All Forum Posts by: Aaron Montague

@Brooke Hallock

I had 3 places in Rutland, VT for about 10 years.  They cash flowed well and taught me a lot about tenant management :)  I'm currently flipping in the Morrisville area when something presents itself.

Where in VT are you headed?

I recommend you pass on this deal.  From what I'm reading, you are not going to get anywhere near your $200 per door mark any time soon. A major skill in the RE world is knowing when to walk away.  In my opinion, this deal is also missing a major monthly expense.

I don't see Property Management anywhere in your equation.  Which will probably come out to at least 10%.  If you do not put this monthly expense in you are bound to be physically near the house, self managing, until you sell it.

Are the sewer and water bills already separated? I didn't see that number in your list. 

How about trash?

This looks like an okay house hank only because you don't have to pay the management fee.  If you foresee an increase in value over the next few years, buy this place knowing your only good exit strategy is selling the place.  Here are the numbers as I see this place as a rental at the max rents you mentioned:

@Yonah Weiss

My degrees help my real estate business a great deal.  Besides giving me a solid day job financial base they provide me with a systems design perspective (MS in IT - Systems Design :) ), the ability to analyze then act (MBA), plus a concrete background in building systems (Comp Sci undergrad).

@Axel Norvell

You are missing a critical expense in your numbers: Property Management.  I use 10% for all my evaluations.  You need to include this expense so you get used to that amount of money NOT being there each month.  

At some point you are going to want to hand off monthly operations to someone else.  If you don't think about that number now, you can never move away from the property physically. Put a 10% property management fee in an rerun your numbers. This expense needs to come out of your monthly numbers, even if you are paying yourself that money.

Why are you paying an electric bill on the duplex and triplex option?  That seems to me like a tenant bill. Same with the gas bill.

@Axel Norvell

Is this deal even worth doing, no matter how you look at it?

I see $700 ballon payment that is going to go UP when you refinance plus $1400/month in expenses. If you got it at 220k, 25% down and 3.5% interest your payment is $741/month.  This deal seems REALLY skinny to me.

@Raymond Rashid

It looks like it might be a decent deal.  

What about trash? 9 apartments are going to generate at least a 4 yard dumpster every two weeks.

Vacancy does seem low. Studios tend to turn over even faster than 1 bedroom apartments at my places.  It doesn't mean you can't rent them quickly but it does mean a LOT of tenant searching.

I'll echo @Jaysen Medhurst on the management, I'd go at least 8%.

Do you have any outside lights?  You probably need to account for at least $30-50 per month in utilities, most of which will be common lighting.

I don't see any numbers for the sewer and water bill(s).  I doubt there are 9 different accounts with the city at this place.  That is the bill that may break this deal at that price point.  Up here I would expect to pay about $150-175 per month for 9 adults.

Welcome to BP. You've come to the right place for information on RE investing.

A few Suggestions:

1. I'd go to work for a contractor this summer. Haul lumber, pound nails, sweep and do all the junk that hired labor does. You'll be right there in the thick of everything while the building is happening. Ask questions and get your work done quickly and safely. The contractor will love you.

2. Start paying a % of whatever income you have into a "real estate" fund. This forces you to get used to the concept of budgeting. Real estate takes a great deal of financial dedication, so starting young is always an advantage. Plus you'll get used to working with multiple bank accounts.

3. Update your profile to your exact location. The exact location allows people to ask you questions about your area. Remember you have the unique advantage of being a "kid." This is not a view of the world we see much here on BP.

4. Keep at it. If you stick with real estate through college, you can can say you've been in and around the business for 10+ years by the time you are 30. Most folks haven't even found BP by that age.

5. Ask endless questions.

Good luck and enjoy the site!

This place strikes me as a big loser as a rental.  That doesn't mean it won't make a good house hack. This is probably a better house hack in Evans.

The place you analyzed will probably appreciate over the course of owning it. Some researching into that should tell you about what you can expect over the next 10 years.

Every property should have at least these expenses listed out:

Once you have those accounted for, you can better understand your options with any property.

@Lynnette E.

What vehicle do you use to report your tenants' on time payments to the credit companies?

FYI - One of the things I've seen in talking to mortgage folks in the last few weeks is that points aren't buying much of anything. They blame it on the 'already low rates.' The single best point buy I saw was a 1/4 percentage point rate decrease for a full point.  That was at two different banks. 7 Banks had one full point buying you an 1/8 percentage point rate decrease.

I do echo your 3-3.5% rate on owner occupied.  MAKE SURE YOU SHOP!!