All Forum Posts by: Liam Goble

When I use my calculator, I arrive at approximately $5,440 in annual cash flow with a total out of pocket slightly over $50k, so your cash on cash return is roughly 10%. My calculator assumes some slightly different numbers: Property management is 10% of gross, Repair reserves are 10% of gross and $50/annual permit fee.

Unless the property is in terrible condition, the 25% vacancy seems a little high. That is one unit sitting vacant for 9 months. My default vacancy rate is 10%, and I try to manage to 5% max.

@Barry M. I'm starting my first flip in about two weeks. To arrive at my ARV, I used the 'Recently Sold' listings on Zillow, and because I'm not a Realtor, I took 15% off of my comp.

@Kaphan Edwards Welcome to BP. I'm relatively new here as well. When I first started posting/reading on BP, I knew there was significant resources available on this site, but only recently have I started to probe the depths of the knowledge available on BP. It's actually mind-blowing how much information is available here.

Good luck with your investments.

@Sandy Franklin I do not own a vacation rental, but my family does visit one such rental in Maine each year. We actually pay the owner directly and he has a contract with a PM company to make sure the rental is ready for each guest and is available for when problems arise.

That being said, we still have to pay in full prior to the week of our vacation and there is a cancellation fee if we back out, and I think it's a 60 day notice.

@Allie Conn What are typical rents in the So Portland area? My wife and I would like to invest in the area, but have had some trouble evaluating the rents for properties that are on the market. We live in Pennsylvania, but spend a few weeks each year in Maine/NH, usually traveling back and forth between No Conway and Portland.

Thanks @Pat L.

@Dawn Anastasi "That is true in my area too, but it may be better to use the $25k as down payments + rehab on 2 properties versus buying just one with cash." -- Too true. My first purchase was $18k in cash for one house. I next purchased two duplexes for about $20k w/ leverage. Cash flow from the duplexes significantly eclipses the SFH.

Thanks for the clarification @Pat L. As to your son's business model, from what I gather, he purchases distressed properties (probably physically distressed, rather than financially), improves the properties, rents them, then sells them to investors and holds the note?

From a financial perspective, I assume he is purchasing the homes for ~$10k, investing $5k, selling for ~$60k w/ 25% down, so his cash is back out, but now he's earning the %% on the mortgage. Does this seem more or less like how he is doing it?

Thanks for sharing.

@Trevor Lohman I started with approximately $15k to invest. My target market is much less expensive than CA - bought my first SFH for $18,500 cash, rented at $725/month. I would suggest either joint ventures or setting up a company with another partner and purchasing through that company.

@Pat L. When you say ">$14,000 p.a.", what do you mean by that exactly? Is that that your son is making $14k annually with the notes that were purchased for a $25,000? Thanks.

@Thomas Swindell - Thanks for the info. I'm about to start my first flip. I'm a contractor, so I have a general sense of the costs for a rehab, but will be extremely vigilant when moving through the improvements.

For point of reference, I've got a contract on the house for $23k and estimate $25k in rehab expenses with an ARV of approximately $82k (according to my Realtor).

I have three goals: 1) Make some money for my investor so they will invest with me in the future, 2) learn from this project and 3) make a little money for myself.

I'm willing to sacrifice my own cash to make sure I can do more of these with my investor in the future.

Thanks again for the post.