Am I Analyzing Deals Correctly?

Cleveland, OH · Member since 2022 · 811 posts · 578 votes

Fellow investors,

I have a deal analysis question.

My plan is to house hack and I'm having trouble getting numbers to cash flow AFTER I move out. It's almost impossible to get a property to cash flow while you live there but I'm also having trouble seeing cashflow after my departure.

Market rent in my area for duplexes is about $1,300. My plan is to go 5% conventional financing.

Here is an example:

Home Type: Duplex

Purchase Price: $200,000 (in my area, this would be purchasing a property at a pretty decent discount. My plan is to walk for dollars and call potential distressed landlords)

Loan Amount: $190,000

Loan Details: 7% interest rate amortized over 30 years

INCOME

Rent: $2,600 (assuming both units rent for $1,300)

Total Income: $2,600

EXPENSES

Monthly P&I: $1,264

PMI: $158 (1% of loan amount)

Homeowners insurance: $100 (estimate for my area)

Vacancy: $130 (5% of rent)

Capex: $260 (5% of rent)

Taxes: $450 (monthly estimate for my area)

Total Expenses: $2,362

Total Income - Total Expenses = $2,600 - $2,362 = $238

This is excluding future property management, potential lawn care, snowcare, utilities that I'd have to pay etc.

There are some properties that rent for upwards of $1,400 in my area but all have extra features like central air. It's highly unlikely that I could purchase a property with central air at a significant enough discount to make the numbers work.

Would love to hear your thoughts.

3 Reply

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Matthew Irish-JonesBusiness Member

Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes

Quote from @Bob S.:

Quote from @Greg Scott:

Quote from @Bob S.:

The roof on an avg duplex in Cleveland will be 6- 8k, not anywhere near 20k,

$6K is not a believable number for a re-roof of a duplex unless you are severely cutting corners.

100% not, there about 20- 25 sqt, (maybe you are assuming its 50- 60 sq ?) at 280-300 per sqt .If there is sheathing that needs replacing sure a bit more, but not anywhere near 20k. That would be 700+ per sq. That would be the highest price anywhere in America, I am not speculating I have done 100s. It's about 130- 150 per sq to buy it so how can they charge 500 in labor for ONE DAY work, that's insane.

All the best

Standard tear off roof replacement cost in Buffalo NY is $20,000-$25,000 depending on pitch, gutters, carpentry work, etc..

I have had one as low as $16,000 for a unit with a roof that was not very high up, no carpentry work, and tons of room between neighbors.

Irish Jones Realty4.947 Reviews

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Greg ScottPro Member
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
2y
You seem to be on the right track. One potential issue pops out.
You have $260/mo for CapEx. On a well-maintained property, this feels like a decent enough figure to start with for long-term improvements. However, you are most likely to get a discount on a property that needs an up-front infusion of capital.

A good example is the need for a $20,000 roof. The seller may be selling because the roof is starting to go and they don't have the cash. You might get more than a $20K discount if you can handle the roof repairs as part of the purchase.
2 Reply
Benjamin Sulka
OP
Cleveland, OH · Member since 2022 · 811 posts · 578 votes
2y
Quote from @Greg Scott:

You seem to be on the right track. One potential issue pops out.
You have $260/mo for CapEx. On a well-maintained property, this feels like a decent enough figure to start with for long-term improvements. However, you are most likely to get a discount on a property that needs an up-front infusion of capital.

A good example is the need for a $20,000 roof. The seller may be selling because the roof is starting to go and they don't have the cash. You might get more than a $20K discount if you can handle the roof repairs as part of the purchase.

Greg,
That's a great point! I appreciate your insight.
0 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Greg Scott:

You seem to be on the right track. One potential issue pops out.
You have $260/mo for CapEx. On a well-maintained property, this feels like a decent enough figure to start with for long-term improvements. However, you are most likely to get a discount on a property that needs an up-front infusion of capital.

A good example is the need for a $20,000 roof. The seller may be selling because the roof is starting to go and they don't have the cash. You might get more than a $20K discount if you can handle the roof repairs as part of the purchase.

The roof on an avg duplex in Cleveland will be 6- 8k, not anywhere near 20k,
3 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Benjamin Sulka:

Fellow investors,
I have a deal analysis question.
My plan is to house hack and I'm having trouble getting numbers to cash flow AFTER I move out. It's almost impossible to get a property to cash flow while you live there but I'm also having trouble seeing cashflow after my departure.
Market rent in my area for duplexes is about $1,300. My plan is to go 5% conventional financing.
Here is an example:
Home Type: Duplex
Purchase Price: $200,000 (in my area, this would be purchasing a property at a pretty decent discount. My plan is to walk for dollars and call potential distressed landlords)
Loan Amount: $190,000
Loan Details: 7% interest rate amortized over 30 years
INCOME
Rent: $2,600 (assuming both units rent for $1,300)
Total Income: $2,600
EXPENSES
Monthly P&I: $1,264
PMI: $158 (1% of loan amount)
Homeowners insurance: $100 (estimate for my area)
Vacancy: $130 (5% of rent)
Capex: $260 (5% of rent)
Taxes: $450 (monthly estimate for my area)
Total Expenses: $2,362
Total Income - Total Expenses = $2,600 - $2,362 = $238
This is excluding future property management, potential lawn care, snowcare, utilities that I'd have to pay etc.
There are some properties that rent for upwards of $1,400 in my area but all have extra features like central air. It's highly unlikely that I could purchase a property with central air at a significant enough discount to make the numbers work.
Would love to hear your thoughts.

