All Forum Posts by: James R Crady III

So, if I understand correctly this is $190k for 1 unit. That you project will realize $1550.00 / month in rent. 
 
if that is accurate, I personally would not be interested in this deal. Several reasons:

-CAPEX - does not appear to be in your analysis. House built in 1958, no issue. But a house that old is likely to need something over your 10 year horizon. Roof, floors, mechanical, etc... Numbers on your deal have a pretty narrow margin for positive cash-flow dependent upon rate and term of mortgage. CAPEX may chew it up.

- Cash on Cash return will likely be very low. Same as above, dependent on loan details and CAPEX requirements. Appears CoC likely we'll below 5% annually.

-HOA - I tend to avoid them in general.

Now, if you think the market is going to sky-rocket and just want to break even every year until you can realize some great appreciation in 10 it might be a winner.

These questions are really difficult since there are so many variables and personal motivations and objectives.

Do the numbers add up is pretty subjective. Depends what your objective is? How much cash you're throwing at it. If you plan to finance. Terms you can get if so. etc... So, what are you trying to accomplish and how do you intend to do so?

If you have vacancies, get them rented.  That’s why we do what we do...

Had a tenant once that literally tore a huge hole in the exterior brick in order to install a large doggy door. Install was a mess, not sealed correctly and totally done without any discussion with me or my property manager. Those folks were crazy. But, there are bad apples in every bucket.

Overall, I agree with the analysis. 4 legged critters make money. Little 2 legged critters cost money! ;)

@Richard Gray brings up a good point. Tenant education can’t be overlooked.

Josh,

Don't be afraid of septic. Just need to be aware of the unique differences in maintenance requirements.

I've had multiple properties with septic systems new and old, lateral lines - anaerobic - etc... If maintained, they function fine.

Recommend you reach out to several septic service companies local to the property in question. If you get to the inspection portion of purchase, schedule a couple of septic companies to come out and take a look at the system. At different times obviously. Things to ask: what is the annual maintenance requirement for the system? What does that maintenance cost? Do you project any major maintenance needs in the next 3-5 yrs, 10 yrs etc... Basically, you want to leverage their expertise to help you gain knowledge of the particular septic system and provide you the data necessary to answer your CAPEX question.

Example, if they say the system is new and only needs ~$300.00 annual service then that is the baseline for your CAPEX. If they say you will need new lids within 18 months then factor that in.

May be wise to add a little buffer. Unless, you have that built in overall in the analysis.

Personally, I would not consider switching to city sewer unless the entire septic system needs to be replaced and sewer is close.

Septic is fine when system is designed correctly and routine maintenance is conducted.

Hope that helps.

Simple way to get started is to buy a MFR for yourself. Can qualify for a conventional residential mortgage and generate cash-flow at the same time. Basic process that will teach you a lot as you go along. Once you get this one look for some more and expand your approach. My first rental was a duplex. Lived in 1 side and rented the other out. Bought that one almost 20 years ago and still own it. Everyone is correct though, you must jump in the water to get wet! GOOD LUCK!