Soooo dazed and confused

8 Replies

Thanks for all replies in advance

I have been looking at different avenues for buy and hold.  Thinking about Out of State Turnkey and have some phone appts coming up soon.  Also, I have been looking in my area and found a few that I can rehab myself and doing whole 9 nine yds myself or even choosing an already flipped house to use.  And I should stick with one.  So basically I am getting muddy with choices and decisions and I haven't even bought one yet and feel I am getting too far ahead myself.  

That's where this question comes up....

So, I am looking at a property opportunity for 2-quad plexes. All are 1BR/1BA and 6 are reno'd and occupied at $475, the other two are still being reno'd. PM in place- asking $240K. Depending on what we settle for after offers ($200-215K) fingers crossed> is my comfort zone; conservative 25% down with $150-170K mort./total rent $3800.  still looking at close to $1700-2000 net mo. individually metered.  All includes PM, and tenant pays elec/water. claims of 14% Pro Forma at 100% occupancy, (and I don't even understand Pro Forma, but do know what it is) these calculations are not verified but for the sake of this thread say numbers work!

SO, my 1st question here is how do you guys feel about 1BR/1BA at 620sq ft? you always hear 3/1 or 3/2 family style as the bread and butta but these are "studio" apt and I should market that way.  Any thoughts?

2nd question is what about purchasing THIS as being a first purchase?

Is it - as long as the NUMBERS work and all other factors are good----a GO?

thanks

Rob

Hey Rob,

If you want to be an active investor, then I think a deal near you that you can be very hands on with is your best choice. Otherwise, if you are looking at a more passive investment, I would explore the myriad options online such as realcrowd.com or dealing directly with syndicators. 

Haha...I love the title of your post. And, you aren't alone. Your spot is a common spot to be in. 

Question- what is the area/neighborhood of these quads like? I don't think there's anything wrong with a 1/1 at 620 sq ft necessarily, but I'm more concerned with the fact that they rent for $475/month, and that's the renovated units. To me, that starts suggesting a certain quality of tenant pool for those apartments, and possibly a risky one.

But, it may be that I've been out of the south for so long (I'm from GA) that I've forgotten that $475/month may be totally normal for a 1/1. So, I might be off.

But what's the neighborhood like?

When you are dazed and confused it means you need to complete more Home Work!  I would confirm all of the data presented again.  Verify market price of house, the rent, the "rentability" of the place, the type of tenants and if you are willing to deal with them, etc.  The very question you ask of BP you will need to do the leg work to find out the answer. I would start with Zillow to do your research.  Even if there is such thing as cookie cutter deals, each location/house is unique.  Don't miss a deal because it's not conformant to what others claim to do.  When everything is said and done, make sure you have enough cash for safety net if things do not go as planned; as a 1st time home buyer you are bound to overlook some specifics. For out of state property I would price in the cost of home warranty. However I won't bother with property managers as they cut into your profits and tend to alienate tenants.  With out of state I would want to have a good rapport with tenants so you are able to "connect" with them even via phone.  I suspect you will do great!

@Robert B. , I agree with most of what Senthil wrote, except the bit about property managers. The cost of a property manager must be included in your analysis, even if you do want/need to be that property manager yourself. (Because, it will likely require significant amounts of your time, which is not a passive portion of your investment, so should be compensated for).

Another way of putting it is: if it looks to be a deal only if you do the property management yourself (with no allowance as an expense), then because it requires your savings/deposit, plus your ongoing time (for free), how good an investment can it really be? All the best...

Hey Rob,

I would agree that if you want to be active in an investment that you look close to home.  If you are looking to do things more passively, then some type of TurnKey makes more sense.

In regards to 4-Plexes, when we got started as a TK, we LOVED them, because it was always so easy to show a good ROI on paper. However, what we found was that they were far more difficult to keep rented with good tenants...especially in that ~$500/mo range.