I would not touch this. I would rather buy all in 120kihs, with rents of 1800 and taxes under 2500, Much better ROI. One of my guys is on his way to look at 2 duplex and a SF on one lot for all in 145k, gross rents of 36k net about 25k, that's more my style
You can do better than what you are presenting,
2 Reply
Benjamin Sulka
OP
Cleveland, OH · Member since 2022 · 811 posts · 578 votes
2y
Quote from @Bob S.:

Quote from @Benjamin Sulka:

Fellow investors,
I have a deal analysis question.
My plan is to house hack and I'm having trouble getting numbers to cash flow AFTER I move out. It's almost impossible to get a property to cash flow while you live there but I'm also having trouble seeing cashflow after my departure.
Market rent in my area for duplexes is about $1,300. My plan is to go 5% conventional financing.
Here is an example:
Home Type: Duplex
Purchase Price: $200,000 (in my area, this would be purchasing a property at a pretty decent discount. My plan is to walk for dollars and call potential distressed landlords)
Loan Amount: $190,000
Loan Details: 7% interest rate amortized over 30 years
INCOME
Rent: $2,600 (assuming both units rent for $1,300)
Total Income: $2,600
EXPENSES
Monthly P&I: $1,264
PMI: $158 (1% of loan amount)
Homeowners insurance: $100 (estimate for my area)
Vacancy: $130 (5% of rent)
Capex: $260 (5% of rent)
Taxes: $450 (monthly estimate for my area)
Total Expenses: $2,362
Total Income - Total Expenses = $2,600 - $2,362 = $238
This is excluding future property management, potential lawn care, snowcare, utilities that I'd have to pay etc.
There are some properties that rent for upwards of $1,400 in my area but all have extra features like central air. It's highly unlikely that I could purchase a property with central air at a significant enough discount to make the numbers work.
Would love to hear your thoughts.

I would not touch this. I would rather buy all in 120kihs, with rents of 1800 and taxes under 2500, Much better ROI. One of my guys is on his way to look at 2 duplex and a SF on one lot for all in 145k, gross rents of 36k net about 25k, that's more my style
You can do better than what you are presenting,

Bob,

Grateful for you response. Would you be willing to provide more insight into how your guys find these deals? What areas of Cleveland are they in?
I do believe that I can do better as well. Trying to find a feasible way to get started with limited capital.
Thank you!
1 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Benjamin Sulka:

Quote from @Bob S.:

Quote from @Benjamin Sulka:

Fellow investors,
I have a deal analysis question.
My plan is to house hack and I'm having trouble getting numbers to cash flow AFTER I move out. It's almost impossible to get a property to cash flow while you live there but I'm also having trouble seeing cashflow after my departure.
Market rent in my area for duplexes is about $1,300. My plan is to go 5% conventional financing.
Here is an example:
Home Type: Duplex
Purchase Price: $200,000 (in my area, this would be purchasing a property at a pretty decent discount. My plan is to walk for dollars and call potential distressed landlords)
Loan Amount: $190,000
Loan Details: 7% interest rate amortized over 30 years
INCOME
Rent: $2,600 (assuming both units rent for $1,300)
Total Income: $2,600
EXPENSES
Monthly P&I: $1,264
PMI: $158 (1% of loan amount)
Homeowners insurance: $100 (estimate for my area)
Vacancy: $130 (5% of rent)
Capex: $260 (5% of rent)
Taxes: $450 (monthly estimate for my area)
Total Expenses: $2,362
Total Income - Total Expenses = $2,600 - $2,362 = $238
This is excluding future property management, potential lawn care, snowcare, utilities that I'd have to pay etc.
There are some properties that rent for upwards of $1,400 in my area but all have extra features like central air. It's highly unlikely that I could purchase a property with central air at a significant enough discount to make the numbers work.
Would love to hear your thoughts.

I would not touch this. I would rather buy all in 120kihs, with rents of 1800 and taxes under 2500, Much better ROI. One of my guys is on his way to look at 2 duplex and a SF on one lot for all in 145k, gross rents of 36k net about 25k, that's more my style
You can do better than what you are presenting,

Bob,

Grateful for you response. Would you be willing to provide more insight into how your guys find these deals? What areas of Cleveland are they in?
I do believe that I can do better as well. Trying to find a feasible way to get started with limited capital.
Thank you!
Really not sure what else to say except. I have a large network and know all the real players in my market, I can get as many as I want with a push of a button.
0 Reply
Rafael Mercedes
Real Estate Agent · Denver, CO · Member since 2023 · 39 posts · 21 votes
2y
Quote from @Benjamin Sulka:

Fellow investors,
I have a deal analysis question.
My plan is to house hack and I'm having trouble getting numbers to cash flow AFTER I move out. It's almost impossible to get a property to cash flow while you live there but I'm also having trouble seeing cashflow after my departure.
Market rent in my area for duplexes is about $1,300. My plan is to go 5% conventional financing.
Here is an example:
Home Type: Duplex
Purchase Price: $200,000 (in my area, this would be purchasing a property at a pretty decent discount. My plan is to walk for dollars and call potential distressed landlords)
Loan Amount: $190,000
Loan Details: 7% interest rate amortized over 30 years
INCOME
Rent: $2,600 (assuming both units rent for $1,300)
Total Income: $2,600
EXPENSES
Monthly P&I: $1,264
PMI: $158 (1% of loan amount)
Homeowners insurance: $100 (estimate for my area)
Vacancy: $130 (5% of rent)
Capex: $260 (5% of rent)
Taxes: $450 (monthly estimate for my area)
Total Expenses: $2,362
Total Income - Total Expenses = $2,600 - $2,362 = $238
This is excluding future property management, potential lawn care, snowcare, utilities that I'd have to pay etc.
There are some properties that rent for upwards of $1,400 in my area but all have extra features like central air. It's highly unlikely that I could purchase a property with central air at a significant enough discount to make the numbers work.
Would love to hear your thoughts.

