All Forum Posts by: Kelly R.

Electric disconnect:

If you plan on building consider your temporary power pole now.  It will cost less at this time because they just swing the existing wires over to the new temporary power pole.  If you fully disconnect and then call them back for a temporary power pole connection the fee goes way up in my area.  I always spend the extra money on a temporary power pole.  Nothing worse then generators screaming all day long next to your neighbors on in-fill construction sites. 

New Power:

They can not connect new power until the home is constructed, a new meter is hung and temporary finals (TPF inspection) are in place.  The power company will also need the lot final graded to (usually) within 6".   A load calculation sheet for each home along with a full site plan is needed. 

Plans:

Permits and plans would lock the potential buyer into your house plans. If they wanted to make changes they would have to back to revise permits.  It might be better to secure a letter stating the land is ready to be developed.  

$232 for 2 million.

 In a 10-10-10-10 scenario like this what kind of cash flow are you happy with?  

What are you replacing the carpet with?  Hardwood? 

 Nice nugget of info, thank you !

BP need a nugget bank so we can store things like this.

I have done infill construction of new homes in Maryland for years.  A few things to look into:

Check the cost of upgraded water service if you are on public water and sewer. In parts of Maryland you need to get a toilet count on the existing home to receive credit for them toward the cost of the new water service.  Also check the laws involved with differing the cost of the upgraded water service, this is called a "front foot fee" in my area.  

New homes in some parts of my area require a sprinkler systems. Those systems require a larger 1.5" water service and the upgrade can get expensive! 

If you are not on public water and are on well and septic check the septic laws and make sure your septic area will handle the required # of bedrooms.  Do a yield test on the well to make sure it meets the minimum requirements for the new homes. 

Check for height restrictions and or story restrictions.  For example one jurisdiction in my area only allows 2.5 story homes.  Basement  + first + second = 3 stories.  If the basement level is in the ground by a certain percent it is considered a "cellar" and not a story so you are clear at 2 stories.  The height restriction is still in affect. 

We now have storm water requirements on small lots... Dry wells are required to "store" the rain water on your lot from all impervious surfaces for 24 hours, including the driveway!  Yes you have to drain your driveway water into a dry well.

That's it off the top of my head.

I arrived at the property and walked up to the front entrance.  Stood before me was a sign post with 12 lock boxes hanging off of it like a lock box tree!

Looking around the outside I could see area's of siding and trim that needed repair, lots of failing caulk and the awning over the entrance door was worn and ripped. The entrance door itself was beat up pretty good around the edges.  Inside the entrance I was greeted with torn wallpaper and carpet the needed replacing.  The elevator had a institutional feel to it but it worked !  Leaving the elevator I saw carpet that was pulled out from under the threshold, a simple fix but not fixed, a clear sign to me that this place was in trouble.  In the hallway approaching the unit I saw a fire sprinkler valve cover on the ceiling, at some point it had leaked and rust colored water stained the ceiling and walls, nice!   

On the inside, LOL... Let me stop for a moment and give a big heads up to the photographer who shot the pictures for the listing.  Great job!  The place was a mess!

All the carpet was shot, the walls had settlement cracks in the drywall that bordered on structural in size. More then likely just shrinkage (kinda how I felt) cracks from the 4 story frame construction but a little large in my opinion.  Bathrooms had mold and tiles falling off, flooring in the kitchen was worn out, and the appliances were a bit beat up.  I would say about 6000 - 8000 for me to repair with my own subs. 

The layout was actually very nice with vaulted ceilings and being a top floor corner unit it had a nice view of a stream on one side and a field on another. I could have been a nice place.

I did not even bother to get the HOA docs as I could see large assessments in the future if the place doesn't fail.

Thank you so much for the help and guidance.   I will keep looking.

Thank you all for helping,

I plan on walking the property tomorrow. I will verifying the fee's and get a copy of the HOA docs.

Yes I did 4% vacancy rate and 2% maintenance since it is a condo and large expenses like roof, siding, driveway will not be needed.

Hello everyone,

During my brief time here I have tried to absorb as much as possible.  I understand a lot of you are not thrilled with Condo investments but I wanted to run this one past you.

Purchase price is $80,000, 2 bedroom, 2 bathroom, corner unit top (4th) floor, 1 car garage and storage unit. Looks to be in great condition. Built in 1998 across the street from a school.

I could self finance but ran the calculations on 20% down at 4%.

Rent is 1400 - 1500, I used 1450.  The property has a rental history.

Monthly expenses = 830

Monthly cash flow = 619

Pro Forma Cap Rate = 13.50%

Purchase cap rate = 13.74%

Cash on Cash ROI - 40.85%

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

Financial Projections

Total Initial Equity:

$16,000.00

Gross Rent Multiplier:

4.64

Income-Expense Ratio (2% Rule):

1.76%

ARV based on Cap Rate:

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

50% Rule Cash Flow Estimates

Total Monthly Income:

$1,450.00

x50% for Expenses:

$725.00

Monthly Payment/Interest Payment:

$305.55

Total Monthly Cash-flow using 50% Rule:

$419.45

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

It seems like a good deal but I am a newbie!  LOL

Thank you for the help