First Property Advice

[Jonathan Kennon]

Hello all, 

So I live in Tampa, Fl and I’m looking at my first property. 2/2 Condo in Boynton Beach.
Here’s the numbers: 

Purchase-106,000
Dwnpymt-20% 21,100
Financed-85,000
Mortgage-1090

Rent-1950 

Maintenance-5%, Vacancy-7%, Prop Mgmnt-10%| Annual Exp-6500

Annual cash flow-11,431 (annual) 

COC ROR-39%

Please provide feedback on these numbers of you can. Thanks to all who comment. 

[Kristina Kuba]

@Jonathan Kennon

Need a little more info to address the deal.. What is the monthly HOA? Also, have you gone through the Homeowners Association past assessments and future deferred maintenance? I am assuming that at that price it is an older building so if you get a roof or other larger assessment that could eat up your cash flow for several years.

[Nathan A.]

Are property taxes and insurance included in that mortgage number?

I'm having trouble understanding how you're calculating the annual expenses and the annual cash flow. For example, maintenance at 5%, vacancy at 7% and property management at 10% don't add up to $6500. Cash flow comes out to nowhere near $11K when you add in all the expenses.

[Account Closed]

You’ll really know what the numbers should be once you’ve owned it for a year.

[Jonathan Kennon]

So...I am terribly sorry, I entered in the wrong numbers for this posting. These were numbers on a unit that actually wasn't going to play out. I was entering them on a car ride with the family an wasn't paying attention to what I was inputting. Attached is the spreadsheet for the  Unit I am looking for. Same area, just different numbers and unit. 

Unit is 2/1: 

[Drew Sygit]

Suggest you use the BP Calculators and then post results here for review & advice.

[Jaron Walling]

@Jonathan Kennon From one investor to another based off the numbers it's a home opportunity for a rental, BUT add in location (good or bad), building age (young or old), HOA fees (always high), and remodeling budget (?) then it starts getting real. In my market nothing sells for $106k and rents for $2K per month unless you're looking in D class neighborhoods. Tampa is a completely different beast but the risk/stress to cash-flow is always the same.

[Patricia Steiner]

I want to start here with you: 

How many condos are available for rent in Boynton Beach (aka your competition)?

How many rentals are currently available in Boynton Beach (the larger competition base)?

Answers:  88 condos are listed for rent on Zillow and 228 rental properties are available - and that's now in the high season.

It's only a solid investment if it doesn't join the ranks of these unrented properties. HOA fees in that area are not cheap either and in some developments, rentals must be handled by the property office - who "loves all the owners the same" (not so great...).

I don't think the numbers are complete nor the story. Take another look at it.  Florida has a housing crisis with a lack of inventory and we're in high tourist season right now - yet that market has 88 unrented units. Start there...

[John Mocker]

Jonathan,

I would not rely on the numbers for the insurance without double checking with your agent.  The Property Insurance Market in FL is in turmoil.  The company the current owner used may not be renewing or may have large increases.  Also, the Association may be facing increases in the cost of their coverage so I would ask them if they have any indication of what will be happening at the renewal and how that will impact the common charges

[Jonathan Kennon]

I appreciate all of your feedback and input. I will say, everyone mentioned something that I didn’t think about fully, and I am grateful for that. I haven’t made any moves on this property yet. This is a property that I was looking at that seemed to be good on numbers, but I can tell there is more that needs to be considered with regards to location and other administrative details inside of the property itself. 

Again, I’m a first time investor with no properties yet. I am trying to see if I’m properly grasping what I need to  in order to be successful with this and learn the process correctly. Again thank you to all that provided some type of feedback. Back to drawing board I go. 

~Jonathan 

[Jaron Walling]

@Jonathan Kennon Amen! 

[Steve Daniels]

Your cost of money can change everything real quick.  look into a business line of credit, very friendly.

Steve