All Forum Posts by: Mark Costa

Look up Quickline Capital. @Timothy Maloney might be able to help you. I've also had luck with Tom Greco at Fulton Savings Bank. I have not been in your shoes where one applicant has enough financial muscle to back the mortgage and the other partner does not, but those two people will help if they can.

I don't have an answer to this question, but here are a few ideas that come to mind:

1) How volatile is your market? Is it prone to significant price shifts that would jeopardize cash flow in downturns? If yest, then keep more equity in the property.

2) Where are you in your career and on your path towards retirement?

3) How does REI fit into your overall financial strategy? Is it your main business or one of several investments? If it's a business and you are in the growth phase then you may want to minimize equity, while if it is more of a portion of a diversified portfolio, you may want to keep more equity.

For example, I am in the growth phase of REI, with it being more of a business than a portfolio allocation I add to slowly, so I try to keep as little equity in a deal or property as possible while still hitting a minimum cash flow value, thus maximizing Return on Equity (RoE). Over time, I suspect I will become more conservative and have more equity in my properties, lowering the RoE but also lowering risk.

HTH

Quick question - what are your property management expenses? I see 2k for professional services but nothing else, unless I'm suffering from temporary blindness.

A few quick observations off the jump. The closing costs are light. You have property taxes of 2000  and insurance of 276/yr (which seems low). With survey, lawyers' fees, title search you are over 3k and that is without finance points. Remember, a refinance involves more finance costs as well.

On cash flow projections, the CapEx and expenditures are low. Maybe you feel comfortable because you are rehabbing the property. But 20k does not suggest a major rehab so you should have to budget more for major systems.

Mitchell,

There is a lot unsaid here. First,  you have a significant jump in value based on repairs but absolutely no budget for repairs. Relatedly, the estimations of closing costs seems low - it seems the consensus is to budget 5% of the deal cost for closing costs. You put 3k down for closing costs, which is roughly equal to what you'd need to escrow just to close, assuming the $250/mo property tax estimate was accurate. 

There are no lawyer's fees, survey costs, environmental studies, inspections ..... See https://www.biggerpockets.com/forums/432/topics/21...

I also see no utilities, unless they are lumped into garbage. And you have 5% for maintenance but nothing for CapEx.

HTH 

Stashoo,

More of a question than a critique - did you input the actual tax amounts or are you just estimating and the best number happens to be exactly 5% of the monthly budget? Your numbers seem low to me, but I'm from NY so I expect to see much higher property tax rates.

Ronald,

Thanks for reaching out. I'll contact you tomorrow so we can chat.

Cheers

A few quick things I saw - 

The property taxes are based on the value of 300k, so they should more than double, assuming taxes scale linearly.

Talk to lenders in the area, they will give you the assumed vacancy rate. I always put 10% down to be conservative.

Do you have utilities for common areas (e.g., laundry, outside lights, hallways)?

Hello BPers,

I'm looking at a 5-unit just outside of Constantia, NY. I was wondering what the going rents were for 1 & 2 bedroom units and how the overall demand is. I drove to the property today and the houses in the area were pretty nice, which gives me more confidence in the town in that it does not appear to be dying. I am guessing housing demand is kept afloat because of the close proximity to the lake. I wouldn't mind talking to someone in the area to get a better sense of what is going on.

Relatedly, does anyone know a property management company in the area or in Oswego County?

Thank you,

Mark

Thank you for all the information. I have PM'd everyone who has reached out and am looking forward to my visit.