All Forum Posts by: Joseph Timon

These replies and comments have been incredibly helpful! We are crunching more numbers and having an electrician come by this week. We'll have to see if things add up within the next week or two. Thanks again, everyone!!!

2 Votes

Quote from @Robert Ellis:

Quote from @Joseph Timon:

Hello everyone! First timer here and this project is a doozy! It's a 5 unit (2 commercial, 3 residential). The purchase price is low ($170000) and has great cash flow, BUT it needs extensive work - $50k-$90k of necessary upgrades - HVAC (no heat!), $5000 emergency stairs off roof, electrical panels are currently 100A and need to be upgraded to 200A (among wiring upgrades), and a few bathroom upgrades (leaky/rusted fixtures for $3k-$5k/unit). Is this deal worth it??

We're putting 20% down. Using cash for remodels. Loan at ~7% for the difference.

PLEASE HELP!!!

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

what year was it built? I wouldn't touch deals built prior to the 1970s anymore. if you can't find any look at new construction and land

It's old! Built in "1900"

1 Vote

Quote from @Jaycee Greene:

Quote from @Joseph Timon:

Quote from @Jaycee Greene:

Quote from @Joseph Timon:

We're putting 20% down. Using cash for remodels. Loan at ~7% for the difference.

PLEASE HELP!!!

View report

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

Hey @Joseph Timon, welcome to the BP Forum! Have you actually discussed this project with a lender? If you're going to spend up to $90k on rehab, why do you have to spend over $1,100/month in maintenance?

That is a good question. I have been just assuming "maintenance" would be 35% of the income/month - that's where that $1100 comes from. What is typical "maintenance" on a distressed property?

3 out of 3 residential units are leased in this property until Dec.

1 out of 2 Commercial units are rented (it's a long term tenant). So there is room to add value in that other commercial property. We could get $800-$1100 in rent, especially after cosmetic repairs like flooring is updated and we fix a toilet.

What are your thoughts with that?

@Joseph Timon When I run proformas for my CFO clients, I use 35% for ALL operating expenses. I would recommend upping the rehab budget to minimize the amount of ongoing maintenance. Have a close to 50/50 mixed use property is going to make it more difficult to finance - most lenders specialize in one type of lending or the other. For a mixed-use property, you'll probably need to talk with a local lender.

Ahhh, that makes sense! Thank you for sharing and I appreciate all of your help! We'll crunch some more numbers!

1 Vote

Quote from @Matthew Becker:

How much is the rent. I don't think you need to budget 1100 for maintenance. I think you need to budget your capital expenses up front. Cost+ Cap exp. Then what are expenses? What is your cash on cash return.

That makes a lot of sense.

Currently, rent is $3150 total with 1 commercial property vacant. We would rent that out for $800-$1100 / month.

0 Votes

Quote from @Chris Seveney:

Quote from @Joseph Timon:

Good point. I have a partner who has the cash for the down payment and rehab cost.

For the monthly maintenance, I was assuming 35% in my estimates - which I understood as somewhat standard when running estimates. The building and units have not been maintained for the last 20+ years. Our rehab is, unfortunately, to get it somewhat modernized and doesn't have much "value add," but rather necessity to function. That 35% will be the assumed rate of other things breaking/needing replaced throughout the year.

If the numbers are correct its an awful deal. I would negotiate a price down that allows you to fully renovate the place so you are not spending $1100/mo on maintenance. IF you need to spend $150k for upgrades then determine an actual value,

We just finished with a property that needs $80k in rehab, they wanted $100k but ARV is $180k. Ended up aruond $35k for the property.

I appreciate this!!!

0 Votes

Quote from @Jaycee Greene:

Quote from @Joseph Timon:

We're putting 20% down. Using cash for remodels. Loan at ~7% for the difference.

PLEASE HELP!!!

View report

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

That is a good question. I have been just assuming "maintenance" would be 35% of the income/month - that's where that $1100 comes from. What is typical "maintenance" on a distressed property?

3 out of 3 residential units are leased in this property until Dec.

What are your thoughts with that?

0 Votes

Good point. I have a partner who has the cash for the down payment and rehab cost.

0 Votes

We're putting 20% down. Using cash for remodels. Loan at ~7% for the difference.

PLEASE HELP!!!

View report

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

0 Votes

All Forum Posts by: Joseph Timon

Joseph Timon has started 1 posts and replied 8 times.

Post: First Timer Here! - PLEEEEASE Help me analyze this deal

Post: First Timer Here! - PLEEEEASE Help me analyze this deal

Post: First Timer Here! - PLEEEEASE Help me analyze this deal

Post: First Timer Here! - PLEEEEASE Help me analyze this deal

Post: First Timer Here! - PLEEEEASE Help me analyze this deal

Post: First Timer Here! - PLEEEEASE Help me analyze this deal

Post: First Timer Here! - PLEEEEASE Help me analyze this deal

Post: First Timer Here! - PLEEEEASE Help me analyze this deal