All Forum Posts by: Neems Y.

Hello BP. I found this deal that seems promising and I wanted to run it by someone to see if I am missing anything. Note: The numbers listed are provided by the seller and haven't been verified yet. Some numbers are estimated by me which are marked in parentheses. The neighborhood is not the best. The schools average a 3 out of 10 (range 2-4) from preschool to high school. Walk score is 67, transit score 48 and bike score 56. On a neighborhood ranking website it scored a 59, while Texas scored 69. 

Details:

4 plex MFH in Texas

Each 2 bed 1 bath 

Price: $250,000

Mthly details:

Income: $3,350

Expenses:

Tax: $65

Insurance: $227

Garden: $80 (this is my estimate)

Repairs: $200 (this is my estimate)

Vacancy: 0% 

CapEx: $200 (this is my estimate)

Prop Mgr: $335 (this is my estimate, 10% of income. Is this accurate?)

Loan: $1037 (Principle and interest)

Total Exp: $2144

Dwn Pymt: $50,000

Close Cost: $4,300 (not sure about this one, I was told it's roughly $1300/$100K, any input would be greatly appreciated)

Rehab: $0 (Although, it may need some, but nothing is critically in need of rehabbing). 

Cash Flow: $1206

Cash Flow/yr: $14,472

Cash on cash ROI: 26.6%

Cap Rate: 10.7% (seller list the NOI as $26,789 and GOI as $40,200, so expenses are roughly 33%)

IRR: 22.3% (see attachment)

This would be my first deal ever and first out of state deal, which makes things more complex and daunting. 

Thanks for taking the time to look it over and providing any feedback.

 Thanks for the reply Shawn. Since I'm a newbie, I'll probably stay away from condos for now. 

@Michael Guzik - That makes sense. Thank you for the insight and advice.

@Anna Buffkin - you'll be pleased to find out that I looked deeper into finding a residential loan with only 20% down and I found it. Only caveat is their is a higher interest rate (4.7 vs 4.1). Thanks for the heads up. :)

@Shawn Q. - that all makes sense and thanks for sharing the wisdom. What calculation or measurement do you use to compel you to move forward (e.g. ROI, IRR, etc)? What does that number have to be (e.g. > 20% or 30%)?

@Hersh M. how did your search in Dallas turn out? 

I'm also searching there and found a decent property in south dallas/fair park.

Would you guys consider south dallas/fair park area ok to invest in?

Anybody have insight on Dallas neighborhoods that are trending up now in 2017-2018?

@Anna Buffkin thank you for the input. I asked my broker several weeks ago what the minimum percentage down I can put and he stated 25%. I'll shop around and look harder.

@Shawn Q. thanks for the wise tip. How else is condo investing very difficult?

@J Valansi how are you able to put 20% down? I thought the minimum for an investment property is 25%.

Does the HOA on your 2/2 condo cover property manager fees?

I calculated your numbers and added $80 for lawn, $100 for repairs, $100 for capX and $125 for property manager. Your expenses would be $1489/mth. With only $1250/mth in rent it'll be cash flow negative. 

@Caleb Heimsoth and @Michael Guzik if an LLC isn't created from the start then won't it be a extra time & money converting the owner on the pre-LLC properties title & docs?

@Owen Schwaegerle, thanks for the words of encouragement. I believe the masses go with an LLC, so I prolly go that route.