but I was curious what everyone else uses and what they are after in a potential city. Curious what everyone focuses on and if it differs across the country.

I think most of us know the rules of thumb for running the numbers on the individual properties we're considering buying, but I'd like to know what everyone looks for in a potential investment city. I think we've all come across that "phenomenal deal" in a town with a declining population of 300. Is that a deal you would move on and if not what kind of city/county/zip stats do you want to see before buying? What kind of population do you look for? Do you look at population trends, unemployment rates, median income, or percentage of renters in that market? If you do look into those types of things what sites or services do you use to find that info? I'd love to see what everyone looks for and how it differs across the country.

Sounds like you're talking about the PayNearMe system. From what I understand the tenants can go to any 7/11 or Family Dollar Store and pay their rent using a particular code.

If your lease states that they cannot change the locks themselves then its as simple as writing them up for it. Either have them give you the new key, and charge them for any duplicates that need to be made, or change them back and charge them for it. As a last resort you can serve them a "Notice of Termination - With Cause" or whatever your state variant is. Then they'll have 30 days to fix the listed violation or be evicted, again dependent on your state's law.

Hi again @Dan Sanders! So far, I have lived in my properties which came in handy when I sold my first rental house and had to pay no capital gains tax. I lived in my duplex for a short time and obviously my personal home. I think @Brandon Turner refers to it as house hacking. Its a good way to get a lower interest rate/down payment loan and also save money on living expenses. I'm actually selling my personal home so that I can get into another multifamily and achieve just that. Legally, you have to live on the property for 1 year to qualify for an owner occupied loan. Otherwise I believe its technically fraud, although I know a few who have never actually lived in the building and gotten away with it (not suggesting that).

I don't know what everyone else does as far as running the numbers, but I simply run them as if I would be renting the whole property since I would only be living there for a short time. If it works out as an investment, then I'll just accept whatever cash flow or reduced living expenses I get while I live there. The important part for me is that its still a cash flowing investment when I move on to the next one.

@Rami Aweti The number's you quoted for Vallejo and Sac are not far off of the numbers I'm seeing for market properties in Clackamas County and East Portland. That being said, feel free to PM me if you would like to meet up or even just chat. More than happy to share the minimal experience I have.

 You've got it, I haven't even looked at a property on the west side of 205 except for the Oak Grove/Milwaukie area. Out of my range. What I meant by east side would actually be considered East County or thereabouts. Funny how much prices can fluctuate in just a few blocks isn't it?