All Forum Posts by: Alexander Price

I combine them in one cell on my calculations. So no less than 10% in total for both on a true turnkey for me. That is what I am comfortable with. Also if you keep cash on hand then that may allow you to be more comfortable with a lower number. That said age of house, deferred maintenance and any other improvements you could not concede from the seller should be considered. I am by no means an expert and many more seasoned investors may have opinions.

Another note, I have not done any work with MFRs or portfolios, but the agent should be able to give you detailed expenses and rents for the property. I would find someone who does a lot of multifamily home investing. I believe @PaulTimmins does a lot. I don't know him, but I see him post a bunch about training.

So BP has calculators that help with this. I personally use an excel sheet that I modified from the book Millionaire Real Estate Investor. Another book to read that has excel files online I think is What Every Real Estate Investor Needs to Know. 

Many investors take conservative estimates based on percentages of Gross Operating Income. For instance I use 8% for vacancy, 10% for PM and maintenance/CapEx needs to be case by case. I would not do less than 10% for these in combination. Add in other expenses like taxes and insurance landscaping pool service etc. Hope that helps.

I'd love to see your numbers as I am sure others would, but we need detailed breakdowns. Assuming 39% expenses seems low even if it is turnkey. What is your financing situation as well?

Also, if it is turnkey, is there a guarantee on the maintenance and if so how long. 

@EmanuelPapadakis asks pertinent questions.

@AlexCraig is very active in the Memphis market and online with BP. I have not dealt with his TK or MI, but both have positive reviews on here. Interview the company you want to work with. I just completed my first purchase with a TK in Memphis and it was a great experience. Lots of the Memphis folk on here are very supportive. 

Someone who lives in CA and has bought many TK properties is @DavidHutson. He is a wealth of knowledge. Contact him. If your curious about details since I just completed my first and about to do a second, let me know.

Listen to @JamesMartin. 

I have heard that lower end multifamily homes in Memphis require an on the ground owner who has a tight grip on the property and it's day to day operations. I dont know what you're looking at, but research your neighborhood as well. 

What if the market goes down? That's my first thought. Otherwise it seems reasonable.

@Alex Craig

Thanks for sharing. I will definitely check this out.

@Jayson Trierweiler

As for an exit strategy I did not put too much extra thought into it. I can afford the payment of the mortgage and take the loss if needed. That would be worse case. Memphis is currently pretty hot right now, so I could likely offload the property and break even since some of the maintenance improvements were completed after appraisal. Fortunate for me. As far as the future is concerned I would likely try to sell if I had to. I also know a few people local to me who would be interested in taking over my property if I needed to as well.

As for CapEx: I put in a blanket of 10% for maintenance which includes a small portion for CapEx. Based on the age of the house, and that many maintenance issues were corrected, including siding, I was comfortable with a smaller percentage for CapEx. That said, I keep cash on hand and am opening a HELOC. So I have CapEx funds saved for or accessible already.

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Since my previous post @mention did not link properly, @Matt White I answered your question in the post above.

@MattWhite I did conventional financing. 20% down 30yr fixed.