All Forum Posts by: Lucio Palanca

Here are my numbers: 

Land cost:170K, Building cost per unit: 100K X 6 units = 600K.  Total cost of land and building = 770K

25 % downpayment = 192500, Assuming 6% interest @ 20 years =$4462.39 X 12 = 53548.68 ( annually)

Assuming Rental income at 1500 per unit (conservative estimate based on surrounding rent), $1500 X 6 = $108,000 ( Gross income)

Expenses (Annual) Insurance $10,000

                            Maintenance 5 % of gross $5400

                             Property mgt 10% of gross $10800

                             Electricity to common areas $1000

                              Cap ex (15% of gross since everything will be brand new))  $16200

        Total expenses: $43400.00

NOI: 108000-43400= 64600

CAP rate: 64600/770000= 0.83 X 100 = 8.3%

COC : 64600 - 53548.68 = $11051.32

I appreciate everyone's input and I believe there is a market with all the duplexes just next to it, specially the town of Brownsburg is really booming.  As I said the buildable area as surveyed is 1.2 acres and I plan to build 1-2 bedroom town homes.  Hopefully, I can get 5-6 units in place.  I am waiting for my builder for his suggestions.  

 This property was verified to have at least 1.2 acres of buildable land.  I plan to just buy the land as we already have an agreed price with my brother and just include the whole package with the construction loan.  Btw, I am not tearing down or re developing existing buildings and as you can see on the aerial view that this lot sits in between residential duplexes and commercial buildings on the other side.  

 411 Johnson ln Brownburg IN 46112

Thank you for that advice

I will not use a financing company to pay my brother.  I will simply have an agreement to pay him monthly.  The financing company will be needed for the building construction only

thank you Henry for this response.  pls forgive me for my inquiries as you can see I am a total novice.  What does the 2nd position mean?  Assuming that I have had my numbers checked, permits secured,  and building plans reviewed, could I proceed to build?  My brother wants to make is as easy as it is for me to build.  I was planning to build with a separate contract between him and me for the lease to own payments.  

My brother owns a 2 acre parcel of land zoned as industrial.  He has offered me to lease-purchase the property .  I want to build 6 duplexes in the area which will make me fall in a commercial real estate category for tax consideration.  Do I have to get the land titled to me before I build?  I plan to make a separate contract for the lease purchase agreement. 

I was always dreaming and hoping that I would have the guts to dive into the rental property business. One day, I happened to find myself listening to an audiobook by Brandon Turner.  After going through it, I followed his advice and bit the bullet.  I am now a proud owner of my first rental home.  I plan to get at least 8 properties within 5 years, since I project my timeline for work would be about 8 to 10 years more. 

I purchased a single family home under my LLC as my first foray into rental properties. There are repairs that need to be done to the crawlspace drainage which would cost about 10K. Can I expense that out as a business expense?