Practicing Analyzing Deals. Looking for feedback. #1

4 Replies

This might have some legs, @Ashley Clements . Your expenses look good. What about lawn care and snow removal? You should expect your taxes and insurance to go up after renovation. Over time CapEx/repairs will probably even out closer to 15% combined.

You may need 12 months to refi on a commercial property. Confirm with your lender.

How did you get to your ARV? What's the prevalent Cap Rate?

@Jaysen Medhurst You are right! I forgot about lawn care and snow removal. Lawn isn't difficult to estimate but with the snow removal I assume I can just look at averages on comparable properties that I manage for property management. 

When using the BRRRR calc do you just go ahead an anticipate the higher taxes and insurance after rehab? Any tips on estimating what that might be or should I call insurance agents and talk with the city assessors.

Thanks for the tip on the CapEx/repairs.

Good point on the refi. I will make sure to ask.

I used a 7.9% Cap Rate. I got this buy researching multifamily buildings in the MLS over that past 5 years. There weren't many. Wondering if there is another way of doing this. I could talk with an appraiser.
Does anyone else feel bad about bothering appraisers, contractors and others for info if they are unsure if they are going to do anything with it? Is this just something I'll have to get over? 

Yes, @Ashley Clements , I think you need to assume increased insurance and taxes when you add value to a property. They may not hit for a few years (at the next assessment, for example), but they will happen. For Insurance, talk with agents. For taxes you can just use the info on the town tax assessor's site to make an informed estimate. The one wild card here is any increase in the Mill Rate. Go to those town council meetings!

As far as cap rate, talk with local commercial brokers and lenders. They will have some insight.