I'm not an expert in areas outside of Indy, but I cannot imagine ANY market where a property like that is ever going to be 100% occupied.  

Originally posted by @Robert B. :

Thanks for all replies in advance

I have been looking at different avenues for buy and hold.  Thinking about Out of State Turnkey and have some phone appts coming up soon.  Also, I have been looking in my area and found a few that I can rehab myself and doing whole 9 nine yds myself or even choosing an already flipped house to use.  And I should stick with one.  So basically I am getting muddy with choices and decisions and I haven't even bought one yet and feel I am getting too far ahead myself.  

That's where this question comes up....

So, I am looking at a property opportunity for 2-quad plexes. All are 1BR/1BA and 6 are reno'd and occupied at $475, the other two are still being reno'd. PM in place- asking $240K. Depending on what we settle for after offers ($200-215K) fingers crossed> is my comfort zone; conservative 25% down with $150-170K mort./total rent $3800.  still looking at close to $1700-2000 net mo. individually metered.  All includes PM, and tenant pays elec/water. claims of 14% Pro Forma at 100% occupancy, (and I don't even understand Pro Forma, but do know what it is) these calculations are not verified but for the sake of this thread say numbers work!

SO, my 1st question here is how do you guys feel about 1BR/1BA at 620sq ft? you always hear 3/1 or 3/2 family style as the bread and butta but these are "studio" apt and I should market that way.  Any thoughts?

2nd question is what about purchasing THIS as being a first purchase?

Is it - as long as the NUMBERS work and all other factors are good----a GO?

thanks

Rob

Yes, investing out of state can be a pain! Hopefully, if you do go that route you find a good turnkey company to assist. With the right company in the correct market, you can really earn a decent ROI.

Please look at:

How to Find the Right Turnkey Real Estate Investment Company for You

and

The Best Types of Markets for Profitable Turnkey Properties

Originally posted by @Robert B. :

Thanks for all replies in advance

I have been looking at different avenues for buy and hold.  Thinking about Out of State Turnkey and have some phone appts coming up soon.  Also, I have been looking in my area and found a few that I can rehab myself and doing whole 9 nine yds myself or even choosing an already flipped house to use.  And I should stick with one.  So basically I am getting muddy with choices and decisions and I haven't even bought one yet and feel I am getting too far ahead myself.  

That's where this question comes up....

So, I am looking at a property opportunity for 2-quad plexes. All are 1BR/1BA and 6 are reno'd and occupied at $475, the other two are still being reno'd. PM in place- asking $240K. Depending on what we settle for after offers ($200-215K) fingers crossed> is my comfort zone; conservative 25% down with $150-170K mort./total rent $3800.  still looking at close to $1700-2000 net mo. individually metered.  All includes PM, and tenant pays elec/water. claims of 14% Pro Forma at 100% occupancy, (and I don't even understand Pro Forma, but do know what it is) these calculations are not verified but for the sake of this thread say numbers work!

SO, my 1st question here is how do you guys feel about 1BR/1BA at 620sq ft? you always hear 3/1 or 3/2 family style as the bread and butta but these are "studio" apt and I should market that way.  Any thoughts?

2nd question is what about purchasing THIS as being a first purchase?

Is it - as long as the NUMBERS work and all other factors are good----a GO?

thanks

The main difference between a 3/1 SFR tenant & a MF 1 or 2 bedroom tenant is going to be their length of stay. MF tenants are much more transient. It is a much more temporarily living situation for them as opposed to a 3/1 SFR that would typically be a family home.

As for buying turnkey or doing work yourself that is a lifestyle question. Turnkey is simply you paying someone else to do the work as opposed to you doing it yourself. Just like getting a steak from a steakhouse as opposed to the grocery store.

excellent advise from everyone and I appreciate it because I think I get too ahead of myself. 

I can go both ways with TK or DIY. I learn more when I DIY and cost seem to be better, but not afraid to be passive as well.  I will do a mix.  

Thanks for all the replies 

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