Hi Benjamin,
Find a property at a discount. If it needs repairs, include that in the purchase price. Find properties that you can do a value add, like in unit washer & dryer, appliances, kitchen/cabs, find something that WILL add value. You can look up what're the best things to add value this year. With adding value you've got to raise rents. Utilities, snowcare, & lawn can be included into the rent. Those are all services they benefit from & you don't have a 100 unit that can cover those expenses, it's reasonable. Manage the property yourself if you're still tight after all of the previous mentioned things. If not, get a trust prop manager & build that relationship. Use your extra time to make more money. I hope this helps some.
We look forward to your success & prosperity.
Ownership is Freedom.
2 Reply
Benjamin Sulka
OP
Cleveland, OH · Member since 2022 · 811 posts · 578 votes
2y
Quote from @Bob S.:

Quote from @Benjamin Sulka:

Quote from @Bob S.:

Quote from @Benjamin Sulka:

Fellow investors,
I have a deal analysis question.
My plan is to house hack and I'm having trouble getting numbers to cash flow AFTER I move out. It's almost impossible to get a property to cash flow while you live there but I'm also having trouble seeing cashflow after my departure.
Market rent in my area for duplexes is about $1,300. My plan is to go 5% conventional financing.
Here is an example:
Home Type: Duplex
Purchase Price: $200,000 (in my area, this would be purchasing a property at a pretty decent discount. My plan is to walk for dollars and call potential distressed landlords)
Loan Amount: $190,000
Loan Details: 7% interest rate amortized over 30 years
INCOME
Rent: $2,600 (assuming both units rent for $1,300)
Total Income: $2,600
EXPENSES
Monthly P&I: $1,264
PMI: $158 (1% of loan amount)
Homeowners insurance: $100 (estimate for my area)
Vacancy: $130 (5% of rent)
Capex: $260 (5% of rent)
Taxes: $450 (monthly estimate for my area)
Total Expenses: $2,362
Total Income - Total Expenses = $2,600 - $2,362 = $238
This is excluding future property management, potential lawn care, snowcare, utilities that I'd have to pay etc.
There are some properties that rent for upwards of $1,400 in my area but all have extra features like central air. It's highly unlikely that I could purchase a property with central air at a significant enough discount to make the numbers work.
Would love to hear your thoughts.

I would not touch this. I would rather buy all in 120kihs, with rents of 1800 and taxes under 2500, Much better ROI. One of my guys is on his way to look at 2 duplex and a SF on one lot for all in 145k, gross rents of 36k net about 25k, that's more my style
You can do better than what you are presenting,

Bob,

Grateful for you response. Would you be willing to provide more insight into how your guys find these deals? What areas of Cleveland are they in?
I do believe that I can do better as well. Trying to find a feasible way to get started with limited capital.
Thank you!
Really not sure what else to say except. I have a large network and know all the real players in my market, I can get as many as I want with a push of a button.

Bob,
How did you meet or develop a relationship with these real players? How did you get started in Cleveland?
0 Reply
Benjamin Sulka
OP
Cleveland, OH · Member since 2022 · 811 posts · 578 votes
2y
Quote from @Rafael Mercedes:

Quote from @Benjamin Sulka:

Fellow investors,
I have a deal analysis question.
My plan is to house hack and I'm having trouble getting numbers to cash flow AFTER I move out. It's almost impossible to get a property to cash flow while you live there but I'm also having trouble seeing cashflow after my departure.
Market rent in my area for duplexes is about $1,300. My plan is to go 5% conventional financing.
Here is an example:
Home Type: Duplex
Purchase Price: $200,000 (in my area, this would be purchasing a property at a pretty decent discount. My plan is to walk for dollars and call potential distressed landlords)
Loan Amount: $190,000
Loan Details: 7% interest rate amortized over 30 years
INCOME
Rent: $2,600 (assuming both units rent for $1,300)
Total Income: $2,600
EXPENSES
Monthly P&I: $1,264
PMI: $158 (1% of loan amount)
Homeowners insurance: $100 (estimate for my area)
Vacancy: $130 (5% of rent)
Capex: $260 (5% of rent)
Taxes: $450 (monthly estimate for my area)
Total Expenses: $2,362
Total Income - Total Expenses = $2,600 - $2,362 = $238
This is excluding future property management, potential lawn care, snowcare, utilities that I'd have to pay etc.
There are some properties that rent for upwards of $1,400 in my area but all have extra features like central air. It's highly unlikely that I could purchase a property with central air at a significant enough discount to make the numbers work.
Would love to hear your thoughts.

Hi Benjamin,
Find a property at a discount. If it needs repairs, include that in the purchase price. Find properties that you can do a value add, like in unit washer & dryer, appliances, kitchen/cabs, find something that WILL add value. You can look up what're the best things to add value this year. With adding value you've got to raise rents. Utilities, snowcare, & lawn can be included into the rent. Those are all services they benefit from & you don't have a 100 unit that can cover those expenses, it's reasonable. Manage the property yourself if you're still tight after all of the previous mentioned things. If not, get a trust prop manager & build that relationship. Use your extra time to make more money. I hope this helps some.
We look forward to your success & prosperity.
Ownership is Freedom.

Rafael,
Thank you for your insightful response!
0 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Benjamin Sulka:

Quote from @Bob S.:

Quote from @Benjamin Sulka:

Quote from @Bob S.:

Quote from @Benjamin Sulka:

Fellow investors,
I have a deal analysis question.
My plan is to house hack and I'm having trouble getting numbers to cash flow AFTER I move out. It's almost impossible to get a property to cash flow while you live there but I'm also having trouble seeing cashflow after my departure.
Market rent in my area for duplexes is about $1,300. My plan is to go 5% conventional financing.
Here is an example:
Home Type: Duplex
Purchase Price: $200,000 (in my area, this would be purchasing a property at a pretty decent discount. My plan is to walk for dollars and call potential distressed landlords)
Loan Amount: $190,000
Loan Details: 7% interest rate amortized over 30 years
INCOME
Rent: $2,600 (assuming both units rent for $1,300)
Total Income: $2,600
EXPENSES
Monthly P&I: $1,264
PMI: $158 (1% of loan amount)
Homeowners insurance: $100 (estimate for my area)
Vacancy:  $130 (5% of rent)
Capex: $260 (5% of rent)
Taxes:  $450 (monthly estimate for my area)
Total Expenses: $2,362
Total Income - Total Expenses = $2,600 - $2,362 = $238
This is excluding future property management, potential lawn care, snowcare, utilities that I'd have to pay etc.
There are some properties that rent for upwards of $1,400 in my area but all have extra features like central air. It's highly unlikely that I could purchase a property with central air at a significant enough discount to make the numbers work.
Would love to hear your thoughts.

