All Forum Posts by: David A Lisowski

One thing I don't understand about the commercial listing is that the agent lists the Cap Rate as 25%...

So he's saying this property generates $24,975 annually?

So 4 units, is $6,243.75 per unit per year. Which is $520.31 per unit per month.

Would a 5 year plan is to improve property and tenant occupancy, and increase rent to $600+ per unit be feasible?

I'm more just wanting to find any mistakes in my thinking or analysis or any blind spots.

Ok. So for example, starting with the SFH.

Offer: $89,900 (looks like it's now pending anyway)

Finances:

20% down = $17,980

Closing cost = $2,500

Total = $20,480

Monthly: (4.5%, $71,920 loan)

P&I = $291.53

HOI = $50

RE Tax = $86.81

City Tax = $25

Total = $453.34 monthly

Quick search on rents, have 1/1 around $695. Since this is a SFH instead of an apartment or studio, might be able to charge a little more.

Vacancy = 5%

Capital expenditures and reserves. And would need a property manager.

So, if annual rent is $8,400, and there are $5,440 in known costs. Then factor in the vacancy and reserves and property manager, then is little left.

Even if it's, 5% vacancy, 5% reserves/cap. expenditures, and 5% manager (which is unlikely), it nets $1,700 annually (15% of $8,400 = $1,260). 8,400 - 1,260 = 7,140 - 5,440 = $1,700

Bumping the PM to 10%, I'm getting, $1,280.

Am I missing something in this analysis?

1,280/20,480 = 0.0625

1,280/ (20,480+2,570 [first year of interest]) = 0.0555

Of course, this is a remote analysis... for practice. I don't think I've ever been to Covington, KY.

Anyone want to help me do some analysis on two different properties?

One is a commercial (apartment building). I have 1 year as a loan processor in a commercial bank so I am somewhat familiar with the terminology and the analysis, but I'd like some help.

http://www.loopnet.com/Listing/21808235

Second, is a small single family which would be purchased as an investment. But more or less as practice in analysis.

https://b1iw.app.link/Z0968V7nOcb

I hope it's okay to post links...

And I guess I should say that we aren't necessarily in a position to make deals, st the moment, but if someone gets a deal from this, then all the better.

@Logan Sherwin

Debt to Income is a ratio. So not necessarily a 1:1 correspondence between the benefits.

In some instances, lowering your monthly debt will have a bigger impact on your qualifications (on paper) in terms of DTI. Sometimes, your increase in income will be a better benefit to DTI.

I don't have specifics at the moment, but you can calculate DTI easily...

I guess my point is that most people can control their debt load easier than increasing income.

Typically, student loans will count as 1% of the balance as the monthly payment (unless you can provide a fully amortized payment plan). Depending on the balances of the student loans, that can eat up your qualifying income pretty quickly. Then again, paying off a $20,000 or $50,000 loan can seem like a mountain especially when you want to "save" to invest.

Generate wealth by purchasing assets to put your money to work. No one gets ahead by saving (not in the traditional sense).

Tap into equity to leverage "hidden" savings to really give a boost.

Hopefully, this helps. I feel like I'm rambling...

@Michelle Belinfante

There are a bunch of services that can forward to a specific number like Google Voice... I don't have any others to recommend. I think texting and email are equally as important as a voice line so some free services might not offer those options.

I also like Slydial for outgoing calls. It dials direct to voice-mail, and there are options for group calls. I think they also have a messaging/texting option.

I don't know if I'd get a "business line" with my cell provider. And certainly wouldn't get a top-end phone.

Just my thoughts. Hope it helps.

@Edgardo Lecona

Are you living in one of the units as your primary?

Is the property 4 or less units?

Are you using the rental income from the other units to qualify?

Then next would be to check the loan limits for FHA.

Not sure if I'm helping out much.

And sure FHA can be an option for people with a low credit score, but that doesn't mean it's only for people with low credit scores.

I suppose you already have your reasons for wanting to go with FHA versus other financing options and that's fine. I think the lenders aren't fully grasping the picture.

@Henry Lazerow

Short answer: yes

Long answer: shirts can have long sleeves

But my opinion is probably not representative of a broader, mainstream opinion.

@Courtney Buck

My wife and I purchased a vacation rental in 2018 and decided to move here permanently in May. Currently working for a local lender, but I'd love to get started with some real estate investment, real estate development, or just a group of like-minded folks!

There is tons of potential in and around 30A. I'm just overwhelmed with where to even start!

@Jeffrey De Los Santos

Do you have cash flow on this property? Is there a lease in place or a tenant?

Most banks and lenders will want 2 years income either S/E or W2. 2 years as landlord filed on tax returns.

I'd say like most others, you are going to need to sell or look for some partners to jump in with financing.

@Ryan Guffey

I feel the same! How can I find time for this stuff when I'm already working for someone else?

I'm no expert and I'm "just starting." My wife and I bought a vacation rental, and made out okay. This year threw everything around so we ended up moving into our rental and selling our home.

I feel like we are back to the beginning. So how can I find deals, or get financing, or manage a property if I'm working for someone else?

Well, the first place it with a goal. A S.M.A.R.T. goal. Make it specific, measurable, achievable, relevant, and time-bound.

If your first goal is education. Start there.

If your first goal is financing. Start there.

We made goals for acquiring our first duplex within 1 year, a goal of paying off our mortgage in 7 years, a goal of generating passive rental income, just to name a few.

Be specific and stick to it. Adjust your plan if you aren't on target. And revisit the goals often to cmsee if you are on track!

Hopefully this helps!