All Forum Posts by: Brett Pirie

@Joshua Hollandsworth that's great you found the spreadsheet!  If the numbers aren't working, try bringing down your offering price until the cash flow numbers look good for you.  I'm just getting started as well, so hopefully some more experienced investors will stop buy to offer their opinion.  I think Brandon talks about how he'll analyze 100 properties, put offers on 10, and have 1 accepted (I don't remember the exact numbers).  The point is, keep looking to find properties that meet your numbers.  

I'm using 5% vacancy, 5% maintenance/repairs, and 10% PM as well.  Those numbers are probably low, especially for an older building.  I've seen 8.3% (1 month) vacancy and 10% M/R used frequently.  

Would writing a business plan with detailed financials help in getting a commercial loan?  

We are just staring out and much of the smart advice is to start out with a smaller property before moving on to multi-family.  We didn't plan to start this way, but we found at a 5 unit place where the cash flow numbers are looking good.  We plan to house hack it for 1-2 years and then hold it.  We're learning as we go, just jumping into things and our first commercial loan application was denied.  We don't have a history for lenders to look at, so is there anything else we can do to improve our chances of being accepted?  Would lenders like to see a well written business plan with detailed financials?  

@Joshua Hollandsworth I agree with @Account Closed, there is a reason experienced investors suggest setting aside higher percentages, they have real world experience.  I've heard to always include property management in your cash flow because one day you may want to step away from self managing and it sure would be a problem if you hadn't planned ahead.  

Do some research on CapEx, it can be an issue with lower value houses. The cost of a new roof is a much higher percentage of rental income on lower value houses than higher ones. Using a CapEx percentage seems to be a good way to make a fist pass at analyzing the property to decide if further analysis is worth while. After that you may want to get a more accurate number. I found a spreadsheet on BP that lists out all the items in CapEx and their typical life spans, like roofs, exterior paint, refrigerators, stoves, etc.

@Jameson Sullivan I have a similar strategy as you, I'm using my wife's 40th birthday as the goal for financial independence which we define as passive income greater than our expenses.  We are counting the cash flow from rentals as passive income even though there will still be work involved in running them.  Visualizing not relying on someone else for a paycheck is what keeps me going.  

Listening to Tim Shiner's BP podcast gave me some ideas for intermediate goals and rewards.  He said that when he completed a certain number of deals he would allow himself to buy a Lamborghini.  I have zero interest in ever owning exotic sports cars, but I have found ways to implement this idea on a smaller scale.  Right now I'm planning big mountain bike trip this summer and need (really it's a want) some new bike parts.  The money is there (they're cheap parts), but I'm waiting until I put an offer in on our first property.  I'm stuck in analysis paralysis right now and hopefully this reward of some new bike parts will help get me over the hump.  

@Hiro Kitagawa I've been participating in the forums for my local area which are, fortunately, quite active with members who really know the area and like talking about it.  From time to time I poke around in the Multi-Family and Apartment Investing forum.  Some people are talking about big apartment buildings (100+ units) while others are talking about smaller deals (5+ units) which interest me more.  

@Hiro Kitagawa you're including everything that I can think of, but I'm just getting started as well.  Hopefully some more experienced users can jump in and give you some more detailed feedback.  

These are both great ideas.  Knowing who is funding projects helps you understand where the big players think the market is going.  I'll look for apartment owners association publications in my area.  

Could you elaborate on what they're trying to do to revitalize the city?  Are there certain industries that are being promoted?  I'm excited to begin investing in Troy with what I'm hearing about the downtown area and of course there will always be RPI.   

@Owen Halloran thanks for the real world example.  These are the kinds of numbers I was looking for to put in as a rough estimate on my cash flow spreadsheet.  

@Devan Mcclish thanks for sharing and providing a great easy to read summary of your analysis.  Great job on the win-win.  

As a newbie who was just turned down for a commercial loan on a 5 unit, this is what I need to read today.  My biggest takeaway is to not get hung up on purchase price, there are other ways to value a property, just make the numbers work!