All Forum Posts by: Marcus Auerbach

@Joseph Jones I could give you a much better answer if I would have some more details to work with. So what I am going to tell you is based on the assumption of a SF or Duplex. Most investors will be looking to buy something for 75% of FMV fair market value. That would be all inclusive repairs and other expenses. I tend to overrehab (pull scheduled capex forward, i.e. all new plumbing on a 50 year old house to avoid any issues going forward) and often end up with 80-85%. In any case you have built in equity and a risk buffer if you would ever sell. Assuming 75% financing you end up with no or little cash invested so CoC return is a mute point.

Cashflow is my top KPI and I am aiming for $400 on a SF and $300 on a duplex after PITI. After reserves, expenses and property management expenses (yes, consider your own time with $35 an hour) you should be making at least $200 per door. Good luck.

I am to the point where I have stopped calling landlords or emplyers. Its hard to get good someone on the phone and then the questions is how much can you trust the information you get. I use mysmartmove for background checks and look at paystubs for emplyment and income verification. When in doubt I meet tenants at home, that is usually very insightful. But for the most part I look on data, credit scores reviel patterns. Like my boss used to say "In god we trust, all others bring data."

I can't speak for him and it probably depends on the job but arround 40 bucks.

yep.

This is a referral for a carpenter who has done a lot of work for us this year in Milwaukee and is available short notice. If you have currently a rehab going and need additional help please PM me. Shane has done kitchens, trim, doors, bathrooms, tile, flooring, drywall repair and general work for us. He charges by the hour and comes with my best recommendations because he does quality work is licensed and is easy to work with. No tire kickers please.

Orit not a warzone, but let's put it this way: I would not leave my laptop in my car while I get a latte..

I will say this though: every time I drive to one of my properties for a showing or to meet an inspector etc I wish they would be closer - and they are just 15 minutes away!! Its not an issue when you have one, but wait until you have collected a few more - you find yourself constantley driving. I can imagine it's impossible to find a deal in NY, but in my opinion investion more than two hours away is just crazy (unless its an apartment complex with on site staff maybe..)

I know the grass looks greener here, but I am sure you find something much closer and you can thank me in five years. Good luck!!

@Orit Nahum

@Timothy Hood additional considerations: what's the overall condition of the building and where do you see it in 5/10 years. How much life is left on the interior? - That's a more important question to ask than what repairs are needed now. If the kitchen an bath rooms are 30 years old you may have to start planning to replace them sooner than later. This will drive your vacancy rate. But you also have to be careful to not renovate the condo out of the neighboring units. You can easily stick 20k in a full condo rehab (kitchen, bath, floors, doors, trim etc) which will make it a great unit, but it may not fit in the building anymore. And you wont be able to get it apprised/sold for what you are in.

Overall, you are at the mercy of powers you don't control. For that reason condos are not the first choice for most investors. The relatively small amount makes it seem like a low risk, but your actual risk might be lower with a 100k SFR. If the risk is low 8% ROI are ok, but with elevated risk that's not much. Also, the small numbers don't work so well with your fixed expenses: It takes me as much work and travel (maybe less) to show and rent a $1500 unit than a $600 unit, however obviously these expenses are easier to be paid for from the higher rent and cash flow.

Finally I would not buy for FMV fair market value. If you think that $35k is what you can sell it for you need to buy it for 75% or less of that amount - otherwise you make no profit on the front end and you have zero buffer for the risk of loosing value. What HomePath is asking for is irrelevant and if you get it for $10k less than asking that still does not gurantee you got a good deal. Generally HomePath is pretty straight forward, just a little paper intense to deal with, but your Realtor will deal with that. Hope I was able to provide some good food for thought and good luck Timothy!

Not to repeat many of the great comments made I'll ad just one point: make sure that the finished "package" works - what I mean is, if your overall approach is to stick to necessary repairs, paint and carpet (and sell the house for 150k) then stick with cheap and easy. If you have updated kitchen, granite counters and tile bathrooms new windows etc and spent the money to make the whole house really nice the electric heating would stick out like a sore thumb.

@John Horner I have heard similar statements before. What they referred to was plain asset appreciation. They compare - whatever number they use, maybe 2% - with interest on a savings account. Basically assuming that you invest 100.000 cash to make 2% in appreciation, which then gets eaten up by the realtor fees when you try to "cash out".

A slight simplification leaving out discount at purchase, value ad remodeling, leverage and OPM, depretiation, principal pay down and .. oh yeah cash flow. 

@Kristin Wollmer looks like you got a good handle on the numbers. What about the building and the location? Some locations just look and feel right, others not so much. You can look at crime rates, schools, parking and shopping, but at the end its a feeling that you have when walking the area. What about the building? Does it look trustworthy, does it look like a place people would want to call home? You dont have to rely on your own judgement, bring some friends over and ask them for their opinion. Good luck.