All Forum Posts by: Jay Dewberry

Numbers look fairly decent on my end. The only changes I would do (IMO), is to up the CapEx to around 9%-11% and my repairs to 10%. I think I would also factor in Prop. Management (unless you plan on managing the units for eternity). Otherwise, looks sound. Good Luck and afterwards perhaps post in the success stories section so we can check out the final product.

What terms did you and the co-worker come up with with regards to the seller financing? Is the home priced below market? We would need a little more info to determine. Perhaps run the figures through the BP Rental Calculator also.

I think my concern is going to be that roof and any other major repairs that will need to come in the not-too-distant future. If it's in the budget, why not fix everything to minimize not only future problems with tenant, but liability if something terrible happens as a result of roof damage with a tenant. But who knows, as I'm not a general contractor/home inspector. I suppose you could do it without a new roof, but IMO I would put in a high CapEx budget...especially with the age of the property. Also, make sure you CAN refinance after 6 months. The banks may require a different time frame. Just thoughts.

Point taken @Tom S.. I just wanted to help @Russell Gronsky understand that it's possible to turn a unit quickly. My vacancy thought process included move-out, rehab, marketing (prior to and during rehab or course), screening, lease signing/walk-through and move in. However, perhaps it's different in different markets. Nevertheless, even with a 20yr commercial loan, it looks as though @Andrew Bosworth has a pretty decent deal.

Hi Justin. Congrats on the property. Have you tried the Hard Money Lenders section on BP? There's sure to be someone there.

Hi Brandon. Taxes are determine by the county assessor's office. If for some reason it's not on the Assessors page, try giving the county assessor a call, or drop by the office. Also try putting the words "qpublic" after your county name.

@Russell Gronsky The vacancy rate is just the time a particular unit is vacant during the year. It could be due to rehab, or change in market,ect. Ideally, an owner would want his vacancy rate as low as possible. There is no scientific number to calculate, however there are a few ways to get approximates...such as a local property management company, or perhaps asking another property owner in the same neighborhood. If an owner is providing a good property it is very realistic to have a property off the market for only 19 days to fix for the next tenant. Hope that helps.

Oh...just checked and that BP has a video on the subject

My first question would be are you responsible for any utilities? I also didn't see a budget for CapEx, which would be a very important oversight to correct IMO. Closing costs seem high, but perhaps there's a reason. I would also ask are you getting a discount for Property Mgt.? Seems a little low also. Nevertheless, what I did was factor in 10% for CapEx. I assumed $100/mo for water and financing at 20% down for 30 years @ 5%interest. My results are:

Monthly Income:
$4,200.00 Monthly Expenses:
$2,858.13 Monthly Cashflow:
$1,341.87 Pro Forma Cap Rate:
11.22% NOI:
$24,348.00 Total Cash Needed:
$89,000.00 Cash on Cash ROI:
18.09%

Based on these findings, IMO it looks as though you'll have a good deal at almost $200/door. Hope it all works out. 

Hi Luke. Did I read correctly...your monthly property taxes are only $21.30? Wow...if so, great. However, I'm getting slightly different results from yours. With the given figures I am showing the following:

Monthly Expenses: $726.37 

Monthly Cashflow: $273.63

NOI: $6,824.00

Total Cash Needed: $18,740.00

Cash on Cash ROI:17.52%

Either way, IF your figures are correct, then it appears that you have a deal. In my opinion, I would still up my repairs/maintenance. Make sure your rehab costs are correct also...a deal can be made or broken by being off on repairs. Just my thoughts. Good Luck.

Hi Eli. Do you have a particular property that you're trying to analyze? If you're (let's say) analyzing a multifamily residential unit such as a quadplex, the Homeowners Ins will cover the entire quad. Your best bet is to call around to get some estimates. Where I am, it would be closer to $75 depending on location. If using the BP Calculator, the Repairs and Maintenance are post rehab estimates, which may include...lets say...a broken window, or hole in the wall. The pre-rehab repairs are considered during the Purchase Price section. However to answer your question, many people use anywhere from 7%-12%.

With utilities, that will again depend on the property, how utilities are metered, and your local laws. 

Accounting/Legal fees are not usually considered in the calculator as it's not necessarily factored into if the property is a "deal" or not. Nevertheless, if you have approximate figures for Accounting/Legal, technically they can be added to other monthly expenses.

Lastly, investors typically consider various factors when determining if a deal is worthy or not. It depends on their investing strategy. For instance, commercial apartment investors may look for Cap Rate and IRR (Internal Rate of Return), whereas a multifamily residential investor may want to know ROI and Cash-on-Cash return. It just depends. Hope this helps.