All Forum Posts by: Michael Finkelshteyn

I am interested in a 4-plex in Houston,TX. The property is listing from a wholesaler for $133,500. CAD appraises it at $179,000 and it has gone up from $135,000 in 2010. Wholesaler says it needs $16,000 in repairs. I've visited the property and it appears to be cosmetic (stained carpets, dirty toilets, sinks, tubs, paint), however I am taking the $16k with a grain of salt. I am going to visit the property with a contractor to verify the number. Below is my analysis.

Property Taxes:2.693%
Property Management:8%
Insurance:0.86%
Vacancy: 8.7%

These are the expenses I've considered
Maintenance (15%)=$372
Insurance=$96
Property MGMT=$199
Property Taxes:$300
Miscellaneous=$100
Vacancy=$216
Debt Service=$725 ($135,000 30 year loan at 5%)
No HOA Fees
Total Expenses:$2100

After all the math, I get:

GOI=$2480
NOI=$1198
CFBT=$473 (Cash flow before corporate/personal taxes)
[b]CFAT=$220 (Cash flow after corporate/personal taxes)

Cap Rate=10.8%
COC=5% Cash on Cash Return

I am positive cash flow $200. However, rentometer shows that the average rent in the area is $730. If I can rent for $700, then cashflow greatly improves and COC is 10%.

Are there any expenses that I've failed to include? Is there a key financial metric that I haven't calculated? I greatly appreciate any feedback.

Thank you all for the welcoming and replies!

Carlos F. do you have experience with furnishing rentals? I was considering going that route if I am to target ex-pats and corporations. My idea is to rent high quality furniture from a furniture retailer and then mark up on the furniture. This will prevent me having to purchase furniture, but more importantly I could tailor the furniture styles to suit tenants or keep up with trends. I am not sure if this is realistic and I haven't really found a good source for furniture rentals. What little I have found runs about $800/month for 3 bedrooms. That seems a bit ridiculous and I have a hard time seeing how marking that up an extra $100 or $200 will work.

My family has a townhome in the energy corridor really close to several major multinational oil and gas companies in addition to multinational engineering companies. It's also located within walking distance of an elementary, middle school and high school. I wanted to know if anyone on BP has had success renting out a townhome or a single family home in this area. While its in a really good location, I haven't seen or heard of many people renting in this area. Most of the demographic consists of families that purchase the homes. However, I am considering catering to ex-pats that may work for these companies, but from what I have heard, most ex-pats find the homes themselves and the company pays for living.