All Forum Posts by: Mike Terry

As for light reno and upgrades I think there is room for improvement in rents there.

Hi Luke,

Great questions. Finance, I don’t have that kind of cash lying around. I have no idea on appreciation. I suspect it could be steady, at least national average, but economic conditions are changing all the time and I see headwinds for all RE appreciation. I am only calculating for cash flow.

Steady employment

diverse economy, not relying on a single industry

low acquisition costs, high rents price to rent ratio

low taxes, landlord friendly (red states)

low risk of natural disasters (low insurance costs)

net in migration

high house hold income

good schools

low crime

good public transportation

well designed urban plan

access to amenities (starbucks, restraunts, nigh life, culture, hospitals)

I came across a portfolio of 7 duplexes.  Please let me know what you think? 

Description:

• 7 duplexes, 2/2 with 1 car attached garage (one with no garage)
• built in 2001
• B+ class neighborhood, steady rental a lot of multifamily in the area
• all on the same cul-de-sac
• wood frame, 2 story, vinyl siding
• taxes $3144 yearly
• insurance $800 yearly
• tenants pay water and electric (electric heat)
• currently fully leased
• Amateur property management, one tenant manages property

Back of the napkin calculations:
Net Operating Expenses (Per duplex per month):

Taxes: 262Capital expenditures: 100

Property Management: 170

vacancy: 85

insurance: 66

Total Expenses: 923 (11,076 yearly)

Gross Rents: 1700 (20,400 yearly)

NOI: 777 (9324 yearly)

asking price: 185000

cap rate: 5%

ARV is 270k, rehab budget 55k

Investment Info:

Single-family residence fix & flip investment in Port Charlotte.

Purchase price: $125,000
Cash invested: $50,000

Contributors:
Cliff Terry

Purchased from a wholesaler with partner . Brought in a cash investor for rehab and downpayment. Private lender for the balance. Needs a complete rehab inside including repipe, floors, 2 baths, kitchen, AC, trim and doors. Outside pool resurface and new equipment.

What made you interested in investing in this type of deal?

Brought to our attention by a wholesaler. WE have done a similar home in similar neighborhood and it has been aour bet deal so far.

How did you find this deal and how did you negotiate it?

wholesaler

How did you finance this deal?

Purchase with equity in our company from Self directed IRA

How did you add value to the deal?

Complete rehad

What was the outcome?

In Progress

Replace water heaters for sure,  You are refinancing soon and can get some money back.  I would check with your lender/appraiser to see what impact new furnaces and water heaters will have on value and cash out at refinance.

Baseball: pitch selection is so important.  When you see one you like you have to swing.

I am sure we will get together when Covid numbers are more under control. In the meantime I’m always looking to network. This group is responsible for most of my deals in the last three years.

I'm flipping in Cape Coral and our forecast is for continued growth and high demand from northerners fleeing high tax states.  Most of our end buyers are from midwest (Illinois in particular).  My primary residence is in X flood zone and it is waterfront property (flood is not required and is $400 if you opt for the extra coverage).  You can find homes that are not in flood zones.  Rental demand is high, rents continue to rise.  It is hard to find properties that meet the 1% rule because demand is so high in the sub 250k price range for owner occupants.  IF you are in for the long term 10 plus years it's a good bet.  Good luck and please feel free to reach out if I can be of any help.

sincerely,

MT