I would not touch this. I would rather buy all in 120kihs, with rents of 1800 and taxes under 2500, Much better ROI. One of my guys is on his way to look at 2 duplex and a SF on one lot for all in 145k, gross rents of 36k net about 25k, that's more my style
You can do better than what you are presenting,

Bob,

Grateful for you response. Would you be willing to provide more insight into how your guys find these deals? What areas of Cleveland are they in?
I do believe that I can do better as well. Trying to find a feasible way to get started with limited capital.
Thank you!
Really not sure what else to say except. I have a large network and know all the real players in my market, I can get as many as I want with a push of a button.

Bob,
How did you meet or develop a relationship with these real players? How did you get started in Cleveland?

Again, networking, also when I was presented with a deal I closed, as is under two weeks. So, I got a reputation for actually doing not just kicking tires. I provide so many with exactly what they ask for and then crickets. Those people I simply delete from my contact list and move on. ITS ALL about actually doing ( of course it has to make sense) vs analyzing.
All the best
1 Reply
Benjamin Sulka
OP
Cleveland, OH · Member since 2022 · 811 posts · 578 votes
2y
Quote from @Bob S.:

Quote from @Benjamin Sulka:

Quote from @Bob S.:

Quote from @Benjamin Sulka:

Quote from @Bob S.:

Quote from @Benjamin Sulka:

Fellow investors,
I have a deal analysis question.
My plan is to house hack and I'm having trouble getting numbers to cash flow AFTER I move out. It's almost impossible to get a property to cash flow while you live there but I'm also having trouble seeing cashflow after my departure.
Market rent in my area for duplexes is about $1,300. My plan is to go 5% conventional financing.
Here is an example:
Home Type: Duplex
Purchase Price: $200,000 (in my area, this would be purchasing a property at a pretty decent discount. My plan is to walk for dollars and call potential distressed landlords)
Loan Amount: $190,000
Loan Details: 7% interest rate amortized over 30 years
INCOME
Rent: $2,600 (assuming both units rent for $1,300)
Total Income: $2,600
EXPENSES
Monthly P&I: $1,264
PMI: $158 (1% of loan amount)
Homeowners insurance: $100 (estimate for my area)
Vacancy:  $130 (5% of rent)
Capex: $260 (5% of rent)
Taxes:  $450 (monthly estimate for my area)
Total Expenses: $2,362
Total Income - Total Expenses = $2,600 - $2,362 = $238
This is excluding future property management, potential lawn care, snowcare, utilities that I'd have to pay etc.
There are some properties that rent for upwards of $1,400 in my area but all have extra features like central air. It's highly unlikely that I could purchase a property with central air at a significant enough discount to make the numbers work.
Would love to hear your thoughts.

I would not touch this. I would rather buy all in 120kihs, with rents of 1800 and taxes under 2500, Much better ROI. One of my guys is on his way to look at 2 duplex and a SF on one lot for all in 145k, gross rents of 36k net about 25k, that's more my style
You can do better than what you are presenting,

Bob,

Grateful for you response. Would you be willing to provide more insight into how your guys find these deals? What areas of Cleveland are they in?
I do believe that I can do better as well. Trying to find a feasible way to get started with limited capital.
Thank you!
Really not sure what else to say except. I have a large network and know all the real players in my market, I can get as many as I want with a push of a button.

Bob,
How did you meet or develop a relationship with these real players? How did you get started in Cleveland?

Again, networking, also when I was presented with a deal I closed, as is under two weeks. So, I got a reputation for actually doing not just kicking tires. I provide so many with exactly what they ask for and then crickets. Those people I simply delete from my contact list and move on. ITS ALL about actually doing ( of course it has to make sense) vs analyzing.
All the best

I like your philosophy. Thanks for the wisdom.
1 Reply
Vadim F.
Investor · Member since 2020 · 337 posts · 213 votes
2y
Quote from @Rafael Mercedes:

Quote from @Benjamin Sulka:

Fellow investors,
I have a deal analysis question.
My plan is to house hack and I'm having trouble getting numbers to cash flow AFTER I move out. It's almost impossible to get a property to cash flow while you live there but I'm also having trouble seeing cashflow after my departure.
Market rent in my area for duplexes is about $1,300. My plan is to go 5% conventional financing.
Here is an example:
Home Type: Duplex
Purchase Price: $200,000 (in my area, this would be purchasing a property at a pretty decent discount. My plan is to walk for dollars and call potential distressed landlords)
Loan Amount: $190,000
Loan Details: 7% interest rate amortized over 30 years
INCOME
Rent: $2,600 (assuming both units rent for $1,300)
Total Income: $2,600
EXPENSES
Monthly P&I: $1,264
PMI: $158 (1% of loan amount)
Homeowners insurance: $100 (estimate for my area)
Vacancy: $130 (5% of rent)
Capex: $260 (5% of rent)
Taxes: $450 (monthly estimate for my area)
Total Expenses: $2,362
Total Income - Total Expenses = $2,600 - $2,362 = $238
This is excluding future property management, potential lawn care, snowcare, utilities that I'd have to pay etc.
There are some properties that rent for upwards of $1,400 in my area but all have extra features like central air. It's highly unlikely that I could purchase a property with central air at a significant enough discount to make the numbers work.
Would love to hear your thoughts.

Hi Benjamin,
Find a property at a discount. If it needs repairs, include that in the purchase price. Find properties that you can do a value add, like in unit washer & dryer, appliances, kitchen/cabs, find something that WILL add value. You can look up what're the best things to add value this year. With adding value you've got to raise rents. Utilities, snowcare, & lawn can be included into the rent. Those are all services they benefit from & you don't have a 100 unit that can cover those expenses, it's reasonable. Manage the property yourself if you're still tight after all of the previous mentioned things. If not, get a trust prop manager & build that relationship. Use your extra time to make more money. I hope this helps some.
We look forward to your success & prosperity.
Ownership is Freedom.

