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Hello all. Many of the numbers are from the pro forma. I understand I'm not to fully trust those numbers and my calculations don't quite match anyway. This would be out-of-state for me, so I'm nervous about the possibility of investing where I cannot see the property and don't yet have contacts in the area.
Should I be putting more money into the expenses? Appreciate any advice.
Washington DC · Member since 2018 · 21 posts · 9 votes
8y
Before considering this any further I’d recommend getting all the info you can on the last updates to flooring, paint, roof, and hvac on the home. If any or all of those are near needing replacement then that will drastically change your numbers.
New to Real Estate · Wilmington, NC · Member since 2018 · 34 posts · 4 votes
8y
Thanks @Travis Henderson . I did some more research and found out the following:
Open floor plan with lots of updates! Beautiful hardwood floors throughout. Freshly painted with neutral paint and white trim. Updated bathrooms. Eat-in kitchen includes new counter tops and stainless steel appliances.
Rental Property Investor · Oakland, CA · Member since 2016 · 341 posts · 643 votes
8y
Hey @Account Closed - your calculations look pretty good on the vacancy, capx, repairs side of things. But, your property taxes look a little low to me if the assessed value is right around $100k (but I could be wrong). Shoot me a PM and we can walk through the analysis together if you'd like. I've purchased a few properties in Indy in the past couple years.
Rental Property Investor · Oakland, CA · Member since 2016 · 341 posts · 643 votes
8y
Hey @Account Closed - sorry to blow this post up. But, I actually saw that property the other day. Couple things:
-It's in a pretty good neighborhood with little crime. The new library being built right on Michigan and 63rd is a plus
-Interior rehab looks good from the pictures I've seen
-I'd be a little concerned with the roof and brick siding as it was built in the 50s. So definitely get an inspection
-Do a little more research on rents as it's been on the market for 30+ days. Maybe a sign that the rent is too high, especially since it's under 1,000 square feet.
New to Real Estate · Wilmington, NC · Member since 2018 · 34 posts · 4 votes
8y
@Tyler Jahnke thank you for your input. I initially calculated taxes based on a flat 2% (saw it somewhere on the Marion County Tax Assessor website). However, your suggestion made me dig further into the site and found the 2016-2017 tax rate (couldn't find anything more recent) of 2.2527%.
After my initial post, I was able to find pictures.
I'm a bit concerned about the rent as well. It has been on the market for 33 days and was just recently dropped from $1200.
I'll be talking to the property manager tomorrow. Currently looking for an inspector.
@Jonathan James Look not sure why I did 5%. Last week I did speak to a lender who told me a rate of 5.625. I updated my report with that rate. Probably should do 6 as a safety net. Thank you for the suggestion.
There are still numbers I'm really unsure of (accuracy of property taxes and insurance). This is also assuming listing price, which would not be my offer.
Rental Property Investor · Cincinnati, OH · Member since 2018 · 3 posts · 0 votes
8y
@Account Closed IMO I think your vacancy and cap ex might be a little too low (at least for my comfort). For cap ex at the very least, I know most investors and Brandon Turner has mentioned for SFR to consider putting at least $180 a month into cap ex reserves. This would definitely eat into your cash flow and I would put vacancy a little higher too at least 10%. With these numbers especially being out of state, I'd say its a no deal for me unless you can get the purchase price down. Even in your new analysis you made yesterday by tweaking a few numbers you're only at a 6.88% return, and if you had another 100 bucks a month for capex, you're essentially breaking even at best. If you're in it for appreciation and loan pay down though, then maybe that's not a terrible case, but I wouldn't go for it if cash flow is your main goal.
Can you share with us your lender? I've not heard of 4.625% rates on a 30 year mortgage for rental properties, only for owner-occupied residences. And what was your total closing costs as a % of the purchase price?
New to Real Estate · Wilmington, NC · Member since 2018 · 34 posts · 4 votes
8y
@Michinori Kaneko would you mind sharing your lender with me as well?
Thank you all for your input. I‘ll remember these tips for my future analysis.
@Scott Weaver