All Forum Posts by: Jimmy Hung

Hi BP Members!

I'm looking to invest in Oxford, MS because the crime rate is low and the schools are great. My only concern is the vacancy rate that I see on neighborhood scout which is: 30%. This concerns me because I don't think anyone would want to own a property that sits vacant 4 months of the year. For those who are investors there, is this number accurate? What are your thoughts on this?

@Jason Bott

Thanks Jason. Do you know of any insurance companies that are known to insure on agreed value? And also, I believe my lenders have to be on board with this as well correct?

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*This link comes directly from our calculators, based on information input by the member who posted.

This is at the current rents. Rents are below market value, can easily be bumped up to $650 as avg. rent market rent is around $800. What are your thoughts?

It's not hard shopping insurance because there's so many different insurance companies. And if you close on the property, you'll need insurance so that part is already done.

Given said that, I just got a quote for a 14 unit apartment (2 buildings) for 14k Annual. The property is selling for around 500k, but the insurance is saying the replacement cost is around 4m. The 14k annual premium really kills this deal for me, and I'm seeing what my insurance agent can do with their underwriters. Wanted to get thoughts on this if anyone is familiar with multi family property insurance

I just replied earlier about the insurance quote and my first quote came in at 1k/unit. Pretty outrageous price if you ask me. Looking into a second and third quote to see. 

For conditions of the units, my pm thinks that 2k would be sufficient to do minor cosmetic repairs to get it rent ready for a section 8 tenant. 

My thoughts on the underwriting of raising rents was to do $65/year recurring until I got to $650/unit. This will take about 4-5 years. This assumes worse case scenario (But not bad) where no tenants leave. If I have current tenants, is it possible to bump up rent from 350-650 if they're month to month? My thoughts was that this may be considered discrimination. And I also didn't want to create too much vacancy right away as I know there's usually a lot higher vacancy in the first year whenever there are new owners. 

So should I underwrite assuming proforma right away and then just keep it the same and see if the cash flow is worth it?

I'm utilizing 5% in repairs and 5% in capex since it recently got a newer roof in 2015. Once I get more information, I'll adjust my numbers to go higher if needed, and if not, I plan to use this as my normal numbers. In terms of rental comps for section 8, it doesn't really have a requirement for comps, but it lists our the average rent for 1bd, 2bd, 3bd, and 4bd and the current rents are well below this. $650 should be easily attainable.

I received my first quote on the insurance and it was way above my initial estimate. I was quoted 14k annually for insurance, which would price it at 1k/unit. I thought underwriting it at $300/unit was pretty conservative. 1k/unit cost more than my SFH. Is this normal for apartments?

I fully agree. I'm searching for another PM to see what their thoughts are on this and based on rental listings on craigslist and facebook, I'm seeing the lowest rents going for around 500-550 and most of them are 650+. The average rent for this apartment complex is 425, so definitely looks like its below market

I copied and pasted the hyperlink so hopefully it works now. If it doesn't, then I'll just write out the details of the deal

Hi,

I'm new to analyzing multi family properties. at 475k I break even, but the units are below market rent. Market rent is around $798, but to be conservative, my PM says we could easily get 600-650 per unit. Would you buy this deal for the potential?

Multi Family Link