Not sure how familiar you are with the Cleveland market but I would highly advise against everything you mentioned doing for a value add. Adding appliances, etc, you're opening yourself up for a headache (lightly put) with the tenants because if anything goes wrong, you're on the hook. Cleveland tenants aren't your typical tenants. Utilities are paid for by the tenant, unless its a duplex then you as the landlord have to pay for water and sewer. Last but not least, self managing in Cleveland unless you are a very seasoned investor is a big no no. You need boots on the ground to do all the dirty work for you.
0 Reply
Rafael Mercedes
Real Estate Agent · Denver, CO · Member since 2023 · 39 posts · 21 votes
2y
Quote from @Vadim F.:

Quote from @Rafael Mercedes:

Quote from @Benjamin Sulka:

Fellow investors,
I have a deal analysis question.
My plan is to house hack and I'm having trouble getting numbers to cash flow AFTER I move out. It's almost impossible to get a property to cash flow while you live there but I'm also having trouble seeing cashflow after my departure.
Market rent in my area for duplexes is about $1,300. My plan is to go 5% conventional financing.
Here is an example:
Home Type: Duplex
Purchase Price: $200,000 (in my area, this would be purchasing a property at a pretty decent discount. My plan is to walk for dollars and call potential distressed landlords)
Loan Amount: $190,000
Loan Details: 7% interest rate amortized over 30 years
INCOME
Rent: $2,600 (assuming both units rent for $1,300)
Total Income: $2,600
EXPENSES
Monthly P&I: $1,264
PMI: $158 (1% of loan amount)
Homeowners insurance: $100 (estimate for my area)
Vacancy: $130 (5% of rent)
Capex: $260 (5% of rent)
Taxes: $450 (monthly estimate for my area)
Total Expenses: $2,362
Total Income - Total Expenses = $2,600 - $2,362 = $238
This is excluding future property management, potential lawn care, snowcare, utilities that I'd have to pay etc.
There are some properties that rent for upwards of $1,400 in my area but all have extra features like central air. It's highly unlikely that I could purchase a property with central air at a significant enough discount to make the numbers work.
Would love to hear your thoughts.

Hi Benjamin,
Find a property at a discount. If it needs repairs, include that in the purchase price. Find properties that you can do a value add, like in unit washer & dryer, appliances, kitchen/cabs, find something that WILL add value. You can look up what're the best things to add value this year. With adding value you've got to raise rents. Utilities, snowcare, & lawn can be included into the rent. Those are all services they benefit from & you don't have a 100 unit that can cover those expenses, it's reasonable. Manage the property yourself if you're still tight after all of the previous mentioned things. If not, get a trust prop manager & build that relationship. Use your extra time to make more money. I hope this helps some.
We look forward to your success & prosperity.
Ownership is Freedom.

Not sure how familiar you are with the Cleveland market but I would highly advise against everything you mentioned doing for a value add. Adding appliances, etc, you're opening yourself up for a headache (lightly put) with the tenants because if anything goes wrong, you're on the hook. Cleveland tenants aren't your typical tenants. Utilities are paid for by the tenant, unless its a duplex then you as the landlord have to pay for water and sewer. Last but not least, self managing in Cleveland unless you are a very seasoned investor is a big no no. You need boots on the ground to do all the dirty work for you.

Hi Vadim,
Thank you for your input on this discussion. To clarify you statement "find something that WILL add value. You can look up what're the best things to add value this year."
I must reiterate what I said in my original reply to the original poster looking for help:
"find something that WILL add value. You can look up what're the best things to add value this year."
If you have any suggestions I'm sure the original poster would greatly appreciate it!
We're looking forward to your success & prosperity.
Ownership is Freedom.
R. Mercedes

1 Reply
Vadim F.
Investor · Member since 2020 · 337 posts · 213 votes
2y
Quote from @Rafael Mercedes:

Quote from @Vadim F.:

Quote from @Rafael Mercedes:

Quote from @Benjamin Sulka:

Fellow investors,
I have a deal analysis question.
My plan is to house hack and I'm having trouble getting numbers to cash flow AFTER I move out. It's almost impossible to get a property to cash flow while you live there but I'm also having trouble seeing cashflow after my departure.
Market rent in my area for duplexes is about $1,300. My plan is to go 5% conventional financing.
Here is an example:
Home Type: Duplex
Purchase Price: $200,000 (in my area, this would be purchasing a property at a pretty decent discount. My plan is to walk for dollars and call potential distressed landlords)
Loan Amount: $190,000
Loan Details: 7% interest rate amortized over 30 years
INCOME
Rent: $2,600 (assuming both units rent for $1,300)
Total Income: $2,600
EXPENSES
Monthly P&I: $1,264
PMI: $158 (1% of loan amount)
Homeowners insurance: $100 (estimate for my area)
Vacancy: $130 (5% of rent)
Capex: $260 (5% of rent)
Taxes: $450 (monthly estimate for my area)
Total Expenses: $2,362
Total Income - Total Expenses = $2,600 - $2,362 = $238
This is excluding future property management, potential lawn care, snowcare, utilities that I'd have to pay etc.
There are some properties that rent for upwards of $1,400 in my area but all have extra features like central air. It's highly unlikely that I could purchase a property with central air at a significant enough discount to make the numbers work.
Would love to hear your thoughts.

Hi Benjamin,
Find a property at a discount. If it needs repairs, include that in the purchase price. Find properties that you can do a value add, like in unit washer & dryer, appliances, kitchen/cabs, find something that WILL add value. You can look up what're the best things to add value this year. With adding value you've got to raise rents. Utilities, snowcare, & lawn can be included into the rent. Those are all services they benefit from & you don't have a 100 unit that can cover those expenses, it's reasonable. Manage the property yourself if you're still tight after all of the previous mentioned things. If not, get a trust prop manager & build that relationship. Use your extra time to make more money. I hope this helps some.
We look forward to your success & prosperity.
Ownership is Freedom.

Not sure how familiar you are with the Cleveland market but I would highly advise against everything you mentioned doing for a value add. Adding appliances, etc, you're opening yourself up for a headache (lightly put) with the tenants because if anything goes wrong, you're on the hook. Cleveland tenants aren't your typical tenants. Utilities are paid for by the tenant, unless its a duplex then you as the landlord have to pay for water and sewer. Last but not least, self managing in Cleveland unless you are a very seasoned investor is a big no no. You need boots on the ground to do all the dirty work for you.

