All Forum Posts by: Blake Garcia

Just for ball park in my area I run around a 32-35% expense ratio. That excludes major remodels and improvements, but does cover my basic maintenance and day to day. Insurance gets cheaper the bigger you get. Definitely find an independent agent that will truly shop it. I went from 17k to 14k on mine this year by shopping it with same limits. You will find patterns in your area in similar properties. In my portfolio and management style my expense is $1900 per unit per year including all but remodels. This will help ball park your numbers.

I stuck 20k in remodel. That could be any mix of maintenance items or upgrades as you see fit. It may not all show up in 1 year but it will eventually. I highly recommend maintaining HVAC, plumbing, and electrical outlets. When something does go wrong a ceiling it out, fix anything within reach!!!!

I had no idea when I bought my first apartment how cool it was that I had a large dumpster for each building, but it was split and billed to each apt separately. This week is my 3 year mark on the first 16 apts I bought and I've accidentally saved right around $6000.

$10 x 16 apts x 36 months = $5760

Adding my other 8 plex of 2 years $1920 tha'ts a total of $7680

Look around and see where you can save. It could make your 8 cap a 9. 

Run like the wind

I show a Gross income of $925 per unit from rentometer. $88,800 annual income from 8 units

Management 6% $5328

Vacancy 6% $5328

$4000 insurance (500 per unit)

That leaves taxes, maintenance 

At asking price with 20% down financing of 80% at 6% 20 year note would be $13,182 a month, $158,188 per year

A bank would probably approve a note in the $750k range purchase price with a 1.05 debt coverage

@Jason Allen

I totally agree. Yes ducts and sizing should be reasonably similar. Not doubling from a 3 to a 5 on same property. Just suggesting in my area most properties are not well insulated and most original units are borderline by todays standards.

I should clarrify, i was just comparing the price of a retail vs a discounted unit ive recently purchased.

@Jeremy Cox

I would price out any services by a partner at a reasonably fair market price. If it's visiting to manage the manager, check in on the project, any team building. Even with a manager, there will be approvals needed. Phone calls and emails can add up quickly during a remodel. Compensation for visits if necessary. I self manage using buildium, but it still takes about 2 hours a week just to balance books and oversee things.

House, Apt, Etc Listed with pics Beds, Baths, Size Listed, No Pets

How many beds?

How many baths?

I only have 2 dogs

Assuming you are long term holding and you're providing down payment, I would suggest a stair step approach. 

 Maybe an 80/20 split until initial down payment is returned to you through either rent or refi. Then 50/50. 

If there is more management on his end through construction or setup I'd give market rate credit toward the equity.

Any accountant can just change the income split annually with whatever you tell them.

Be upfront about income, credit, minimums and criteria in listing or when speaking about property. I pre-qualify people before even showing. If they know the guidelines and apply anyways they should not be surprised. Stick to your guns on policy

If you are upgrading HVAC and have a relationship with installer or distributor be sure to ask if they have any scratch and dent. I got a 5 ton for $2500 and installed for another $600. It had a bad compressor, but was still covered by warranty.

My last 3 ton I purchased in a pinch was $5000 installed.

Similar to washer and dryers, the majority are all made by the same few companies and just branded differently. People will never treat a unit as there own, because it's not theirs. I usually end up with a Goodman or similar with no issues.

Also, sometimes larger units are cheaper because they are overlooked by everyone chasing the "correct size"

@Erin Butler

My bank will lend or refi at 85%. I definitely recommend getting a good local bank relationship. 

I did this one year, I bought 1 on a line of credit

Refi

Bought next with the cash and credit

Refi

In 9 months I turned a line of credit into 4 houses, 3 mortgages, and a full line of credit. 

I do caution that if you ever brrrrrrrrrrrrrrrrr this repetitively, you may be in a pinch if you ever sell any, but the last too quick. 

All of my equity ended in the last house and each of the other had 15% equity because of stripping it to the next. There has to be some debt pay down at some point if you intend to sell individually.  If holding, it is a very powerful system.