All Forum Posts by: Jay Dewberry

Welcome to BP Tony. If you get a chance come on out to some of the REIA meetups in Atlanta. Two popular ones are Atlanta REIA and GA REIA. These also have sub-chapters that meet as well. Many times it's a good place to network and learn about the market. Good luck and hope to see you there.

Stanley. You man want to elaborate on what you're trying to accomplish. If you're in need of estimates for a particular property that you're trying to acquire, perhaps taking a General Contractor with you to get some estimates. If you just want to do it on your own, a Bigger Pockets book that's highly referred here is J. Scott's Book on Estimating Rehab Costs. It's sold together with the Book on Flipping Houses. Perhaps those can give you an idea of how to get the best estimates.

Hi Sivarajasekaran. Welcome to BP and congrats on your purchase. From my initial look, I didn’t see a budget for things such as Repairs(future), Capital Expenditures, Vacancy(future), and Property Management. You may find that when you factor these items into your analysis, your cashflow will be lower than $360/mo, and possibly negative in some cases. I would factor those in because sooner or later they will become an issue. Other than that, I don’t see any issues with your numbers. Good Luck.

Grant. I'm curious as to how you would be financing the deal. I ask as it may be difficult to get a traditional loan for under 50k. How much work is needed to bring the unit up to market? What's the ARV? When you take in consideration Capital Expenditures and that you will be covering all utilities, the overall financial picture may be less than your initial analysis. On the surface, having $1380 in income seems pretty good. But when compared to long-term expenses (coming from a much older property), it may drastically lower cashflow … even put you with negative cashflow. Not saying it's a bad deal. Just saying make sure to have your exit strategies in place with relation to your investment goal(s). Just thoughts. Either way good luck.

Wait...I just noticed something. All eight units rented at $625/unit is $60k gross annually. Are you sure your getting $59k+ in expenses?

Hi Jason. Welcome to BP. I will defer to the knowledge of more seasoned investors on this. However, going off of your numbers, this does not look like a good deal. My concerns:

• 1)Expenses. If those numbers are monthly, the repair, insurance, water/sewer/garbage budget seems low.
• 2)Analysis. Not factoring in Vacancy, CapEx, and Property Mgmt(regardless of if self-mgmt) is a mistake and can put your investment very much so in the negative. BTW, the costs associated with sub-metering the units could be expensive, as well. Check with a contractor.
• 3)Owner/Analysis. I’ve always heard the term “Trust…But verify”. The owner’s figures could come from anywhere…even on just running 4 units. I would call and verify the highs/lows per annum to get an idea for the water. Call the local garbage for the monthly’s there. Call insurance companies to get a general quote for rates on the eight units. Boost repairs figures. Verify rent rolls.
• 4)Which leads me to the question of the general condition of both units. I understand four have been renovated, however, have you gotten quotes on the other four? How’s the roof, HVAC, electrical, ect? These will cost big bucks if needing to replaced sooner than later.

I understand there’s demand in your market, and it can be exciting to acquire your first property, but take emotion out of the equation and focus on the numbers. Perhaps other investors can offer suggestions to get this to be a profitable investment, however from my limited knowledge, I couldn’t, in good faith, sign on to this. Just my two cents. Either way good luck.

Hi Johnathan. From my initial thoughts, your numbers seem pretty solid. My only thought would be to up the CapEx and get a couple of GC's in there to give you some estimates. An older property like that would tend to make me a little nervous on repairs...never know what you'll find. Also I noticed AC units in the windows. Out of curiosity, would you be required to upgrade that to a Central HVAC in your state for rentals? Nevertheless, good luck and keep us posted.

Hi Shaun. Welcome to BP. To determine if saving for a bigger deal would be better for you would depend on your investment goals and strategies. Perhaps if you found a great deal, you may not have to use much of your savings to get a cashflowing investment. What types of properties are you interested in? MultiFam's, SFH, Condos, Land, ect. Have you had a chance to frequent some of the local REIA meetings? Networking with other investor friendly professionals could be a great way to get a feel for the market you want to be in. Either way, having $20K can be a great thing for your first investment. Just make sure to run the analysis to make sure the numbers work. Good Luck.

Hi Tim. The asking price should be based (at least somewhat) on the amount of rehab work that it will take to get the property in move-in condition. If you're using the ARV as a guide, perhaps take the ARV and subtract the estimated rehab work, then subtract estimated closing costs. This will give you a ballpark reference point to begin with. As for doing the rehab yourself, I guess it depends on your level of workmanship. If you have the background for rehab work, I don't see a problem with getting it done yourself and saving a few bucks, which would help your overall bottom line. Just my thoughts…good luck.

When investing, I've found that you've got to take emotion out of the deal. If the numbers work for your particular strategy, go for it. Otherwise, one has to be able to walk away from the deal. As far as I know, there is no "acceptable ratio of negative equity to cashflow". The question is, and should be, does the numbers work based on my investment goals/strategy. If you've crunched the numbers and after all foreseeable expenses you're cashflowing $800+ per month, then the negative equity is not a big deal. On the other hand, if you feel you will need to sell this property in the foreseeable future for any given reason, that negative equity is going to be a problem.