All Forum Posts by: Aaron Montague

 The $150 is my target cash flow per month for my initial offer.  I'm good with $100/unit/month if there is obvious room for rent increases and/or expense decreases.  Ideally my offer is taken and I can still increase from $150 instead of $100 :)

The 30 year loan is better because it is less cash out of pocket each month.  The general point of having tenants is that they pay for everything.  Having a lower monthly payment also give you the ability to pay back extra should you feel like it.  IF you can make your numbers on a 15 year loan, go for it.  I've been doing this for a long while and I've never seen a 15 year mortgage on a long term residential rental make financial sense. 

@Anthony W. you have $550 in misc expenses.  Is that a real number or something left over from figuring out the spreadsheet?

$3250 does seem about 2x what a SFH 3/1 is going to get in Midland:

https://odessa.craigslist.org/apa/d/midland-casa-nueva-de-3-recamaras/7135360959.html

SFH generally don't have owner expenses for any utilities, which is nice.

If Midland is a hot rental market then your vacancy should be low.  I use 8.1% which is 1 vacant month per unit per year.

@Troy Studer - Even if you intend to self manage, put 10% in for property management.  If you don't, you will not be able to look at deals accurately.  If the deal looks good with 0% for property management, does it still look good if you need/want to move and have to pay 10%?  When self managing get used to paying out 10% of the gross rents to yourself, at least on the books.  This gives you the ability to shift the Property Management work to another company without screwing up your cash flow completely.

Change your mortgage to a 30 year loan.  If you want to pay more down each month you can.  

2.8% without points seems REALLY low for an investment loan.  Despite what most of their websites say, the investment grade loan rate DOES NOT equal the primary residence rate :)

@Brenden Mitchum covered the Cash on Cash ROI return nicely. So I'll put a concrete example down. I adjust my offers so I'm making 12% CoC ROI AND $150/door(unit)/month.

Hi @Emerson Hazell!

Welcome to BP and the Real Estate investing world.  It sounds like you are trying to find what we collectively call C or B class properties.  Take a look around the site and gather some different opinions on what A, B, C, D and Warzone properties mean to the various folks.  

Let's try the click bait style title this week and see what happens :)

My business partner and I have 1 property in our portfolio. We are looking at 5 other deals in the immediate future. These places are in NH and MA. Please send me a DM if you are interested in hearing more details.

We are looking for cash partners looking to invest between 20 and 100% of the cash we need to close or close/renovate these deals. Numerous people have said something to the effect of "I won't invest without you putting cash in as well." We are looking to build a portfolio with partners for the long term. Bringing cash to these deals on our side is perfectly acceptable to us. Hit me up and we can talk numbers.

Current Deals:

Flip - 19% ROI projected - Cost to start ~155k
Buy and Hold #1 - 10% current CoC ROI, 13% projected ($100 below market on rents) - Cost to close ~41k
Buy and Hold #2 - 10.7% CoC ROI - Needs ~10k in work - 57k should cover purchase and reno
Buy and Hold #3 - 7.2% current CoC ROI, 12.1% projected ($250 below market on rents) - Cost to close ~50k
Buy and Hold #4 - 0.0% current CoC ROI, 16.7% projected ($1000 below market on rents, converting a commercial space into a 2/1 apartment) - Cost to close and reno ~63k

@Brendan Murphy Do you work downtown?  I ask because finding a place to live that gives you a good commute while lining your pockets if always a good plan.

My business partner and I have 1 property in our portfolio. We are looking at 5 other deals in the immediate future. These places are in NH and MA. Please send me a DM if you are interested in hearing more details.

We are looking for cash partners looking to invest between 20 and 100% of the cash we need to close or close/renovate these deals. Numerous people have said something to the effect of "I won't invest without you putting cash in as well." We are looking to build a portfolio with partners for the long term. Bringing cash to these deals on our side is perfectly acceptable to us. Hit me up and we can talk numbers.

Current Deals:

Flip - 19% ROI projected - Cost to start ~155k
Buy and Hold #1 - 10% current CoC ROI, 13% projected ($100 below market on rents) - Cost to close ~41k
Buy and Hold #2 - 10.7% CoC ROI - Needs ~10k in work - 57k should cover purchase and reno
Buy and Hold #3 - 7.2% current CoC ROI, 12.1% projected ($250 below market on rents) - Cost to close ~50k
Buy and Hold #4 - 0.0% current CoC ROI, 16.7% projected ($1000 below market on rents, converting a commercial space into a 2/1 apartment) - Cost to close and reno ~63k

@Connor Rice To me "buying a bunch of equity," then realizing the place has minimal, or zero, cash flow means flip.  This deal does not look worth it to me once the property management is in place and you've raised the vacancy rate back to 5%+.

Just because I won't buy it doesn't mean you shouldn't.  Looking at this deal in a vacuum I would tell you to walk away unless the price came down a ways farther.  Taking care of your folks is a different story all together.

Have you spoke with your parents about raising their rent a bit so you get back to even with your monthly numbers?  Is $1200 for the 2/2 side the most you can get?  What are your repairs going to do accomplish?

@Connor Rice how does the cash move around this deal from start to finish?  If your folks own this place outright are you going to cash them out at the refi? Is the pre-refinance P&I number from a current mortgage?

I second @Maggie W.'s opinion on the vacancy.  I use 8.1%, it is 1 vacant month per unit per year.

I don't see property management on your expenses list anywhere.  I would add 10% for that as well.  While you could do your own, I recommend at least paying yourself the 10% so you get the accounting used to seeing that money leave every month.  If you don't have that expense in your initial calculations you'll be in for a nasty financial surprise when it comes due.

Your sewer and water bill looks low to me.  Though you obviously have closer access to the number than I do.  Is $30/month enough to cover that?

My business partner and I have 1 property in our portfolio. We are looking at 3 other deals in the immediate future. These places are in NH and MA. Please send me a DM if you are interested in hearing more details.

We are looking for cash partners looking to invest between 20 and 100% of the cash we need to close or close/renovate these deals. Numerous people have said something to the effect of "I won't invest without you putting cash in as well." We are looking to build a portfolio with partners for the long term. Bringing cash to these deals on our side is perfectly acceptable to us. Hit me up and we can talk numbers.

Current Deals:

Flip - 19% ROI projected - Cost to start ~155k
Buy and Hold 1 - 10% current CoC ROI, 13% projected ($100 below market on rents) - Cost to close ~41k
Buy and Hold 2 - 10.7% CoC ROI - Needs ~10k in work - 57k should cover purchase and reno