All Forum Posts by: Quinton C.

I have been working through this analysis, I am very new and have 0 investment properties.

This is a property that has been on the market for 6mo. My goal is to come up with a strike price to put on the table, though I do not think the seller is motivated. Property is located in Janesville, Wisconsin and is triple digit old and a case study for how to defer maintenance on everything though currently occupied. My plan is to prioritize building envelope and do minimal interior work to stabilize property value, submeter electricity, and add RUBS fee to recoup utility cost.

1. Ask Price: 120k
2. Bid Price: 99k
3. ARV: 165k (possibly more, this is a comfortable number)
4. Rent: $2040 (currently rented numbers, includes all utilities)
5. Repair: 47.3k
   1. Roof Repair: 6k
   2. Gutters, Fascia: 3k
   3. New Siding (whole building): 8k
   4. Grading: 1.5k
   5. Misc. Trim: 0.5k
   6. Full Interior Paint: 4.2k
   7. New Carpet: 4.2k
   8. Deep Clean: 1.2k
   9. Full Replace of Knob+Tube electric: 10k(+)
   10. 20% Contingency
6. Near Future Repairs
   1. New windows
   2. Full roof replace likely in near future
   3. Pieces of interiors need updating due to wear- shower stalls, some cabinets, etc.

Risks:

1. 1. Analysis depends on being able to recoup most of the cost of utilities while maintaining existing rent. I think this is possible with market rents but everything really hinges on this.
2. 2. Contractors in the area are currently very busy, it may be difficult to manage this breadth of scope on a reasonable schedule.
3. 3. The property is very poorly maintained, there are likely to be many other surprises along the way. My repair estimate is almost certainly on the low side of all that could be done. There are signs of water damage on the interior, I would just be painting over this for time being.
4. 4. This doesn’t meet 70% rule, though plan is not to flip but hold.
5. 5. Analysis assumes I can refinance at 70% LTV, and that what I will put in will get it to full ARV. Not terrible if I can't get this.
6. 6. This would be my first property, I am out of state but have a personal contact in the area to check in.

I am hoping someone will pick this apart and give some feedback!

I am looking for contractor recommendations in Fond du Lac Wisconsin or nearby areas like Oshkosh or Ripon. Any GC or specialty contractor (plumber, electrician, roofer) are welcome.

Thanks in advance.

@Colin Wyatt I am asking for two reasons. First, I want to get a sense of what is baked into listed rents as I am doing market research. If the market rate includes utilities I want to make sure I include the cost in my analysis. Second, I want to know how important separating utilities is. If utilities are often excluded, it could make it harder to recoup the cost of non-separated utilities in a small multifamily. My suspicion is that people do not accurately do the math on cost of renting a unit with utilities included vs not included and the higher sticker price would be a disadvantage in an area where utilities are not usually included.

That's just my line of thought.

@Anthony Chao Do get a structural engineering report. Also look for the words "clay soil" and "expansive soil" on disclosures and inspection reports.

If you do move ahead with the property, consider some more robust drainage control. It looks like the problem areas are at the downspout and the low side of the property slope where water is likely to collect. Expansive soil problems are driven by changes in soil moisture, the soil will expand and contract during wet cycles. If there are unaddressed drainage issues any repaired problems are likely to reappear.

Are utilities typically included with rent in the South Wisconsin markets? If so, what do they typically run per unit or square foot?

I am looking at the Janesville area and Rock County specifically, targeting small multifamily.

From looking at available listings it seems that water is often included but others are not.

Any other advice or information on what to expect in maintenance costs is great as well.

@Danny - I would not recommend donating to World Vision. I know some people who have worked with them in varying capacities and have heard too many horror stories about the waste, poor management, and questionable attitudes that permeate the organization. 

@Eric Additional suggestions:

Give Directly - Facilitates direct cash transfers to people in third world countries. The organization vets and monitors its donations to make sure money isn't being used fraudulently.

https://www.givedirectly.org/

Watsi - You can donate directly to people around the world in need of medical treatment

https://watsi.org/

You could also look at GiveWell's list of top charities and see if any match your interest in giving:

http://www.givewell.org/charities/top-charities