All Forum Posts by: Tou V.

The units are well maintained and I don't see much cap ex in the near future (knock on wood). The 10% vacancy is just an average amount, currently there are no vacancy and hasn't been one in over a year. Rentals in this area seems to have stabilized and with SFH prices going up, there should continue to be rental demands. Current PM seems pretty good and answered all my questions. Thanks for all of your replies and input.

 That's correct.  The current total expenses are around $98,521 , which are pretty high for a gross income of $167,940.  That's like 58% of gross income.  There's opportunity to lower the expenses also.  Basically it comes down to is it worth putting down $175,000 and getting roughly $3000 monthly in passive income.  Thanks for your input.  

Looking at this decent 20 unit apartment complex.  Below are the current break down of income and expenses.  PM fees are also included in Total expenses.  Sales price is $700k.  Loan would be 25% down at 4.5% fixed for 7yrs.  Would this be a good investment?  The numbers have held steady for the past few years and should remain relatively the same.  

Rent Income:  $167,940 

Less: Vacancy/Deductions:  $16,794

Effective Gross Income: $151,146

Less: Expenses:  $81,727 

Net Operating Income: $69,419

Less: Debt service: $31,920

Total cash flow:  $37,499

I'm no expert, but your assumptions are pretty close. The 10% for utilities depends if the renter is paying for it or not. A lot of SFR the renter will pay for it. It's pretty hard to cash flow when houses costs $150-200k and you can only rent them for $1200-1500. What I've seen is some investors buy fully rehabbed properties, thus making their repairs expense almost zero. After a few years they sell it and it's up to the next guy to cough up $$$ for repairs. Between the utilities and repairs, that's about 20% you could save. Depending on what condition you bought the house in. If you self manage you could say you're saving a total of 30%, but then you'd be using your time. I have a couple of SFR and they cash flowed great for years until the roof , AC, windows, insulation needed replacing. That's 20k in expenses at the same time. Yes, the reasoning is not correct as you should be saving throughout the years for those repairs, but most small time investors don't.

 Both will require commercial financing.  The cottages are on one lot and can't be sub divided or sold off separetely.   From what everyone is saying, the apartment is better. 

yes, cottages would be small detached units with no garages. Kind of like cabins.  Thanks for the input 

Trying to figure out which is best.  I know the income / expenses on each will be different, but just for comparison sake make them around the same.  Which would be better?  Both are relatively around the same price range and brings in about the same gross income.  Would you rather buy a 10 unit apartment for 500k or 10 separate cottages on one lot.  These would all be 2bd / 1 bath units.  The apartment units are identical, while the cottages vary in color, interior décor, etc....  Thanks. 

Does anyone know much about the Rochester, NY market? I'm interested in properties there, but not sure how sustainable that market is. Who on here invests, lives, or works in this area? How is it? Thanks.

Does anyone know much about the Decatur, IL market?  I'm interested in properties there, but not sure how sustainable that market is.  Who on here invests, lives, or works in this area?  How is it?  Thanks.

Hello Jeff, good to hear you are making it happen in the Bay Area. I've seen deals similar to yours and they were all flips , where the buyer bought some beat up unit for 500k fixed it up for 100k and sold for 700k or so. My concern is if you're trying to buy and hold if there's enough cash flow to pay everything and still make a healthy profit. How are you purchasing these units? All cash , loans, or hard money? Please provide a break down of expenses for your deal above so I can better understand. I know Bay Area has crazy potential for appreciation in the long run, My uncle bought his home in SF for 60k in the 80s and now worth over 1mill. He regrets not buying more back then. Right now I find it hard to pull the trigger on potential deals that costs 500k and generates 5k in rents. First would be the 100k in down payment (20%) , severely limiting me to only 3 until I'm out of money. Unless I used hard money which would eat into my cash flow and require me to refi soon. Oh, so complicated.