All Forum Posts by: Doug Shapiro

Hi @Denis Davidyuk,

You should just use this as a percent for PM.  Most people typically just use 10% of rent, but you can use the 8.33% as well.  

Thanks!

Hi @Joe Prins,

It looks like a good deal to me. I personally would adjust the numbers a bit - the vacancy is low (use 8%), CapEx is low (use 10%), and management is low unless you are planning on doing all of that work. Listing descriptions always inflate how good a property really is. Only because vacancy has been close to 0% for the past 3 years, it doesn't mean it will stay that way. For each tenant that ends up moving out, there will be some vacancy and expenses with fixing things in the unit, painting, cleaning, new locks, etc.

Hi @Bria Johnson,

It doesn't sound like a good deal. Let's just say that you can get $83 of cash flow/month.  You pay $60k (20% down payment), and get back $1,000/year.  That is about a 1.6% return on your investment each year, which is quite low. 

Hi @John Mann,

I would pass on this deal.  It is a great deal for your friend.  He lends you 90k, and you pay him about $7,200/year.  That is a nice 8% return for him.  

For you, although you buy the place with just $1,000 out of pocket, you'll probably end up losing at least $1,000/year. The numbers just don't look that great. Your vacancy is low and CapEx is low. If you are not going to be managing the property and renting it out, then there is another 10%/month going towards management fees.

Hi @Kevin Brenner,

That is a great idea that I am always thinking about as well.  Keys are annoying to keep track of, and it becomes a problem the moment you get a little disorganized.  I've had a great experience with August smart locks.  I have no affiliation with them.  

The one I bought uses bluetooth and still works to this day (about 2 years after installing).  If anyone needs access, I just add their phone # (they receive a link to download app) and they can unlock the door.  It also gives info on who enters/exits the place and still allows a key to be used as a backup.  

Word of caution - you have to be precise with installing the lock so that when the door closes, the electronic lock mechanism can lock the door with no friction.  Once you have everything aligned correctly then you are good to go. 

Hi @Maria G.,

I agree.  I am not familiar with Elk Grove, but typically you want to sign leases as a landlord in the 'hot' months, from April - October and to avoid signing leases in the winter months, from November - March.  Ending a lease in the winter months is terrible as a landlord because market rent at that time is typically lower and you'll lose a lot for the entirety of the lease.  

In Manhattan, New York, where I currently am, rental prices are about 15-20% cheaper in the winter months.  If any lease does start in a winter month, it is in the landlord's best interest to have a 16 month or 18 month lease (any lease term that will get them back on the normal cycle).

Hi @Sean Jany,

Those numbers look amazing. Noticed that you did not have management expense - will you be renting out/managing the properties on your own in the future?  If not typical management expense is about 10%/month.  

@Melissa Man,

From the top navigation, hover over "Tools" and you will see calculators on the left.  Here is the buy and hold calculator.

Hi @Shane W. Chapin,

Assuming you are not going to be using a property management company?  Your numbers look really good. 

As for raising rent - that would have to be done at the end of the lease.

Hi @Jonathan Barreneche,

Your CapEx may be a little low. This number varies significantly from condo to multi-unit home. For single family home I typically use 10%, and for condo I use 2% (in case there is a special assessment). Everything else looks good to me.