All Forum Posts by: David Spear

Hello,

Looking for any recommendations on property management in this area, thanks in advance!

After identifying my market, I flew out and started meeting with different REA's, contractors  and property managers. Now I have a solid team in place.

Congrats Matt but I am trying to understand your numbers a bit better. What did you calculate as a 1st year COC return? Did you include 5-10% maint, 5-10% capex, 5% Vacancy, 10% PM, $1.2k property tax, $1k insurance? With 10% down on a 30 yr note, I would guess about 3-4% COC return?

I purchased my first out of state property one year ago and have subsequently added 5 more. Generally speaking, I won't even consider a property unless I am hitting at least a 1% or higher Price/Rent ratio.

Update-Passed on the 6 plex and very happy that I did. I learned a lot along the way especially when it comes to commercial lenders. I ended up purchasing a duplex in cash with my 1031 equity and 2 SFR, with conventional loans. Combined, I'm seeing about $2k a month in pure cash flow.

HI Jaysen and thank you for the response.

1. A 6 unit apartment, all 1 bedroom 750 sf

2. Washer/dryer already n each unit. No garages or storage spaces to potentially increase the income.

3.the cap rates for this area seem to fall between 5-6%

4. I've spoken with quite a few lenders and bc it's more than 4 units, I can only go with the commercial loan route. 3.75% on a10 year note amortized over 20 years with a balloon payment at the end of 10 years. A 30 year would be great but I have not been able to find that on the commercial side.

5. This is a Midwest property

Noted on the vacancy #. "Other expense" covers water, trash, landscaping and cap ex(5%)

Im using 5% for maintenance  since it's a newer 2010 building.

I think there is more margin on rents here based on some of the comps, definitely possible to hit $750 per unit with full occupancy but I want to be conservative and base everything off of the actual rental income. Thanks for your insight on this deal...

10y/20y amortization loan with a balloon payment after 10 years. 3.75%

5k closing costs, 3k in repairs

I've had good success following the 1% rule on my sfh properties and am seeing good $$ flow (8-10% 1st year coc return on a 15 yr note) but I have not done a very good job analyzing properly my first commercial property.

Price is 480k and these numbers are accurate with full occupancy. The only variable in this is that the gross rents could probably come up to about $4200. This commercial property does not currently meet 50% rule. I made the mistake of running the initial numbers based off of downpayment of 57% from a 1031 exchange in which case it cash flows $735/month at full occupancy but even in this scenario 1st year coc return is 3.14% Clearly,  I do not want to overpay for this property and give up my hard won 1031 equity. What do you think its worth based off these numbers? Thanks!

@Blake Lennon @Will Fraser

Please send me the names of the Real Estate Attorneys as well, thank you.

Hello Kara, I am also from California and about to go into contract on my first OKC property as well and also under 80k. This is some useful information, thanks.