All Forum Posts by: Joe Gutmann

Thank you @David Dec, Around the area 2 bedrooms seem to be going for around $1000.00 in the area. I'm glad that falls within the fair market rents.

@James 

@James Syed Trash yes, landscaping I am still on the fence about. I am either going to have them split it, do it themselves, myself, or hire a landscaper. I have several emails out trying to gauge the price range, I don't know how tenants of the duplex do it now, so I suppose I have a question to ask the seller once the offer gets put in. Thanks for the input, I definitely need to give it more thought!

Hi Nicolas, 

As a warning I am basing this off of what I have read here on the forums / reading from other sources, and not from personal experience. Capex is long term higher expense repairs/replacements like the roof, water heaters, gutters, siding, hvac while repairs are small things like a clogged toilet, broke a fan chain, small drywall patch, etc. I think you can probably find great information here on the forums that should provide more insight.

Thank you Rob, the property management I am looking at using does do 8%, I placed 9% just to be conservative on the off chance they stop and I have to find someone new. I'll talk to some title/escrow companies later in the week to see what they run on average, online calculators are so far not much help. The property will be held under my name, not an LLC. I appreciate the feedback!

I hope everyone is having a great holiday weekend and enjoying their time with family. I am currently looking at Duplexes and SFR in the Largo to St. Pete area of Florida and seek advice on how accurate my analysis is and ways to improve it as I have not bought an investment property yet. The numbers for expenses are what I am using as a standard, I know I am off on insurance (I don't know how to estimate, but the email is sent to my insurance agent and it's Christmas so I don't expect an answer today) but I don't know what other numbers could use polishing. The rent in the analysis is what is posted on the MLS as what the current tenants are paying, this is not the listed price but it is the highest offering point that allows me to reach my minimum goal of 100$ a door, and it is not in a SFHAs (a/ae/v/ao zone). The link to the BP Rental Calc is below and will open a new tab.

2bd/1ba Largo Duplex Analysis

$160,000.00 purchase price

$3,000 closing costs

$40,000.00 downpayment 

30 year loan at 5.2% 

$658.93 monthly P&I

// 

Vacancy $126.00 (7%)

Repairs $90.00 (5%) 

CapEx $180.00 (10%)

Insurance $150.00 (8%) 

Management $162.00 (9%)

P&I $658.93 (37%) 

Property Taxes $221.08 (12%) 

Total $1,588.02 (88%) 

Rent as listed: $1800 - expenses  $1588.02 =  $211.98

Gross Rent Multiplier: 7.41 

Income-Expense Ratio (2% Rule): 1.10%

I expect I would be able to raise rents, at least to matching levels but I am ensuring the deal would pencil out before turnover and an increase (is this smart to do, or is it killing potential deals?) in rent. Any advice and pointers would be greatly appreciated!

I ended up not going with the mixed use, but I did learn a lot. The commercial loans that were available to me killed the cashflow. So I am actually currently looking at SFR within a Tacoma neighborhood I expect to appreciate greatly in the coming years based on subarea plans, and the fact I live in it and see the changes it is going through on a daily basis. So, for now I am currently trying to gain a greater understanding of the values in the neighborhood since there are not many comps available as it has historically been a depressed area.

There are a couple properties I am currently looking at, but one appears to be killed by the fees associated with the bankruptcy trustee (I think this is the correct term) sale (over $23,000 on a 70k property), another one has water damage throughout and black mold, a different property has what appears to be foundation problems (the front is leaning outward and large cracks) as well as sealed siding which appears to be rotting under the tarred, fake brick layer, and knob and tube wiring.  

To summarize,  I am currently wondering if I am suffering from analysis paralysis or simply doing the smart thing and avoiding buying a bad deal. I guess I will have to wait until I see a deal that pencils out with the BP calculators and whether or not I put in an offer.

Thanks for the updates @Charmed_WI, I am still working on finding my first property so I am enjoying seeing rehab the process as it takes place!

Thank you @Blake Yarbrough

That was my thought as well. This will give me a little taste of both worlds while learning where I can afford to pay the entire mortgage by my self as a worst case scenario.

@Jerry_W. Thank you, when I did my walk through all it needs on a surface level inspection (my experience is tearing several rooms down to stud and rebuilding, running electrical, etc and 1 year as a realtor so in other words not extensive) is to complete tearing up the old flooring and restoring the hardwood, new appliances, water heaters, possibly some updating, and maybe a furnace. All of which I have budgeted for with a little cash . I will be bringing an electrician to look at the wiring to make sure I did not miss anything, and will be paying for an in depth inspection, and from what I saw there maybe be a storage tank as I saw a pipe coming from the ground labeled 'Oil' which I will be looking into. The commercial section is a single room above ground that is essentially empty so it should not need repairs. What I do not know is if a new tenant comes in is if they always pay for changing the layout and how to handle any contract negotiations. For the Zoning it is zoned as commercial. It has a parking lot next door that appears to be going through foreclosure which could be a down the road purchase. 

Good afternoon everyone, I am new to investing and my area (and BP PRO) of Tacoma, Washington seems to be a little low on the supply side of MF properties in my price range. So, looking through the supply in the area I am willing to buy in (as a live in landlord) the best option appears to be a mixed use property with 2 residential units (both 2bd/1ba) and a small commercial unit of roughly 850sqft with about 900sqft of storage. 

Now, assuming 5% vacancy, 10% CAPEX, 10%PM, 10% repairs/maint, insurance, taxes, etc etc it should clear $230 of cash flow per month with a cap rate of 7% which from my math works out for about on par in the area (numbers ran through BP rental calc). This is also using conservative numbers where I discounted the value of what I think the rentals will actually go for.

I am leaning towards putting in an offer, but I also have never been a landlord for a residential property nor a commercial. Would any of you start off your first deal with a mixed use property? If anyone has advice or could direct me towards resources that they think I should look at prior to placing an offer on it I would very thankful. 

You can try to find new agents in your area and be up front with them. Sometimes new agents will appreciate the practice, but John White is correct. It was very annoying when a prospective buyer decided to waste my time when they knew they were not going to buy a home. Not only are you wasting their time and money, there is the opportunity cost involved where they could be doing actual money making activities if they were not showing homes to someone not buying.

Solutions: approach new agents, attend open houses, call the listing agent, or run analysis on friends/families houses.