All Forum Posts by: Jesse Glatz

@Andrew Freed the address for this particular property is 2318 Rosalee St La Marque, TX 77568.

https://www.har.com/homedetail/2318-rosalee-st-galveston-tx-77568/15160521?cid=jesseg

I don't have a link, I have an excel spread sheet I got from another member that took the BP one and created it here. The mortgage payment was derived simply by taking a 80% LTV at 4% over 30 years. I did that to avoid the PMI, if I do anything less than the 20%, the PMI is about $850 a month. Property insurance is a crap shoot for me, I have no idea how to estimate that.

Maybe this link will work. https://www.biggerpockets.com/...

How do I ensure the mortgage payment and property insurance amount is correct in the monthly expenses section? Can someone let me know their thoughts on this analysis? Is there a simple formula you would use to determine your monthly payment and property insurance? So far, all the deals I am analyzing seem to be extremely low cash flow, very low CoC return or both and I feel that I may be inflating these 2 costs. I can easily pull taxes, adjust PMI based on if I decide to put 20% down or not and other fees are pretty explanatory but if I try to get the desired $100 per door net on multi-family and at least an 8% CoC return, it seems I am very much lowballing the purchase price and gutting expenses to nothing. Something can't be right.

I don't think your getting too emotionally attached, your running the numbers and that is what it is all about, run the numbers and if they don't work, no go.

If you are going to self manage, then that will increase your net income, and your CoC, so win win! Just be sure to pay yourself a market rate. I've heard Brandon say, my time is worth something, it sucks to be crawling around fixing leaky pipes etc working for free becasue if your fixing broken things, making monthly property check-ups, etc, then guess what you are not doing? Generating leads and looking for the next deal. But again, just starting out, you may want to try it to create more net income and CoC, let it get going, then look for the next one. Trust me, I get it. I have 5 SFR rentals and I self manage still to this day and what I have come to realize is, I don't want all the calls anymore, its time to let someone else manage so I can keep looking for deals. This is going to be the year I 1031 all of them and invest in a minimum 1M or more building and have it professionally managed so I can keep looking for deals.

I say if you are going to self manage, get the seller down on the asking price then you should be good to go as far as NOI and CoC. Also be sure to keep good records so you can write off all your expenses. Mileage, fuel, etc.

Its exciting to get into the rental portfolio business but like most successful investors know, you aim for an at least an 8% CoC return to stay even competitive with the general market return such as stocks, mutual funds, etc . 8% is considered a base hit, 10-12% is a home run and 15% or more is a grand slam. For your first one, I would really try to aim for 8% CoC minimum. Try reducing down payment, I know it will add PMI to the loan but again, rental income will pay that fee as long as you stay consistent with the $100 per door for SFR and $200 per door for MF scenarios meaing you would need to net $400 per month. Also look for other ways to add income such as a storage building, laundry, etc. You could even offer services such as lawn service, cleaning etc and tack on a bit to those charges. For instance, I have a lady that cleans all mine, charges me a reduced fee for multiple units but I charge a bit more on rent on each one for that service, increasing my net income. It works out so I am even making a slight bit on the cleaning fees.

But look for at least an 8% CoC return, at least $100 Net Income after all expenses per SFR and $200 Net income on multi family. $345 has a good return but if its not 8% CoC, I'd rather invest in the markets and do nothing and earn a higher yield. Sounds simple enough, but make sure you use the rental calculators on BP to adjust the sliders and play with the numbers to make it work.

Remember, every deal is a good deal. Every deal has a certain number that will make it a good deal, you just have to try to get to that number. Either reduce the down payment which would in turn decrease your net income (not as desirable) or decrease the purchase price which in turn decreases loan amount and decreases monthly debt service and doesn't effect rental income at all.

View report

I have no idea how to ensure the mortgage payment or insurance amount is correct. Can someone let me know their thoughts on this analysis? I can't imagine I would go get numerous approvals for a loan every time I analyze a deal. 

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $90,000
Cash invested: $20,000

SFR purchased in 2013. 3 bed, 2 bath, 2 car detached garage, 1,250 sq. ft. Cosmetic fixer/updater. Purchased for $90,000 using a 30 yr conv. loan for 5.5% APR with 20% down to avoid PMI and paid my share of closing costs. Home has an ARV now in our market for approx $150k. Monthly rent is $1,500 and current tenant has been there for 5 years. Monthly mortgage which includes taxes, insurance and wind/hail policy which is required on a loan in a coastal county is $943/mo.

What made you interested in investing in this type of deal?

Cheap investment, area was poised for growth and is continuing to grow.

How did you find this deal and how did you negotiate it?

MLS, the agent that I used to buy my primary residence was the agent selling the home.

How did you finance this deal?

30 Year, Conventional, 5.5% APR through local Credit Union. Back then whatever interest rate you qualified for, the credit union added 1% for it being an investment and not your primary residence. I have yet to refinance as I changed careers in mid 2018 to an independent contractor and have to wait for the 2 full years of tax returns to qualify.

How did you add value to the deal?

Cosmetic fixes, minor updating like fixtures, paint, flooring, overhead garage door and opener, fully fenced back and side yards.

What was the outcome?

It has been steadily rented since the first tenant. First tenant gave 30 day notice upon lease expiration and new tenant was found quickly, no down time except a week to clean and prep. Second tenant also gave notice but had another family member lined up to rent and those tenants have been there 5 years and have no plans to move and have expressed interest in buying the home when I do sell. Well....sell as in 1031 exchange!

Lessons learned? Challenges?

Great first investment. Low initial investment, low sales price, good area, high resale value as a 3/2/2 in our area, easily maintainable.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

TDECU is the credit union I use to finance all my deals so far. As in any credit union, low rates, plenty of options, utilize loan, insurance, online banking, etc all in one place.