All Forum Posts by: Manesh Hardeo

Bryan, I went to UT so let me first say I miss Austin. We actually have an office there.

In any case, what costs do you factor into your NOI calculations?

Right now this is what I'm looking at:

Taxes/Insurance (variable based on prop)
Prop managment 8%
Tenant placement $295
2 months vacancy

Just curious as to what you use or if you think my calculations are too conservative...

Rentals? But flips we can talk about as well! Although it seems most investors have a specific dollar amount they'd like to make on flips.

What in your opinion makes for good cash on cash returns? Now I know this can vary depending on the risk of the area, but generally speaking what do you expect?

I see companies advertising 25% cash on cash returns, but when I calculate the numbers I'm not seeing taxes, insurance, management (i know this is optional), 2 months vacancy, and even tenant placement being factored. After all those costs what would you expect?

I'm curious to see the response. Thanks for your help!

Manesh

I'd actually get a bid for the work that needs to be done and make sure it's disclosed that they're purchasing as-is where is. You noticed some damage so have a contractor make sure the problem can be solved and how much it would cost your buyer.

Well, before you get to that point I'd make sure you have at least some buyers together and KNOW what they're looking for. I see it all the time where wholesalers contract something that's a REO on the market, but guess what....everyone else can see that same deal, so you win some you lose some, but know your numbers and what buyers are expecting. If you have buyers and you know what they're wanting it's a matter of putting them together if the numbers make sense.

James,

For us we put together our own spreadsheet with costs, but it's so regional it's hard to say there's just one. Also, over time material/labor costs can vary. We are constantly tweaking numbers and adjusting. For example, after Hurricane Ike during my time in Houston roofing costs spiked bc materials were harder to get a hold of etc.

The bottom line is if you put something together for yourself get some trustworthy contractors, talk to them, get some bids, and from there you'll have a true understanding of what your costs are. It took me a few months of flying from Houston to Atlanta to get ours together here and I'm still trying to learn some of the costs. For example, foundation piers in houston -- we could get for $125/pier vs here is $950/pier. It's insane...

In any case, stick to your local market that you plan on purchasing in and it'll be much better for you.

Happy investing,

Welcome...I too miss the hill country! Hook 'em Horns

What Jon Klaus said. Disclose everything, but most importantly to disclose requires proper verbage in your contract/addenda to do so.

I recently ran across a similar situation here in Atlanta. The seller's family got involved and....well long story short -- the seller did not want to sell it.

After speaking with a couple of attorneys and getting advice about any cases with precedence we quickly realized that a Lis Pendens could not be filed without a lawsuit first being filed. Now, we're starting to talk about time and money.

What was also told to me was the chances of suing for "specific performance" would be hard to do and could take some time. The laws, here in Georgia anyway, did not make it easy to do. The alternative was to get a monetary judgement filed against the seller. Sure, you could do that...it would cost some money. But, in the end are you really going to get anything out of the seller? Probably not.

The bottom line is if a seller doesn't want to sell the house it's probably not worth the time or energy to fight it. There are plenty of deals out there so we chose to move on.

That's just my opinion, but that's what happened. Hopefully this helps out a bit.

Thanks,
Manesh

I'm not a fan of the 800#s and using an answering service. I often wonder how people have success with this method, but hey I'm sure it works for someone.

Google voice tends to work well though.