All Forum Posts by: Brant Richardson

As others have said, 10% of rent goes to maintenance you might even want to go higher with student rentals, 10% for vacancy.

purchase of 116k with 1600 rent, no HOA and reasonable taxes sounds decent to me. Whether that is decent in your market I don't know though. It needs no rehab to be rent ready?

If yout type @ and start typing out there name it will bring up a list at the bottom of the page.

What does it rent for? How much are taxes? How much is the HOA? I would concentrate on whether you will really be getting cash flow rather than the value. HOA often kills the deal on townhomes.

Or make an offer within hours of it being listed on the MLS. Your newbie flippers won't be moving anywhere near that quickly. Check out Mark Ferguson's podcast #68.

60k rehab, and every penny well spent it looks like. Good luck on the sale, very healthy profit it looks like.

Banks do not count your rental income when figuring out your debt to income ratio until you have been a landlord for two years. For this reason it would be a really good idea to buy a rental property as soon as possible, even if you do not plan on going full time into realestate for another couple years. There is great cash flow opportunities in Indiana. You should be able to buy a place 80% financed with a rent which will pay all the bills and give you $100-200 per month cash flow.

Good luck getting him to pay 1.5 million in restitution. I would like to see his coconspirators get hit just as hard.

Welcome to BP, it really is an incredible place to learn and network. I am an out of state investor in KC and look forward to seeing the deals you offer. Have you listened to any of the podcasts yet? They are a great if you do any commuting or while exercising. Podcast #67 had a lot of wholesaling content which you would probably find interesting. #65 had quite a bit of wholesaling as well.

You need to see the appraisal. What is the date on it? What does it list as areas needing repair? There should be a list of comparable properties that you can check out as well. Are the rents as high as they should be? If not then your friend may be undervaluing the place.

Like you said, you need to look at it for yourself to see what repairs are needed. If it needs substantial repairs then you should be buying well below the ARV minus repairs.

Figure out if it is a good investment with both units rented. If it is good, then figure what the monthly cost would be with you living in one unit. If you pay a lot less than you currrently do and your kid is safe to go outside then it sounds like a good thing for you.

If you post up the actual numbers (rent, tax, etc.) I'm sure others will chime in on whether they think this looks like a good deal.

@Richard Gaston

Other than the question about what ARV is, I guess I don't understand what you are trying to ask.

Your wife actually has a great idea, assuming its an area you are ok with living in (if the wife approves I'm sure you do). A lot of people start out with a building 2-4 units, you come up with the down payment, your tenants pay the monthly expenses. If you can get seller financing that allows you to have little or no down payment that might be even better.

A lot of people analyze a deal like this as though they were not going to live in it, even if they have full intentions of doing so. You want to make sure you get positive cash flow. Rent for both units minus mortgage payment - property tax - insurance -10% maintenance - 10% vacancy = cash flow. Many would recommend you subtract 10% for property management in case you ever wanted to have a property manager run it for you. You want your cash flow to be at lease $200, $100 for each unit.

The 50% rule I mentioned above is a very quick way of getting an idea of whether it might cash flow. Take the rent of the two units put together, divide that in half, then subtract the mortgage payment. If you come up with $200 then figure out the real numbers.

Like you said, a big consideration will be figuring out how much rehab it really needs. The other is what the real ARV is.

You still have a lot of work to do before you you call this a deal or start celebrating.

Before you spend a lot of time digging into all the details figure out if it will cash flow. What are the rents? The 50% rule would be Ok as a screening method to see if it is worth pursuing as a buy and hold. Then you will need to really dig into the real numbers, vacancy,expenses, etc.

Is this a legal duplex or did he just convert it?

The ARV is what similar duplexes in good condition (converted single family homes in similar neighborhoods) have sold for recently. It might be hard to find good comps for this, mabybe not, I don't know your area. Hopefully your purchase price plus rehab costs come in far below the ARV, in which case it could be a flip. A common flipping rule is you offer 70% of ARV minus the cost of rehab.