Hi Vadim,
Thank you for your input on this discussion. To clarify you statement "find something that WILL add value. You can look up what're the best things to add value this year."
I must reiterate what I said in my original reply to the original poster looking for help:
"find something that WILL add value. You can look up what're the best things to add value this year."
If you have any suggestions I'm sure the original poster would greatly appreciate it!
We're looking forward to your success & prosperity.
Ownership is Freedom.
R. Mercedes

Hi Rafael - I understand what you were mentioning, but what something that will add value in another market will not add value in the posters market which is Cleveland. The best thing that will add value, is buying it at the right price. It's a cashflow market for a reason.
0 Reply
Rafael Mercedes
Real Estate Agent · Denver, CO · Member since 2023 · 39 posts · 21 votes
2y
Quote from @Vadim F.:

Quote from @Rafael Mercedes:

Quote from @Vadim F.:

Quote from @Rafael Mercedes:

Quote from @Benjamin Sulka:

Fellow investors,
I have a deal analysis question.
My plan is to house hack and I'm having trouble getting numbers to cash flow AFTER I move out. It's almost impossible to get a property to cash flow while you live there but I'm also having trouble seeing cashflow after my departure.
Market rent in my area for duplexes is about $1,300. My plan is to go 5% conventional financing.
Here is an example:
Home Type: Duplex
Purchase Price: $200,000 (in my area, this would be purchasing a property at a pretty decent discount. My plan is to walk for dollars and call potential distressed landlords)
Loan Amount: $190,000
Loan Details: 7% interest rate amortized over 30 years
INCOME
Rent: $2,600 (assuming both units rent for $1,300)
Total Income: $2,600
EXPENSES
Monthly P&I: $1,264
PMI: $158 (1% of loan amount)
Homeowners insurance: $100 (estimate for my area)
Vacancy: $130 (5% of rent)
Capex: $260 (5% of rent)
Taxes: $450 (monthly estimate for my area)
Total Expenses: $2,362
Total Income - Total Expenses = $2,600 - $2,362 = $238
This is excluding future property management, potential lawn care, snowcare, utilities that I'd have to pay etc.
There are some properties that rent for upwards of $1,400 in my area but all have extra features like central air. It's highly unlikely that I could purchase a property with central air at a significant enough discount to make the numbers work.
Would love to hear your thoughts.

Hi Benjamin,
Find a property at a discount. If it needs repairs, include that in the purchase price. Find properties that you can do a value add, like in unit washer & dryer, appliances, kitchen/cabs, find something that WILL add value. You can look up what're the best things to add value this year. With adding value you've got to raise rents. Utilities, snowcare, & lawn can be included into the rent. Those are all services they benefit from & you don't have a 100 unit that can cover those expenses, it's reasonable. Manage the property yourself if you're still tight after all of the previous mentioned things. If not, get a trust prop manager & build that relationship. Use your extra time to make more money. I hope this helps some.
We look forward to your success & prosperity.
Ownership is Freedom.

Not sure how familiar you are with the Cleveland market but I would highly advise against everything you mentioned doing for a value add. Adding appliances, etc, you're opening yourself up for a headache (lightly put) with the tenants because if anything goes wrong, you're on the hook. Cleveland tenants aren't your typical tenants. Utilities are paid for by the tenant, unless its a duplex then you as the landlord have to pay for water and sewer. Last but not least, self managing in Cleveland unless you are a very seasoned investor is a big no no. You need boots on the ground to do all the dirty work for you.

Hi Vadim,
Thank you for your input on this discussion. To clarify you statement "find something that WILL add value. You can look up what're the best things to add value this year."
I must reiterate what I said in my original reply to the original poster looking for help:
"find something that WILL add value. You can look up what're the best things to add value this year."
If you have any suggestions I'm sure the original poster would greatly appreciate it!
We're looking forward to your success & prosperity.
Ownership is Freedom.
R. Mercedes

Hi Rafael - I understand what you were mentioning, but what something that will add value in another market will not add value in the posters market which is Cleveland. The best thing that will add value, is buying it at the right price. It's a cashflow market for a reason.

Hi Vadim. I acknowledge that & that's why I suggested the OP search what can add value in their specific market. What I mentioned were suggestions. We appreciate your input on the Cleveland market & thank you for letting the OP know that nothing will add value to their properties and the only tactic is buying at a discount.
1 Reply
Matthew Irish-JonesBusiness Member
Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
2y
Quote from @Benjamin Sulka:

Fellow investors,
I have a deal analysis question.
My plan is to house hack and I'm having trouble getting numbers to cash flow AFTER I move out. It's almost impossible to get a property to cash flow while you live there but I'm also having trouble seeing cashflow after my departure.
Market rent in my area for duplexes is about $1,300. My plan is to go 5% conventional financing.
Here is an example:
Home Type: Duplex
Purchase Price: $200,000 (in my area, this would be purchasing a property at a pretty decent discount. My plan is to walk for dollars and call potential distressed landlords)
Loan Amount: $190,000
Loan Details: 7% interest rate amortized over 30 years
INCOME
Rent: $2,600 (assuming both units rent for $1,300)
Total Income: $2,600
EXPENSES
Monthly P&I: $1,264
PMI: $158 (1% of loan amount)
Homeowners insurance: $100 (estimate for my area)
Vacancy:  $130 (5% of rent)
Capex: $260 (5% of rent)
Taxes:  $450 (monthly estimate for my area)
Total Expenses: $2,362
Total Income - Total Expenses = $2,600 - $2,362 = $238
This is excluding future property management, potential lawn care, snowcare, utilities that I'd have to pay etc.
There are some properties that rent for upwards of $1,400 in my area but all have extra features like central air. It's highly unlikely that I could purchase a property with central air at a significant enough discount to make the numbers work.
Would love to hear your thoughts.

