All Forum Posts by: John Leavelle

Howdy @Jessica Costa

Their financing assumptions are misleading.  This is a 5-unit acquisition.  Therefore, it requires a Commercial loan.  Good luck finding those interest rates and terms for a commercial deal.

Totally agree with @Oren K..  The expenses are way too optimistic.  I never go below 8.34% (one month rent) for Vacancy reserves.  Depending on the area and quality of tenants I may hold back even more.

CapEx is a joke. How much does it cost to replace a Refrigerator? You have 5. Do you know how old they are and what condition they are in? That's just one of many things you must prepare for. I would keep it at 10% ($528.60) until you have the property inspected to determine the current condition and life expectancy of all major components and appliances. Then you can make adjustments to your reserves requirement.

The allotment for R&M ($250) might be ok.  Again, depending on the age and condition of the property, and the quality of tenants.

Add an additional 10% for PM.  Plus the other expenses Oren mentioned.

Howdy @Juan Rosado

This analysis is good for after you move out (If House Hacking). You need to analyze it also as if you are living there. Meaning you get Rental Income from only one unit (not both). I also believe in being conservative going into deals. Your reserve withholdings are to low for me. I never go below 8.34% (one month rent) for Vacancy. I prefer to have at least 12% - 15% combined for CapEx/R&M. It depends on the age, current condition of the property, and quality of tenants. Until the property is inspected you really don't know what the condition and life expectancy of all major components and appliances are. Once that happens you can adjust your numbers accordingly.

Is $150K the Asking price or your Offer price? What is the current Fair Market Value/ARV?

Is there any common area utilities that the owner is responsible for?

The likelihood of you having positive cash flow while House Hacking is very slim.  But, that is normal using a Duplex for this strategy.

Make the adjustments we have recommended.  Then see what the results are for both while you live there and after you move out.  If it meets your criteria then go for it.

Howdy @Jovan Hardwick

Nice job on the deal.  Two minor things I have questions for.

1.  Does the Refinance loan have any Closing costs/Fees?  Or is it included with the loan?

2. I would maintain a little more for reserves withholding (Vacancy, CapEx, Repair/Maintenance). At least for analysis and budgeting. One month rent for Vacancy (8.34%), 12% - 15% combined for CapEx/R&M.

Hope it works out good for you.

@Michael Temple

Not a mailman yet.  But I have received tips from others (Electrician, a pool cleaning guy, and a painter, to name a few).   I only closed on one referral so far.  I usually will pay them $50 for the tip if the property meets what I am looking for.  Then will pay them $500 - $1000 if I close, depending on the property.

Howdy @Derek Meehan

This is not a good deal.  It would not even get close to passing my Initial 5 minute analysis.  

Does it meet at least the 1% Rule?  No

Does it meet the 50% rule for Cash Flow  (minimum $100 per unit)?  No

Does it meet minimum COCROI?  No

Definitely pass.

@Craig Rider

Call the utility company to find out what the average bill is for that property.

Get a quote from an insurance agent for the property.

@Michael Temple

You are correct. It will not work for REO properties.

There are deals to be had on the MLS. Standard Buy & Hold deals can be found requiring minimum repairs. But, BRRRR types (distressed properties) will typically go fast or must be found by other means. Example of other options:

1. Many Successful Realtors have separate lists of properties (not on the MLS) that they refer to their preferred customers.

2.  Driving for Dollars.  Drive neighborhoods you are interested in and look for distressed properties.  When you find one get as much information as you can, take pictures, and have your Realtor do some research for you.

3.   Bird dogs.  Referrals from friends, family, the mailman, Contractors, or anyone who can provide you a lead to a possible deal.    You can pay them a finders fee (typically $500 - $1000) if the deal closes.

4.  Wholesalers are always out there looking for deals.

5.  For Sale by Owners.

6.  Craigslist.  People sell just about anything thing there.

Howdy @Craig Rider

From an over all view the calculations and analysis is correct.

Here are a few comments.

1. Let us know the type of property (SFR or Multi family) it is. This makes a difference in what we look for. Although, I see in your Cash Flow Income it shows A $1200 and B $1200. Which would indicate a Duplex. It helps if you clearly state it in your Post text or Report Description.

2. Be sure of the ARV. Don't just make it up. All other costs can be affected by it.

3.  This is a multi family (2-4 units) you may be required to put 25%-30% Down.

4.  You show the costs of several utilities.  Are they not separately metered?  You should state one way or the other.  If billed to the owner, you need to look into the possibility of charge back to tenants.

5.  For Vacancy reserves I never go below 8.34% (one month rent - $2401 annual) for analysis and budgeting.  If the actual amount ends up less (5% - $1400) then you made more money than expected.  However, if you have the property vacant for a full month with only 5% saved.  Ouch!!  That’s $1000 you did not plan for.

6.  The rest of your expenses look good.

Nice job.  You are now officially a BP member.

Howdy @Carter Still

They covered the subject pretty much.  So let me at least help you with the tagging function.

Type the” @“ symbol, then the first three letters of their name “Joh”

A small pop up window  will appear with a single or multiple images with the person’s name.

Click on the image and that name will be inserted.

Then hit Return.  The entry will show up in blue text.  They will be tagged.

Your done.