All Forum Posts by: David Schulwitz

David Schulwitz has started 15 posts and replied 52 times.

Originally posted by Patrick McGowen:

I have not looked at Great Falls market specifically, but am familiar with Montana (Bozeman mostly). Your numbers look good to me. Two numbers might be low:

I would guess insurance to be 1200-1500. You can lower this with a higher deductible if you have cash reserves.

Your utilities could be closer to $3,000. Find out what renters pay and what is your responsibility and you should be able lock numbers down for what you are responsible (water/sewer, garbage, electricity…)

To have positive cash flow with no money down is awesome. Looks like you have about 300/month. Your cash on cash return is infinity! Here are my recommendations to you:

Lock down all these numbers before you close (the previous property manager should be able to get you costs on utilities for example). I would also get verification on actual rents collected over the last year. The two numbers that are most difficult to estimate are vacancy and repairs.

Repairs: You have good number, but get a good inspection to make sure there is not a lot of deferred maintenance.

Vacancy rates: You should be able to get historic vacancy rates from property manager. Also you can look at census data for Great Falls area for 2010 rental vacancy rates. In my opinion, the best hedge against vacancy is cash flow. An urban area like Great Falls you never have to have vacancy with a good property manager and willingness to reduce rents. So the real risk is what happens when you reduce rents. In my opinion, the best hedge against vacancy is cash flow. Right now it looks like you could reduce rents by $75/month/unit and hold the property indefinitely. Could you survive a 20% reduction in rent? If you had to drop rents from $1000/unit to $800/unit to keep them occupied, that would shift your +$300/mo to -$500/mo. Inflation will eventually catch your rents up, but you need to be able to survive potential down turns. My main point is, this looks like a good deal, but HAVE CASH RESERVES

Good luck

Thank you so much for the thorough response Patrick!! It's great to have someone also from Montana take a look at it since this is definitely not the most popular real estate investing market.

Totally agree on nailing down the utilities. I'm in the process of getting ahold of the actual data of what water has cost the property in the past. Also I'm almost sure that at least 3 of the 4 units pay their own gas & electricity. I will update my spreadsheet as I get more solid information.

Also agree on nailing down a more definite insurance premium. I'm actually planning on making some phone calls today to get some quotes.

How much do you like to keep in cash reserves? This will be my first purely investment property, but my initial idea was to have enough to cover 12 PITI mortgage payments.

Thanks again, and enjoy whatever autumn you may get down in Belgrade. Winter is quickly arriving!

Dave

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Link should work now, I just changed it to public access. Sorry for the hassle, new to Google Docs..

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Welcome Jonathan!

I'm also a veteran, great to see others on here. Very admirable ultimate goal you have. Keep on this website...the longer I'm here the more I learn!

Dave

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If this isn't working, does anyone have advice on how to post an excel spreadsheet?

I think it will work if you have a Google account and click on the link?

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Hello everyone,

I would greatly appreciate any feedback. I used the excel spreadsheet template from another thread in this deals section. I'm looking at making an offer on a 4-plex in Great Falls, Montana with my VA Veteran loan (0% down-payment, just funding fees).

To my naked eye, the property passes both the 1% rule, and the 50% rule, but I have zero experience. The rents are current contracts, not estimates.

Thank you ahead of time!

Google Docs:

https://docs.google.com/file/d/0Bxva3NMWFFo3RzYwRFZMT2NTMVU/edit?usp=sharing

JPEG Upload (hopefully you can zoom?)

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Hello everyone,

To my naked eye, the property passes both the 1% rule, and the 50% rule, but I have zero experience. The rents are current contracts, not estimates.

Thank you ahead of time!

https://docs.google.com/file/d/0Bxva3NMWFFo3RzYwRFZMT2NTMVU/edit?usp=sharing

Dave

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Welcome Noel! I'm pretty new as well. Do you have any investment deals under your belt yet?

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Welcome to BP! From my limited experience, I have also seen 50k being the minimum mortgage amount. Where in the country are these $9000 properties?

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Thank you so much for the reply Joel. You lost this novice here though: "a 10 cap at 60% costs is about 106,900 sales price." How did this math work out? Is a 10% cap rate a 'standard' I should shoot for?

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Hey BP! I took a walk-through of a 4-plex in my hometown in Michigan a few days ago, and I've started to crunch the numbers based simply on the expenses and income listed on the listing. I would of course have to have these confirmed, but here's what I'm working with so far. I'm not sure what "miscellaneous" is, but I would have to pay for lawn, snow, and common area electric.

Still learning how to calculate CAP rate and Cash-on-cash return.

What do you guys think of the deal? Thank you so much ahead of time. Let me know if you have any questions.

I apologize if it's hard to see. Trying to figure out the best way to imbed a spreadsheet...

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All Forum Posts by: David Schulwitz

David Schulwitz has started 15 posts and replied 52 times.

Post: Deal? Montana 4-plex

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