All Forum Posts by: Joseph Colliu

Hey all, can someone check my numbers and logic for using a cash out vs purchasing my next property out of pocket?

Current duplex, assuming an appraisal of 150k

Just went under contract for duplex #2

Am I correct in thinking that the cash out refi is essentially me accessing $23k by financing another $960 annually, at 4.17%? As long as my proforma is correct and I can get 10.16% on that cash it makes sense to refi, or am I doing some math wrong?

Thanks!

@Matthew Irish-Jones this is a block west of Culver just south of Homestead Heights. I'd say it's a solid C neighborhood, with potential for appreciation based on the spill-over from east of Culver. The inherited tenants were definitely giving the block a bad name, I had neighbors reach out directly to me about them being a nuisance. Hopefully, this flip and solid tenants will be a positive direction for the block overall.

@Timothy Smith thanks for your insight - I still have to see the final itemized bid, but have read from a few sources $3k is avg cabinet cost so that's one area I may look to Home Depot to cut back on, along with countertops. We're essentially changing the entire layout of the kitchen to make it more functional so not sure how much that weighs into the price of material. I'm going to head to my local Home Depot today to take a look at some materials. 

Thanks for the reply!

I need to taper the 100sq/ft expectations, while the zipcode averages that, most are smaller SFHs. I see the $/sqft diminishing past 1200sq/ft, and my unit likely won't hit $100 for some years. It's tough to assume, but I'm hoping ARV may be $150k by summertime (seller's season). I could still recoup some cost to roll into the next deal but not expecting all.

But - if I can be invested ~60k cash (down payment, closing, and rehab cost) and rent for $2400/mo, 14%+ CoC after expenses sounds good, no?

@Danny S. typically in Rochester landlords pay water on MFHs.

After some research and speaking with my PM and realtor, (cautiously) amending my after rehab rent assumptions to $1200/door, which makes this more attractive, even if I crack the 30k mark on rehab cost. Thoughts?

Anyone have insights into expected values for rehabbed duplexes in the 14609 zip? Between Webster and Culver specifically. Generally I'm seeing values trending toward 100sq/ft but know there has to be a cap considering higher sq footage units. I have a 2400sqft property that I'm about to kick off a rehab on and looking for comps to get an idea of what it may be worth after some work, or if the work is worth it at all. 

Any insight is greatly appreciated!

The unit is pretty beat, and there's alot of additional small things that add up to the 25. My hope is I can take off up to 25% on some of the material cost by shopping around a bit, but not sure how realistic that is. Here's a more detailed quote

Misc:
*Cleanout Apartment
*Pressure wash Porch and front of house
*Fix broken stairwell window
*Replace all door hardware and stops
*Repair Back door
*Repair/Paint Back Porch
*Replace 2 window screens
*Install towel bars and Toilet Holders
*Repair Storm door
*Repair Stairwell door latch
*Clean Apartment after all work is completed

Painting:
*Repair all drywall patches and caulk all necessary seams
*Paint all walls and Trim in apartment
*Paint Basement Stairs
*Paint/Seal Basement Floor

Electrical:
*Replace all Outlets and Switches
*Replace Hallway Light Fixture
*Add 1 Light Fixture to Bedroom

Bathroom:
*Caulk Tub and Surround

Kitchen:
*Replace Kitchen Cabinets with Wolf Brand Builders Grade Shaker
*Replace Kitchen Floor with Coretex Clickboard Flooring
*Replace countertops with 3/4" stock laminated countertops (Renter's
Grade)
*Replace Stove and Refrigerator
*Replace Kitchen plumbing and Install new drop in sink
*Repair all Necessary Trim
*Replace 1st Bedroom Floor to Eliminate Warping issues

Labor Hours 10,000.00T
Materials purchased specific to job 13,680.00T
Dumpster/ Disposal Service 500.00T

Thanks Brittany. This is in Rochester, NY. The contractor is on the payroll of my PM (who is also my realtor) so it's an all-eggs-in-one-basket scenario. I have yet to shop other contractors but it sounds like that may be to my benefit. 

Bought an out of state property a year ago, 2400 sqft duplex. Inherited the existing tenants. Here was my proforma assuming everything went to plan (which it didn't!)

One tenant stopped paying in May, the other racked up one maintenance charge after another. Finally got the entire property cleared and there is a good amount of work to be done specifically to one unit that was horribly cared for. Floors, walls destroyed, broken windows, the whole 9. I'm going back and forth on the quote with my contractor but this is where we're at now:

~25k materials/labor for the bad unit, most costs coming from the kitchen. Big-ticket items include:

• 6k cabinets
• 2.5k countertops
• 1.6k flooring
• 1k appliances (stove & fridge)
• 1k bedroom flooring
• 10k labor

~5k materials/labor for the "good" unit, most costs coming from fixing door frames, paint, cleaning.

After the rehab, I should be able to get 1k/door. But dumping this much money into a place I just bought for 105k is giving me reservations. A few questions:

• I intend to source materials myself to reduce cost. As a newbie, 6k for rental grade cabinets, 2.5k for countertops sounds very high - does this sound in line with rental quality materials?
• Assuming all of the above, is it simple enough to update my existing pro-forma with a rehab budget and new rents to get an idea of my return? i.e:

• Does this sound like a worthwhile investment?

To note, I purchased the house 1 year ago for 105k (43sq/ft), it appraised for 115k at purchase, and properties in the area appear to be trending toward 100sq/ft as per my realtor and some comps on MLS.

Thanks in advance for any insight!

In for the next meetup!