All Forum Posts by: Justin Broster

How do you guys generally build in CapEx to rentals? I've been told 8% is a good starter but that makes things look a little scary

 assuming 8% of the monthly income in capex I'm looking at around 192/mo over the life of the property bringing cash roi to 13% and cash-flow to 500 in a worst case scenario. 

I'll definitely wait come inspections and harp on this for sure.

I still will have 20k cash reserve in my emergency fund that I always have available and can liquidate other investments in a serious pinch. Additionally, I have a full-time job generating almost 2,000 a month after all of my expenses.

I still have to schedule inspections and what not, but from face value here's what I've been able to observe:

The electrical appears to be redone, new breakers in the basement, etc.

Plumbing appears to be solid/new under sinks.

Heating and cooling is newly replaced gas. First floor is gas, second is mixed gas/electrical, and third floor is electrical. I am looking into historical information on the building to see what these costs look like as it may affect vacancy rates. 

The one thing that worries me is that the median home value in this area is 114,500. However, three famlies are hard to come by and two families sell in the 145-150 range.

Zillow predicts Indian Orchard home values will rise 2.2% next year, compared to a 2.1% increase for Springfield as a whole. Among Indian Orchard homes, this home is valued 59% more than the midpoint (median) home, but is valued 42.3% less per square foot.

I'm about to get my feet wet into investing, and I will be investing a pretty sizable chunk of my savings too. The area is the Indian Orchard part of Springfield in Massachusetts, and this home is a bit above the median price in this market (Advice here)

Here are the numbers:

Three Family (Top Floor, 1bd, 600-700Mo) (Second Floor, 2bd, 800Mo) (First Floor, 3 BD, 1,000Mo) Roughly 2,400 income

158,000 Purchase

31,600 Down

4,000 closing approx

Resulting in 126,400 loan

P/I=603

Sewer=100

Insurance=84

Garb=50

Tax=233

Building in 10% Vacancy & 10% Repair = 240/240 with a 120/mo property management 'just in case'

That brings cashflow to 723 & cash ROI to 24%. If I have a good year that is 1300/43%

Misc: roof installed 10 years ago, 30 year roof

brick foundation just pointed

built in 1907

Is there anything I am missing here? Is this a good starting investment? I really do want to get into having multiple properties in the coming years so this one is definitely the most important.

Thanks!

Property is located in a good market, especially this particular street. 

The latter question is interesting to answer, three family homes in this area of town are VERY hard to come by. Most two families in this area are within the 130-150 range. 

Closing costs are not factored in here, so I'll add them thanks!

Hello There! I'm new to this type of investing and I continue to expand my education on the topic, but I need to know if I am on the right track.

I'm 24 and plan on spending nearly half of my cash reserves on property. I want to start out with a buy & hold/rental property. I'm looking at three family properties and there is one I am zeroing in on. It is in a decent neighborhood with a general upward trend yearly. 

The property is a three family with the bottom floor (3 bedrooms) renting at anywhere between 1,000 and 1,200 historically, the second and third floor are 2 bedrooms renting for 625 and 825 respectively. The property was recently re-done and the person who actually is selling introduced me to the idea of investing in real estate flips properties and does a significant amount of renting. She's left it up to me to decide on which properties and challenged me to do my own research that she will evaluate.

Here are the numbers I've run based on some research:

Am I missing anything? What other forms of research should I do?