All Forum Posts by: Gavin Delmas

@Eva Salas

Thanks Eva. Ya over here in Bishop the CAP Rates seem to be on the lower end..... The more I'm looking at this deal the more it is starting to make sense. Thanks for your help and input!!

@Marc A.

Thanks Marc for looking at the deal and giving your input.  The more I adjust my numbers the better it is starting to look.

@Curt Davis 

Thanks for your input.  Yes I am in a little bit of a quandary over what to do.  The small town I live in seems to not produce much cash flow on investments.  There is not an abundance of properties to pick from and a lot of owners  seem to think their properties are worth more than they are.  So I may have to sit back and wait to see if better deals come available.  Right now this is the best deal I have seen so far.

Here is the down and dirty of my first deal that has landed in front of me.  My Father in Law purchased a Condo for $145,000 two years ago.  The condos in the complex are now selling for $165,000 in much worse condition.  Since he knows my wife and I are trying to break into real Estate Investing he has offered to sell us the condo for $123,500 and is going to consider it as an early inheritance.  He does not want to do seller financing so I will have to do a conventional loan with 25% down at a 4.17% interest rate which would make the loan amount for $92,625.  Currently the condo rents for $950.00 which is way below what he could be getting for it.  My friend who manages some of the condos says I could get $1200 for rent at the top end and $1100 for sure.

The break down is this:

HOA 200.00

Insurance 30

Vacancy 7%

Maintenace & Repair 7%

CAP/EX 7%

Taxes $1500 Annually

Getting $1200 a month in rent would produce $141.67 cash flow a month making it a 5.76% Cap Rate and a 4.88% cash on cash return. However at the $950 a month rent it would be -55.83 cash flow. I don't know how to look at this? the Cash on Cash return is not good but we are basically getting $40,000 in equity given to us. I used the 7% rates instead of 10% because there is a HOA involved that I am assuming will have some of the stuff covered. Any help on how to view this purchase and whether or not my numbers are right would be greatly appreciated. Is this something you would do? Am I missing anything? Thanks!

Being new to all of this I am having trouble determining what percentages to use for Maintenance & Repair/CapEx to arrive at a monthly cash flow figure? Is there a default percentage I should be using when calculating or is it a case by case basis? If it is a case by case basis how do I go about determining what those percentages should be? Thanks in advance.

Can anyone point me in the direction of how to determine what percentages to use for the Maintenance & Repair and the CapEx features on the Rental Properties Calculator? Is there a default percentage I should be using when calculating for a specific piece of property or is it a case by case basis? If it is a case by case basis how do I go about determining what those percentages should be? Thanks in advance.

Tommy thank you for making me think here.  I'm very new and trying to process it all.  Since she didn't provide a potential offer number I just figured for starters I would see what the 2% rule was in reverse, so I divided $5004 by 2% and that arrives at $250,200.  I then plugged that info into the rental calculator on this site along with the other info she provided and it pops out negative cash flow.  Maybe I am inputting things wrong or going about it wrong.

I might be completely off here but with the numbers given I don't think this property will cash flow even using the 2 percent rule if you are doing a conventional 25% down....? It appears you are using 15% for repairs and maintenance,10% for vacancy, and 10% for PM. I calculated in 10% for CapEx. When calculated using the 2% rule you get a purchase price of $250,000, plug that into the calculator with the above percentages and the rest of the expenses you stated and you are still -133.00. Maybe I royally messed something up here and if I did please let me know so I can learn. I am new to all this after all......

Thanks Kyle,

Ya I am looking forward to all the information, there is a lot to absorb.  I am working my way through the book now.

Hello Everyone,

My name is Gavin and I am from Bishop, CA which resides on the eastside of the Sierra Nevada's.  While I live in Bishop my career is actually located in Southern CA as a Firefighter.  I am brand new to Real Estate Investing.  I have always had an interest in Real Estate and now find myself at a point in my life that I am able to begin pursing this dream.  I am currently looking to invest in the Bishop and Reno, NV areas.  I look forward to connecting with you all!