All Forum Posts by: Aaron Thivierge

@Don Konipol thank you for your reply. In summary, you are saying buying for the 'potential' in reducing expenses and raising rents is not a sustainable formula for cash flow but maybe acceptable for appreciation? 
Noteworthy:  This quad will need a new roof in the next 18 months ( or sooner if the 4 point inspection for insurance reveals the age of the roof and insurance underwriter balks).  No leaks, just past her useable lifespan.  

I learned through hours of BP reading and to satisfy my end goal of cash flow, not to purchase for appreciation or depreciation (these are bonus'), but rather buy for the cash flow/ revenue generating investment opportunity.  

I should add that the selling price of $320,000 is for the 4 plex and 2 vacant maintained lots on the property that are zoned RLD so future building on the lot is an option.  Seller broke down the numbers as $300,000 for the 4 plex and $20,000 for the two empty lots w/ separate RE ID's. 
To me there is no value in the lots.  They are liabilities ( insurance, taxes, maintenance).  

Good morning, BP. 
After closing last August on my 1st investment property, I have closed on another SFH rental. Both of these properties are doing great. I find myself now in discussion with an older owner of a 4 plex in a B+ area of Jacksonville, Florida. What is your take on these numbers?

Numbers: 

Purchase price $320,000
Closing costs ( buyer is paying all of closing costs w/ a $2500 credit from seller): $7500
Rents ( 2 are under market value, 2 are at market value): $750, $850, $1000, $1100: total: $3700/mo
Downpayment: (25%) $80,000
P/I: $1800/ month
Taxes: $550
Insurance:  $267/ mo
Garbage:  $140/ mo
Water:  $440/ mo
maintenance (5%): $185/mo
vacancy ( although none have been vacant in 10 years): 5%: $185/ month
Expenses total: $3567

**I know I can raise two rents from $750 to $850 and $850-$900 ( adding $150/month in revenue)
** My goal is to do SOMETHING w/ the water bill : $440/ month that the owner is paying seems ridiculously high to me.  I feel like I can cut that number in 1/2 to decrease expenses. 

Thoughts on this deal? 

 Have you purchased and implemented this tool yet? any feedback?

I am looking at acquiring a quad-plex that has one water meter and 4 units. Water/ month is $480 total: owner paying all. The  electric/water company sub-metering cost would be nearly $20,000 for all 4 units.  
My options led me to truesubmeter as well.   Thoughts anyone? 

UPDATE:   We closed yesterday with Title America without a hitch.  We bought our 1st rental property and the vacant lot beside the home. 
I met with the tenant at 415 yesterday afternoon and had a unique and pleasant experience. 

He had been paying $600/ month for 19 years. I told him I needed to bump that number up to pay for PITI and all the capital improvements forthcoming. I said $700/ month seemed fair. His reply " I was thinking more like $750". WHAT?!
You want to go UP in rent further than I suggested?  He said, yes and I want to help pay for anything that breaks along the way: hot water heater, HVAC, etc..
I told him he was very kind, but let's settle at $725/month.  
We agreed. Shook hands and then I met my family for a lovely celebration dinner and swim. 

Now, here's the nuance: When I asked him his time frame for moving back to Tennessee as he mentioned to me months ago was his ultimate goal. 

He said, "well I don't know. Maybe next year, the year after possibly.... SO, I concluded that he is there for a good while still: All improvements and getting higher value off the property will be on standby until Cleve moves back to Tennessee where he is from and his extended family still resides.  

All in all, I am thrilled and delighted with the immediate cash flow, amazing tenant, proximity of the property to my primary residence, and the opportunities this property present in the future.   

Thanks for all the support along the way bigger pockets and friends.  

I will be the property manager for SO many reasons.  

PS: Just called Gail and left her a vm for the quote for the insurance quote. Thanks again for that contact.   

@Brandon H. I am sitting at the gate right now in Ft. Lauderdale waiting for the next leg of the flight. So, time is limited.  I enjoy and appreciate your contributions and thought process'.  Here's another addendum to my thought process.  
I am considering AIRbnb 'ing the property.  I have three friends who have similar homes in similar ( maybe less desirable) areas here in Jacksonville.  They are running 75-90% occupied consistently .  It was recently suggested to me by one of them to AirBNB this property (once the current Tennant moves out).  Even at $70/ night  (very conservative) and 66% occupancy (again conservative) that would beat the fair market rent ($1400 vs. $1100).  
And as my buddy puts it "they aren't there long enough to mess the place up or destroy anything".  I live less than 1 mile away and have a flexible schedule to turn the house over after a airbnb'er left.  So, THAT is also an option.  

As you can see, I am all over the place with my options and opportunities.  Thanks for giving me MORE to think about.  I will circle back when I have something constructive to share. 

I agree with taking it slow, considering all angles and not committing to anything until all avenues have been evaluated/ analyzed.  

Thanks agin. 

Let me get your opinion on what to do w/ the second empty lot:

There are two lots, two real estate ID's, two property taxes: the lots are adjacent, and the home, garage and gazebo are built on one lot. The other lot is landscaped and grassed. Looking from the street, you would not know there is two separate real estate id's, just a massive lot. 

I forgot to mention, my primary residence is less than 1 mile from this property.  

If I Airbnb or monthly rent the house, garage and gazebo, what would you guys do w/ the empty lot?
Sell it? build a duplex?  nothing?  build another Single family home? any creative ideas?  

By the way, I have a signed Florida Real Estate Purchase and Sales agreement from all three siblings for the $60,000 purchase price.  I will be sending it to "Title America" when I return from Key West Monday next week.  We are heading away to fish for 4 days, then back to close on this property.  

Also, an update: I met w/ my banking friend yesterday, and he changed the plan ( for the better I think): he offered me a $100,000 cash line of credit: uncollaterized, unsecured to use at my discretion.  
Is this superior than a mortgage?  It's easier, less reporting, less stipulations.  Am I missing anything by going this route? No money down, 100K to spend.  Interest only (5%) payments, principle due at my leisure.  

listen to the podcasts: it's easy, it's informative, it's diverse.  You'll learn a ton

 Got it. Thanks so much. I will call her later today for a quote. I am grateful for this contact. Thanks for sharing.  

This is a prime property to hold long term.  Flipping isn't really what I want to get into at this time.  Building longterm wealth passively with doors is my real goal.  Thanks. I will post real numbers after closing next week.