All Forum Posts by: Andrew Ashby

@Manny Perez  welcome to Chattanooga!  There are several available duplexes in Hixson right now. I would recommend house hacking to get started,  under the circumstances. 

@Tyler Rodgers  I have to agree with Thomas on taking the 37406 ZIP Code block by block. Just bought a duplex in that area on a street that I believe to be fairly stable. Currently renovating the vacant side myself. I would not have bought it if I did not feel good about the idea of renovating the property for hours at a time, sometimes in the evenings.  However, I did install a SimpliSafe security system immediately after purchasing it.  If you plan to do section 8 as I do, you can download an Excel spreadsheet showing all the currently listed rents, deposits, and numbers of bed and bath directly from the Chattanooga Housing Authority.  That's how I arrived at my rental rate and deposit amount, based on averages taken from that data. 

@Patti 

@Patti Robertson -  that makes a lot of sense. And just ignore the credit score aspect as well? 

what kind of screening criteria is reasonable for section 8 tenants? Is a credit score of 600 even reasonable?  I'm about to post a section 8 unit for $800 fully renovated. Can I still ask for verifiable income of $2400 a month or more?  This seems very relevant to me because the tenant is still liable for the entire rent if they lose their voucher for any reason. 

It sounds like your first duplex is very similar to the one I closed on two days ago. I'll add my own numbers here to give you some added perspective. By the way, I am a firm believer in paying for property inspections so that you have a better understanding of property condition from the outset. The inspection report may also give you added negotiating leverage if you have written the right type of offer contract. I use the same highly respected inspector on all my new acquisitions at $475 per property and I get a highly detailed report with photos. As for my duplex, here's how I analyzed it:

Built 2005, 3/1 and 1050 sq ft on each side

Appraisal: $85,000

Purchase price: $80,000

Cash down (25%): $20,000 + $4,094 closing cost + $475 inspection=$24,569

Initial repairs: $10,000 ($5,000 on each side)

Financing: 4.75%, 30-yr fixed, $313 monthly, $3,756 annually

Taxes: $1784 annually (combined city and county)

Gross rent: $1,400 monthly, $16,800 annually

Vacancy (10% of total expenses): $913, I use 10% because of seasonality in my market

Cap Ex (10% of gross rent): $1,680

Insurance: $860

Lawn: $120 per month X 9 months= $1,080 annually 

Management: $0, Self managing

Utilities: $0, Tenant pays

Cash flow: $563 monthly, $6,755 annually

Cash on Cash return: $6755/$34,569=19.54%

I hope that helps!

I'm closing on a duplex at the end of the month and it's half occupied. I'll be renovating the vacant side and leasing it out with a non-smoking policy for Section 8. The occupied side is a Section 8 smoker whose lease does not prohibit smoking. What, if anything, can I do about their smoking other than simply not renew their lease?