All Forum Posts by: Account Closed

Jordan, thank you so much for that suggestion! I'll start calling banks today. My credit score is above 700 so that should help! The roof is flat and it's a rubber roof but it was also just recently replaced. Thank you guys! Getting quotes takes longer than finding properties. Lol

Good advice! A lot of places I've been reading have said use percentages which never made sense to me anyway. The property management company I would go with would do the snow removal as well. Thank you all for the help so far! Hopefully I'll have updated numbers soon to post! Any suggestions on creative ways to finance it? I was thinking about just trying to get a commercial loan. Any way to get a potential quote without hitting your credit score? Thanks, Jason

The rent on 1 of the units should definitely be increased as well and the average tenant is paying $525 and rentometer says for that area the rent should actually be $631. So even if I raised all the rents just $600 and got the larger unit up to what it should be, then my rental income would be: $3,100

I'll call those places and check for sure! Thank you so much! The management price was a quoted price from a company in my area. They charge 6% and then 1/2 a months rent to place a tenant. I'm going to the bank tomorrow to talk about financing options. Any other suggestions on financing 93k? Thank you, Jason

Good Afternoon!

I've been looking at a bunch properties and i think i've finally found one that would be a good first investment and i was wondering if the community at BP could help me out at all?

It's a 3 story, 5 unit apartment building. It's in the center of a small town that's growing.

The taxes seem really high, but it still seems to cash flow when i run my numbers. 

Question: How would I or could I appeal the taxes and get them lower?

I'm not sure if i'm missing anything else, so any advice would be great before I jump in...

Here are my figures (calculated monthly)

Purchase Price: $93,000.00

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Total Rent: $2,730.00

Insurance: $52.00

Property Management: $163.80

Capital Expenses: $273.00 (i just used a 10% estimate)

Maintenance: $136.50 (5% of Total Rent)

Vacancy: $163.80 (avg vacancy for the area is 6%)

Utilities: $448.25 (this number seems high, but i flesh out below where it's coming from)

Taxes: $593.95 (this seems really high and i'm wondering if there's a way to get it down.

Mortgage: $499.00 (93k @ 5% interest rate over 30 years)

Cash Flow: $399.70

Net Income - Mortgage: $898.70

Cap Rate: 12%

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It needs 1 new hot water heater, but he'll have that replaced before purchase.

1 unit is vacant, but again, it'll probably be filled before i purchase it.

There could definitely be some other repairs, but nothing major and just maintenance things that aren't urgent.

Utility Explanations

Monthly Utility Averages for 2017 YTD:

• Gas: $72.43 (for hot water only, no heating bills are paid)
• Electric: $39.31 (For common area lighting and circulating pumps on boilers)
• Water: $72.95
• Sewer/Refuse: $263.56 (Charged by the unit for refuse + usage for sewer portion)
• Total Monthly Utilities: $448.25

This seller also has other properties for sale that if this one works out, it might be a good way to grow my portfolio.

Some Property Pictures

Apartment 5 (only one I have pictures of right now but most are laid out the same)

So I'm new to investing. Posted a few questions to this forum before on things like explaining the brrr method and things like that. I've been searching for deals to get started in buy and hold... I came across a really good deal.. the catch.. it's almost a $1 million dollar investment. Good news is the seller is willing to do some sort of financing themselves like me putting in 20% and then financing the rest through them. But either way, for a new investor who doesn't have a lot of money to invest, where do I even start with finding $1 million dollars to invest? Should I try for a business loan? Maybe see if I can even get a $200k business loan? Either way, here are some more of the details: 8units + 4 lots Asking price: 950,000 Collective rent: $6,000 (but way under what it should be) There are also 4 lots on the property that can either be developed or sold separately. If I build them, then obviously that more initial capital I need, but ultimately more units I can rent. Thoughts? Thanks, Jason

That makes sense. Now can you do the BRRRR method without doing a rehab? For example if I just walk through an apartment, and everything looks good, tenants are already there, could I theoretically by the unit With someone else's money, don't rehab it, and in six months refinance?

so really you refinance up to what you've borrowed and put down. Not more than that necessarily? 

@Andrew Syrios I like that flipping the loan from yourself to yourself. That's a good way to put it. 

Once I'm by a computer I'll try and rework the example so it makes more actual sense based on all of your feedback. 

This is super helpful as I'm looking at properties!

Would you pass up on a traditional rental property to do a brrrr property or would you say that really comes down to preference?

@Jason D., yeah, in this scenario, if i took into the vacancy, cap x, i'd probably be under water on the cash flow. lol. but this is really neat. I really like the numbers and running comps so it's kind of like the math part of both scenarios that are neat!

So you would allot for a 65% ARV just to be on the safe side. That's a good tip!

Thank you all for your replies @Jason D. and @Chris Mason!

So for the refinancing side of it, they will literally cash out 75% of the ARV? I thought I was reading somewhere that it was 75% of the equity which doesn't make a lot of sense.

So in the scenario:

ARV: $175,000

Cash out: $131,250 (75% of ARV)

HML: $108,000

Cash in pocket: $23,250

Equity: $43,750

Now if I'm renting the place for $1,000/mo and their paying utilities..

Rent: $1,000

Mortgage: $665

Repairs: $100

Property Management: $60

Cash Flow: $175

So in this hypothetical scenario, I could walk away with $23,250 to reinvest and cash flow $175/mo?

Now I see why it's the best of both worlds! I though it was because you got to fix it up and rent it out (which seem like fun projects to me), but it's really because you cash out like you would on a flip and cash flow like you would on a rental.