All Forum Posts by: Kevin McConnell

@Michael Catausan Congrats on closing, please keep us updated on this one through rehab! Keep it rolling

@Jeremy Clarke What general area is this property located in KC? Being out of state, that could possibly play a big part in making your post-inspection decision in terms of if its even worth it to go through with the deal. There are some seedy pockets that could potentially demand more hands on management than anticipated.

Purchase price: $133K

20% DP ($26,600) @5% 30yrs (google mortgage calculator): $571/mo.

Rents: $1770

-Vacancy (8.33%): $148

Gross Income: $1622/mo. 

Utilities: $150

+Taxes: $93

+Maint. (5%): $81

+Insurance: $50

+P.M. (10%): $177

+CapEx (8%): $130

Gross Expenses: $681/mo.

NOI: 1622 - 681= $941/mo.,  $11292/yr.

Cash Flow: 941 - 571= $370/mo., $4440/yr.

CAP: 8.5%

COC: (Rounded up to $30K) $4440 / $30,000 = 14.8%

My calculations have it cash flowing at $92.50/door and that's with upping maintenance and CapEx...IF my calcs are right and if Google's mortgage calculator is right with 20% down at 5% and 30 years or at least in the ballpark...it doesn't seem like a bad deal at all. I think I'd be happy with that cash flow and COC using fairly conservative numbers. Please let me know if my numbers are off or any thoughts

What scope of work are you needing to be done?

@Mike Snyder I agree, I think that option has multiple benefits as you mentioned. However, in this particular case, I'm not sure if AirBnB would be the best route for an out of state investor due to the constant turnover and maintenance unless you have trusting feet on the ground that will take care of that part for you.

@Bob Okenwa Thank you, much appreciated!

3 bed, 2.5 bath, 1892 sq.ft. 

Located in B neighborhood near major hospital and multiple entertainment districts, opportunity for appreciation.

Listing price: $140,000

Avg. rents: $1560, median rents: $1400 (Rentometer.com)

10% down payment: $14,000

Analysis using $1400 median rent:

Gross rent: $1400/mo

- vacancy (8.33%): $116/mo

Gross income: $1284/mo, $15408/yr

Expenses/mo.:

Taxes: $204

Insurance (homeowners+mortgage): $190

CapEx (8%): $112

Maintenance (5%): $70

Property management (10%): $140

Gross expenses: $716/mo, $8592/yr

NOI: $15408 - $8592 = $6816

Financing:

30 yr. fixed, 4% interest

P&I: $601/mo, $7212/yr

Cash Flow: $6816 - $7212 

= Negative $396/yr, $33/mo

Albeit I believe I used conservative numbers, looks like I'd be in the negative cash flow.

*AKA not a good buy and hold candidate unless I increased equity by higher down payment or lower purchase price...

Is my analysis and understanding correct? Thanks for reading and any feedback is much appreciated!

@Austin Fruechting I appreciate the response.

So using this as an example, based on the picture and purchase price, it looks like it would be a steal of a deal in terms of great looking property for such a low price of just under $50K. It also initially seems like a good investment at ~1.7% using the 2% Rule. Even despite the conservative expense numbers, the cash flow just doesn't pan out like I thought it would prior to analyzing these numbers.

I guess my question is, being new to this and assuming I'm running these numbers correctly, where does this deal go wrong in regards to poor cash flow? I realize there is the big variable of financing routes that could affect the outcome, but after analysis, it seems like this would be a poor buy and hold investment. 

@Austin Fruechting Hey could you just clarify what you meant by 60% expenses?

When I run the numbers with the conservative end of the rent ($800) and same expenses:

Gross rent (8% vacancy) - $736

PM (10%)- $80

Repairs/Maintenance (10% GR)- $73

CAPEX (7%)- $51

Taxes- $175

Insurance- $100

NOI = Gross monthly income ($736) - Gross monthly expenses ($479)

NOI = $257 monthly, $3084 annually

Cash Flow= NOI ($257/mo, $3084/yr) - Finance ($346/mo, $4152/yr)

Cash Flow= -$89/month or -$1068/yr

I realize the expenses are conservative to start, but I am getting negative cash flow....am I missing something or doing something wrong?

*Thanks in advance

@Rustin Dowd Is there a specific reason why you went with a 15-year note?

Did you acquire this property through personal contacts since you mentioned a divorce foreclosure?