All Forum Posts by: Jibu V.

RUBS is the cost-effective alternative to sub metering. 

If they complain about things that have nothing to do with safety or cleanliness during the showing, then they’ll complain about every little thing after they move in. Steer clear - there are plenty of other deserving tenants standing by. 

If they have renter’s insurance, the spoiled food is something that should be covered under their policy. This further removes the question of whether the landlord should cover it.  I always require renter’s insurance and most people are fine with obtaining it because it’s relatively inexpensive. 

@Remberto Teos The goal of the BRRRR method is to pull out most of your capital at the end so that you can recycle it. In this case, you are still leaving $40K in the deal. If you didn't refinance at the end, you'd leave $61K in the deal - not much of a difference there and you are still leaving a large chunk in the deal even if you refinance.

In terms of cashflow, it appears that you are missing real estate taxes and insurance from the expense listing. Further, you'd be better off increasing your vacancy and repairs %s to 7-10%. When you make these changes, it is unlikely that you will still cashflow positive on this deal.

This would not be a deal in my view. Hope this helps.

@Henry Lazerow

They can write “For Deposit Only” on the back instead, along with the account number.

@Tak Ogihara

What are you including for $5K repairs? That seems very low. Usually budget a minimum of $10K for just paint/flooring, but usually more needs to be done. As well, as @Grant Thompson mentioned, I'd double check comps to confirm that ARV.

Homeowners insurance is likely to be higher than $50/mo (more like $75-100) - did you confirm with an agent?

Your expenses are missing a property management fee (usually 10%), which you should factor in even if you are not planning to use property management right now (you may someday). 

For vacancy, I'd stick with 8-10% as 5% is relatively low.

Are the real estate taxes really only $2,200? That seems low for New Jersey from what I've seen, but maybe they are much lower in south Jersey?

Your refinance - why is the loan only $119,200 when your ARV is $230K? Couldn't you get up to $170-180K (if 75% LTV)? Also, your 2.99% interest rate is unlikely for an investment property loan. I'd budget for at least 4%.

@Demetrius Lindsey 

Here is my feedback on the analysis:

1. What are your expected repairs for $10K? 

2. For expenses, you are missing insurance and management fee (typically 10%).

3. Vacancy factor seems low. I typically see 7-10% reserved for this. 

4. CapEx also seems low. I typically see 8-10% reserved for this.

The post-refi cash flow & CoC look good. Are the real estate taxes really only $660/year? Also, you budgeted $1,620 for insurance, but you said you factored in $1,000/year for flood insurance. Did you speak to an insurance agent to know whether that seems reasonable or too low for this property? Also, did you speak with a lender to confirm that said you can cash-out refi at 80% LTV (as your report shows)?

Regarding your concern about the area, in your shoes, I would speak to 2 or 3 property managers about the property, area, market rent, and whether they themselves would want to manage a property in this area.

Congratulations @Simone Johnson! Those are amazing numbers. Regarding the decision to sell vs. rent, as an alternative to selling, did you consider doing a cash-out refinance in order to pull out the equity in excess of what you had into it? Based on the numbers, you should have been able to pull out at least $130-140K, free of taxes and selling costs. 

@Troy Sheets

Looks awesome. Love the rooftop deck. Could you share your numbers on this?