All Forum Posts by: Andre P.

Have you gotten an actual insurance quote? $100/mo seems low for a multi family building, unless your coverage amounts are low to the point of not being useful.

If it's in a low income area I would double your vacancy calculation as you will almost definitely have issues with that.

Same thing with your maintenance, are these buildings brand new? In a low income area your units are going to be beat up more, so I'd set aside at least 15% for maintenance.

Especially in lower income areas, plan for complete worst case and see if it still works, that way if it's not that bad, you still come out ahead, instead of the opposite.

Fist thing I would do is check with other lenders, sometimes local banks or credit unions won't sell the mortgage to Fannie or Freddie and therefore won't need to worry about the waiver at all.

@Dustin Beam has it right, focus on earning money and bid based on the returns you want.

@Brandon L. and @Christopher Giannino are dead-on.

Fill the vacancy first, then do a small (say $50) increase in rent. Your $2000 to get that apartment ready probably don't account for marketing costs, the mortgage, insurance, and tax costs as well as that it will probably take you longer than one month to get a new tenant.

Forcing a tenant out after 27 years of on-time payments and being a good tenant seems like madness to me. If she does leave, see if she wants to move to Madison! :)

While it's possible, my question is should she? If she's your mom presumably she's closer to retirement age. If all her cash is tied up in a Roth- is she willing to jeopardize her retirement to buy a single property? The few hundred dollars (at best) she may earn in cash flow is not nearly enough to live on.

Unless she has other sources of income to work with I would be extremely cautious about doing something like that, even if it is possible.

@Darren Wendroff

Rosston Smith makes a good point. say you invested 11k (20% down) and took out a loan for the rest? Would you want to buy a 2nd property? After buying this place for cash to you have some reserves in case something happens early on in your ownership?

 I'm by no means an expert but to be conservative and make sure you can be profitable I would use the following formula (other have different ones, this is just mine) using monthly numbers:

Rent - Mortgage - Taxes - Repair (15%) - Insurance - Vacancy (10%) = Cash Flow

The repair and vacancy percentages can vary based on the age of the house, previous work done, time to find a new tenant given the neighborhood, etc.  In my mind, it's always best to plan for the worst case and be pleasantly surprised than vice versa. :)

@Account Closed

Without understanding how to finance a purchase I would be hesitant to move forward. Penny offers excellent advice- figure out what you can afford, get pre-approved, understand the details, then work to find a deal.

You'll only know that by running the numbers to check.

If you're paying 52k cash, what are your other expenses (since you wouldn't have a mortgage obviously)? After taxes, repairs, potential vacancies, etc, subtract that from your rent and you'll have your monthly cash flow.

Multiply your cash flow by 12 and divide it by your purchase price to get your rate of return- is it any good?

Without the ability and knowledge to understand the numbers investing in real estate quickly turns to speculating...

With those of you giving deposit slips, or online- how can you enforce full months rent only? Here in WI at least, a partial payment will allow a tenant to stay and void an eviction process if it's in the works.

@Andrew Latus

Thanks Andrew, I'm not a landlord yet but am looking to be in the next year or so- great info!