MF Numbers, Can you think of anything else?

Question

I say "prediction" because the property will be completely vacant when I take possession.

After lots of research and time looking at costs for updating (and negotiating with the seller to make some repairs), these are the numbers I have finalized on my 9 unit MF purchase, which is closing in March.  These are 5 attached 3 bedroom townhomes and 4 individual SF homes all on 1 acre of land.

Please let me know if I am forgetting anything.

Rent:   $8,875.00

Units:   9

Maintenance  $1,331.25

Vacancy  $443.75

Property Manager  $621.25

Insurance  $484.47

Utilities  $150 (calculated at 85% recapture on RUBS for water, gas and electric metered separately)

Landscaping  $300.00

Advertising  $73.96

Ongoing Capital Expenses  $887.50

Taxes  $702.63

Purchase Price  $385,000.00

Rehab  $78,100.00

Holding Fees  $17,750.00 (2 months rehab, some will rent sooner)

Closing Costs  $3,500.00

Cash out of Pocket  $484,350.00

Additional ideas for extra income:

Pet Rent - $10 per month per pet  (the property has a huge green space for pets that I may actually fence in as a "dog park")

Appliance Rental - $25 per month for w/d, $15 per month for refrigerator (I actually ran across this idea looking for my son an apartment recently)

Property also has a big playground that I may remove -- not sure yet.

Please let me know if there are other expenses that I am not calculating (hopefully they are small :))

Joel Owens · Answer

I am getting a 9 cap after stabilizing if repair estimates hold up.

Are you getting a loan or really putting almost 500,000 cash down? If putting that much down you could go after a larger property that could throw off more yield upon rehab.

Kim H. · Answer

I haven't been on here since this purchase... almost 5 years now.  But, I did purchase this property and did a major renovation on all 9 units. Turned out to be a good investment for my first one. Now looking for another :)

Sam Leon · Answer

Insurance $484.47?

This is yearly for all 9 units?  Amazing.

Kim H. · Answer

Here are a few pictures of one of the units... they are not horribly ugly as is...

http://www.biggerpockets.com/files/user/kahdallas/file/mf---bedroom-before

http://www.biggerpockets.com/files/user/kahdallas/file/mf---kitchen-before

Sorry if it's it's against the rules to share pictures.  I am sure a moderator will delete if necessary :)

Kim H. · Answer

"it's probably the largest I can get with the best rents in the Dallas area for now"

I should rephrase that to ... the largest and best rents in the North Dallas area... I don't feel comfortable buying in an area I am not familiar with or would have to drive more than 30 minutes to access.

Kim H. · Answer

And I may be able to rent them as is with very little updating if I try.  I do need to do some foundation work first on a few though.

Kim H. · Answer

@Joe Fairless I have maintenance at 15% plus a 10% capital expense budget.  I am really hoping to do a lot of preventative maintenance in my rehab, so hopefully the costs won't inch up too much but it's definitely a possibility being that the property was built in the 50s.  It was completely overhauled in the 90s with new electrical and plumbing so keeping my fingers crossed for the best.

@Joel Owens this is the size of property that I feel comfortable with for my first investment.  It's 15 minutes from my home in an area that I know very well and feel confident about the market conditions.   I don't want debt so it's probably the largest I can get with the best rents in the Dallas area for now.

Joe Fairless · Answer

@Kim H. - a couple thoughts:

- depending on the year built the maintenance cost could be light

- I don't see a turnover cost to make units rent ready

Jeff Kehl · Answer

Congrats Kim! Glad to see you got this one nailed down. Looks good to me :)

MF Numbers, Can you think of anything else?

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