Here is my two cents.  There is more to analyzing deals than subtracting expenses from revenue.
We analyze deals by location first, asset condition second, and returns last. I value location and asset condition over returns. Valuing location and asset condition over cash flow has lead to large cumulative returns.
Your property is not cash flowing because you are only putting 5% down. Get a good property and a good location and you will have quality tenant demand. Quality tenant demand is different than tenant demand.
While you live there spruce the place up, add air conditioning, replace light fixtures, paint, etc..
By the time you are ready to move out rents should be up and you should be close to cash flowing.  Don't forget to calculate appreciation, debt paydown, and variable costs.
Irish Jones Realty4.947 Reviews
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2 Reply
Benjamin Sulka
OP
Cleveland, OH · Member since 2022 · 811 posts · 578 votes
2y
Quote from @Matthew Irish-Jones:

Quote from @Benjamin Sulka:

Fellow investors,
I have a deal analysis question.
My plan is to house hack and I'm having trouble getting numbers to cash flow AFTER I move out. It's almost impossible to get a property to cash flow while you live there but I'm also having trouble seeing cashflow after my departure.
Market rent in my area for duplexes is about $1,300. My plan is to go 5% conventional financing.
Here is an example:
Home Type: Duplex
Purchase Price: $200,000 (in my area, this would be purchasing a property at a pretty decent discount. My plan is to walk for dollars and call potential distressed landlords)
Loan Amount: $190,000
Loan Details: 7% interest rate amortized over 30 years
INCOME
Rent: $2,600 (assuming both units rent for $1,300)
Total Income: $2,600
EXPENSES
Monthly P&I: $1,264
PMI: $158 (1% of loan amount)
Homeowners insurance: $100 (estimate for my area)
Vacancy:  $130 (5% of rent)
Capex: $260 (5% of rent)
Taxes:  $450 (monthly estimate for my area)
Total Expenses: $2,362
Total Income - Total Expenses = $2,600 - $2,362 = $238
This is excluding future property management, potential lawn care, snowcare, utilities that I'd have to pay etc.
There are some properties that rent for upwards of $1,400 in my area but all have extra features like central air. It's highly unlikely that I could purchase a property with central air at a significant enough discount to make the numbers work.
Would love to hear your thoughts.

Here is my two cents.  There is more to analyzing deals than subtracting expenses from revenue.
We analyze deals by location first, asset condition second, and returns last. I value location and asset condition over returns. Valuing location and asset condition over cash flow has lead to large cumulative returns.
Your property is not cash flowing because you are only putting 5% down. Get a good property and a good location and you will have quality tenant demand. Quality tenant demand is different than tenant demand.
While you live there spruce the place up, add air conditioning, replace light fixtures, paint, etc..
By the time you are ready to move out rents should be up and you should be close to cash flowing.  Don't forget to calculate appreciation, debt paydown, and variable costs.

Matthew,
Thanks for your response. That is a great way to look at things that I haven't necessarily considered.
What are some of the indicators that you use for a good location?
0 Reply
Greg ScottPro Member
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
2y
Quote from @Bob S.:

The roof on an avg duplex in Cleveland will be 6- 8k, not anywhere near 20k,
$6K is not a believable number for a re-roof of a duplex unless you are severely cutting corners.
0 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Greg Scott:

Quote from @Bob S.:

The roof on an avg duplex in Cleveland will be 6- 8k, not anywhere near 20k,
$6K is not a believable number for a re-roof of a duplex unless you are severely cutting corners.

100% not, there about 20- 25 sqt, (maybe you are assuming its 50- 60 sq ?) at 280-300 per sqt .If there is sheathing that needs replacing sure a bit more, but not anywhere near 20k. That would be 700+ per sq. That would be the highest price anywhere in America, I am not speculating I have done 100s. It's about 130- 150 per sq to buy it so how can they charge 500 in labor for ONE DAY work, that's insane.

All the best
0 Reply
Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
2y
@Benjamin Sulka
I don't have much to add other than to say your thought process and conservative analysis are on track. This is where the market is right now if you buy with a rate in the 7s or 8s.
The more distressed the property you find, the higher the chance there is for a deep discount and a value add, but also the higher the risk. TANSTAAFL.
1 Reply
Matthew Irish-JonesBusiness Member
Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
2y
Quote from @Bob S.:

Quote from @Greg Scott:

Quote from @Bob S.:

The roof on an avg duplex in Cleveland will be 6- 8k, not anywhere near 20k,
$6K is not a believable number for a re-roof of a duplex unless you are severely cutting corners.

100% not, there about 20- 25 sqt, (maybe you are assuming its 50- 60 sq ?) at 280-300 per sqt .If there is sheathing that needs replacing sure a bit more, but not anywhere near 20k. That would be 700+ per sq. That would be the highest price anywhere in America, I am not speculating I have done 100s. It's about 130- 150 per sq to buy it so how can they charge 500 in labor for ONE DAY work, that's insane.

All the best

Standard tear off roof replacement cost in Buffalo NY is $20,000-$25,000 depending on pitch, gutters, carpentry work, etc..
I have had one as low as $16,000 for a unit with a roof that was not very high up, no carpentry work, and tons of room between neighbors.
Irish Jones Realty4.947 Reviews
View Page
3 Reply
Matthew Irish-JonesBusiness Member
Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
2y
Quote from @Benjamin Sulka:

Quote from @Matthew Irish-Jones:

Quote from @Benjamin Sulka:

Fellow investors,
I have a deal analysis question.
My plan is to house hack and I'm having trouble getting numbers to cash flow AFTER I move out. It's almost impossible to get a property to cash flow while you live there but I'm also having trouble seeing cashflow after my departure.
Market rent in my area for duplexes is about $1,300. My plan is to go 5% conventional financing.
Here is an example:
Home Type: Duplex
Purchase Price: $200,000 (in my area, this would be purchasing a property at a pretty decent discount. My plan is to walk for dollars and call potential distressed landlords)
Loan Amount: $190,000
Loan Details: 7% interest rate amortized over 30 years
INCOME
Rent: $2,600 (assuming both units rent for $1,300)
Total Income: $2,600
EXPENSES
Monthly P&I: $1,264
PMI: $158 (1% of loan amount)
Homeowners insurance: $100 (estimate for my area)
Vacancy:  $130 (5% of rent)
Capex: $260 (5% of rent)
Taxes:  $450 (monthly estimate for my area)
Total Expenses: $2,362
Total Income - Total Expenses = $2,600 - $2,362 = $238
This is excluding future property management, potential lawn care, snowcare, utilities that I'd have to pay etc.
There are some properties that rent for upwards of $1,400 in my area but all have extra features like central air. It's highly unlikely that I could purchase a property with central air at a significant enough discount to make the numbers work.
Would love to hear your thoughts.

