All Forum Posts by: Kevin Nichols

@Donald Patterson I use this worksheet with every potential deal. It's a great resource you can play around with the numbers to see how they play out.

http://www.biggerpockets.com/files/user/JasonScott...

Most of the broken deals I come across have only a few factors:

1. Asking price is too much.
2. Low rent potential (I'm in the South, where rent in my city averages $500 to $800 per month)
3. High expenses...especially property tax. In our state, investment property is taxed at the same rate as commercial property.  Or there's a lot of deferred maintenance that I  know we'll have to complete because the previous landlord rode the house into the ground and is selling before the big ticket expenses hit.

Use your worksheet and the numbers don't lie.  

Thx,

Kevin

The offer on my 2nd buy & hold deal was accepted today.  I offered cash, but should I do a cash out refi after closing?

Thanks,

Kevin

-------------------

3 Bedroom/1 bath
Price: $37,800
Annual Income: $8400 Gross ($7728 with 8% vacancy)  Tenant in place @ $700/month

Annual Expenses:
Prop Taxes: $675
Insurance: $320
Maintenance: $840
CapX: $500

Total expenses: $2195

Even if you were able to do a good fix and flip on this...your market will be limited to investors....a discerning crowd of individuals who scrutinize over their numbers. :) Don't get married to a bad deal. Move on and find a better one. Kevin

@Robert Broadie In NC, you're probably looking at $4000 to $6000 for a new roof. It's probably worth it to get 3 quotes and see where they are.

I don't know if most folks know how much a new roof cost. 

If you have no leaks, I would focus on using your rehab capital on the visuals in the home for a wow factor. If questions come up about the roof, mention there are no leaks, etc.

They'll end up getting a home inspection and the inspector will do a good job pointing it out. You can always negotiate down a little since realistically, you probably have 3-5 more years before you "must" get a new roof.

K

The rent on that particular example was only $575.  

Overall, all the houses were at their "deferred maintenance" stage in their life.

Couple that with the lower rent levels and I opted to not pursue any of them.

Kevin

@Michael Westberry Let me know if you're interested in wholesaling your Rock Hill deals. We're currently looking for buy & hold properties.

Thanks,

Kevin

@John Morgano I live and invest near you.  Reach out to First Citizens bank on hwy 160.

I met with them in December and they would really investor friendly. Gave me a few different hybrid options for financing.

Kevin

Before you look into financing make sure the duplexes meet your goals. Do the meet the 50% rule and the 1-2% rule? Do your due diligence and get comps.  Once you're comfortable with making an offer, then think about financing options.

First things I do when looking at potential properties:

1.) Use the XLS calculator on this site and plug in my offer, potential financing scenarios, capX, vacancy, etc.

If the calculations check out for my needs (My personal goals are to have 15% COC and not be in the "D" areas of my area.)

2.) I then look at comps in the area. How is the asking price comparable to recent purchases in the area?

Don't fall in love with any potential deal. Nobody's looking out for you...other than you.

Kevin

I'm fairly new at landlording...2 months ago we bought a duplex with 1 year and 1.5 year lease tenants, who are doing fine.

I'm looking at another property and the tenants are month to month.

So...I started thinking...what are the ramifications of a broken lease? Let's be honest, how many owners are going to chase down a tenant who leaves?

What's the "best case" scenario for a broken lease?

Kevin

the other properties don't meet the rules....I would say there are about 5 of the 18 that meet 50%, 1% and have a decent 10 to 15% return on cash.