All Forum Posts by: Aaron Montague

@Mike Faulkenberry Are the sellers set on a 190k price tag? This deal works nicely for you if you can get it for 150k.

Do you have any cheaper lending sources?  Family that would take 8 or 9% and no points?

@Erik Rouleau Buy and Hold is a straight forward strategy anywhere :)

Which population segment are you targeting?  Westfield and Holyoke are possible college towns. 

Springfield is cheap and doesn't have a good reputation for tenants, deserved or not.

First place I saw on Realtor.com, https://bit.ly/2Y8fkBD, is a disgusting pit that needs everything.  The advantages: everything is already hooked up and it is on town sewer.  Rentometer puts rents for a 2 bedroom place at ~1000/month for that part of Springfield.  So it you turned it into 3 2-bedroom apartments you would make good money on the place.

This all assumes you can get good tenants to live in that building that pay their rent.

@Account Closed Your Maintenance number is too low.  I would bump this up to at least $200/month.  Click for my post on how I figure Cap Ex for my building.

Why are you paying utilities for all of the units?  This is the first thing you need to move to the tenants' names.  For a property like this you may have some common lighting, a bit of security and some safety signage/lighting to take care of.

The Sewer and Water bill(s) is another story.  That may fall into your hands.  I would try and split that out as well.  You definitely want the commercial space paying its own water/sewer bill.

Is trash buried somewhere in there?  Again, you will probably want to put that bill on the commercial space.

Do you have legal fees in there?  Keeping a business entity up and running costs money.  Even if all you are paying is the state Corp fee each year.

Overall it looks like a good property.

@Walter Milam I highly recommend you account for the ~$190 in PM fees each month in your calculations.  This allows you to look at the property from the perspective of not wanting to manage it in the future, be that next month or late 2026.  Even if the payment goes from the business, to you, to the bank, get used to accounting for it every month.

If you don't you will surprised by a sudden lack of income from the property if you are forced to put it under someone else's care.

@Matt Clark Here is how I see the numbers broken out.  

I don't recommend using a % for Cap Ex.  If you know things are coming due in the near term, you might want to float the money to the business now and pay yourself back with the Cap Ex expenses over the course of the years.  Here are my thoughts on Cap Ex and how I figure it.

Everyone else makes good points about moving some of the expenses to your tenants.  This is not a good deal otherwise.  I keep my numbers conservative and then enjoy it when I beat my own financial predictions.

My added suggestion: Eliminate the lawncare with a zero-scape.  I'm not sure what that would look like in your area but it should pay for itself quickly.

@Wyatt Dixon Sounds like the homework is done.  Now come up with a proposal for investors.  And figure out exactly how you are getting out of the investment.

"I will need X dollars for Y months and believe your profit should be Z"

@Account Closed 2 Things:

1. Keep at it.  RE is a frustrating endeavor.

2. Start putting money away today.  Make it a regular thing.  Cash is still king in this game, especially for the rookies.

Ideas:

Start your own REI group. Convince your friends. Keep posting here. Find specific topics to discuss. Do it at an interesting location. Pass out flyers.

BP is a great place to find just about anything you could want in the RE world.

@Wyatt Dixon Now those properties sound good.  @Account Closed posts and such.  They have a massive buyers list for their projects.

What are you brining to the table besides the deal?  Some cash always makes investors happier.  "Skin in the game" is the term I hear most often.  Do you have good credit that could be used with someone else's money to secure the properties?

Do you have a trade you can offer?  Any ability to do work on the property that doesn't involve cash flowing out the business?  This can be anything from a family connection to a greenhouse all the way up through a GC license on top of your electrician license.

You mention good ARV and such but how realistic are your numbers? What about your background says your repairs numbers are accurate?

@William Kelly Quick and Dirty: 

What is the ARV of the property?

Who are you going to sell it to?

@Robin Wilcox Here is my perspective on wholesalers from a buyer's point of view.

Find your buyers first.  Know which crews want termite ridden, asbestos covered 2/1 800 sq foot sitting over sinkholes vs the patch and paint 4/3s in gated communities.  If your list is long enough you can get a bidding war for your contract.  Be honest and be known for being honest.

Hustle, hustle, hustle.  You need to know everyone within earshot that wants to buy places and do something with them.  Then you need to beat them to the deals, lock them up, take your cut and move on to the next set.