Here is my two cents.  There is more to analyzing deals than subtracting expenses from revenue.
We analyze deals by location first, asset condition second, and returns last. I value location and asset condition over returns. Valuing location and asset condition over cash flow has lead to large cumulative returns.
Your property is not cash flowing because you are only putting 5% down. Get a good property and a good location and you will have quality tenant demand. Quality tenant demand is different than tenant demand.
While you live there spruce the place up, add air conditioning, replace light fixtures, paint, etc..
By the time you are ready to move out rents should be up and you should be close to cash flowing.  Don't forget to calculate appreciation, debt paydown, and variable costs.

Matthew,
Thanks for your response. That is a great way to look at things that I haven't necessarily considered.
What are some of the indicators that you use for a good location?

You have to classify neighborhoods based on price, demand, risk profile. We use A, B, C, D, F.... I don't buy D's or F's and will rarely pick up a C unless the cash flow is so much I can't walk away.
B class is where most people house hacking find the most value.  I can't tell you what your area would be classified because I am only an expert in WNY.
I can tell by cash on cash returns what classification a neighborhood normally is. 1-3% returns (assuming 25% down) is A. B is normally 4-8% and F is 20% + and so forth.
I would advise you to start with knowing what an A, B, and C class area is before you worry about calculating cash flow.
Irish Jones Realty4.947 Reviews
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3 Reply
Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Matthew Irish-Jones:

Quote from @Bob S.:

Quote from @Greg Scott:

Quote from @Bob S.:

The roof on an avg duplex in Cleveland will be 6- 8k, not anywhere near 20k,
$6K is not a believable number for a re-roof of a duplex unless you are severely cutting corners.

100% not, there about 20- 25 sqt, (maybe you are assuming its 50- 60 sq ?) at 280-300 per sqt .If there is sheathing that needs replacing sure a bit more, but not anywhere near 20k. That would be 700+ per sq. That would be the highest price anywhere in America, I am not speculating I have done 100s. It's about 130- 150 per sq to buy it so how can they charge 500 in labor for ONE DAY work, that's insane.

All the best

Standard tear off roof replacement cost in Buffalo NY is $20,000-$25,000 depending on pitch, gutters, carpentry work, etc..
I have had one as low as $16,000 for a unit with a roof that was not very high up, no carpentry work, and tons of room between neighbors.

Impossible to know is that is a good price or not, it goes by the number of squares. We never pay more than 240- 280 per sq, So if 30 sq well,,,,,,, Avg in Clevland is 20- 25sq, Guys I am not speculating, I do about 150k a month in reno/ repairs my guys do my personals for 225 a sq.

All the best
0 Reply
Matthew Irish-JonesBusiness Member
Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
2y
Quote from @Bob S.:

Quote from @Matthew Irish-Jones:

Quote from @Bob S.:

Quote from @Greg Scott:

Quote from @Bob S.:

The roof on an avg duplex in Cleveland will be 6- 8k, not anywhere near 20k,
$6K is not a believable number for a re-roof of a duplex unless you are severely cutting corners.

100% not, there about 20- 25 sqt, (maybe you are assuming its 50- 60 sq ?) at 280-300 per sqt .If there is sheathing that needs replacing sure a bit more, but not anywhere near 20k. That would be 700+ per sq. That would be the highest price anywhere in America, I am not speculating I have done 100s.  It's about 130- 150 per sq to buy it so how can they charge 500 in labor for ONE DAY work, that's insane.

All the best

Standard tear off roof replacement cost in Buffalo NY is $20,000-$25,000 depending on pitch, gutters, carpentry work, etc..
I have had one as low as $16,000 for a unit with a roof that was not very high up, no carpentry work, and tons of room between neighbors.

Impossible to know is that is a good price or not, it goes by the number of squares. We never pay more than 240- 280 per sq, So if 30 sq well,,,,,,, Avg in Clevland is 20- 25sq, Guys I am not speculating, I do about 150k a month in reno/ repairs
All the best

Thats on a standard duplex with sq ft of 2200-2500 (I wouldn't know roofing squares). I am also not speculating we manage over 600 units and facilitate 10+ roofs per year and shop multiple vendors.
I am not telling you your numbers are wrong, I am telling you the market cost in WNY for a full tear off on an average sized double in the city of Buffalo.
Irish Jones Realty4.947 Reviews
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Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Matthew Irish-Jones:

Quote from @Bob S.:

Quote from @Matthew Irish-Jones:

Quote from @Bob S.:

Quote from @Greg Scott:

Quote from @Bob S.:

The roof on an avg duplex in Cleveland will be 6- 8k, not anywhere near 20k,
$6K is not a believable number for a re-roof of a duplex unless you are severely cutting corners.

100% not, there about 20- 25 sqt, (maybe you are assuming its 50- 60 sq ?) at 280-300 per sqt .If there is sheathing that needs replacing sure a bit more, but not anywhere near 20k. That would be 700+ per sq. That would be the highest price anywhere in America, I am not speculating I have done 100s.  It's about 130- 150 per sq to buy it so how can they charge 500 in labor for ONE DAY work, that's insane.

All the best

Standard tear off roof replacement cost in Buffalo NY is $20,000-$25,000 depending on pitch, gutters, carpentry work, etc..
I have had one as low as $16,000 for a unit with a roof that was not very high up, no carpentry work, and tons of room between neighbors.

Impossible to know is that is a good price or not, it goes by the number of squares. We never pay more than 240- 280 per sq, So if 30 sq well,,,,,,, Avg in Clevland is 20- 25sq, Guys I am not speculating, I do about 150k a month in reno/ repairs
All the best

Thats on a standard duplex with sq ft of 2200-2500 (I wouldn't know roofing squares). I am also not speculating we manage over 600 units and facilitate 10+ roofs per year and shop multiple vendors.
I am not telling you your numbers are wrong, I am telling you the market cost in WNY for a full tear off on an average sized double in the city of Buffalo.

wow those must be some big roofs, It cost about 150 a sq to buy ,
Keep crushing bro, 600 units, GREAT1!!! PM sux right LOL,
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