All Forum Posts by: Matt McLeod

Ali, thanks for commenting.

Bob, I get that you do not support using cap rate to evaluate properties. I'd appreciate it if in the future you wouldn't comment on my posts. Your comments have been rude, condescending and ridiculously confrontational. Congratulations on your success. Please go away and enjoy it.

Thanks everyone else who took the time to comment. See y'all around.

Taxes: $63/mo.

Water, trash, electric: Tenant pays

HOA: none

Cap Ex and ops: Assuming $4500 for initial improvements. Budgeting $400-450/mo. based on 50% of expected monthly rents.

Insurance: $50/mo.

Mgmt: $80-90

Vacancy: 8%

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Thanks for the great ideas. What do you think about presenting 3 offers:

1) 50k, bank financing. (Seller nets 50k minus realtor fees)

2) 50k, seller financing: 15k down, 35 at 4% for 20. (Seller nets 65k minus fees)

3) 50k, seller financing: 15k down, 35 at 6% for 10. (Seller nets 61k minus fees)

Thoughts? Any tips for presenting multiple offers?

Anish, thanks for the comment. Property values have been stagnant in this area for a while, so I think I might be hard pressed to find one that's appreciated over the past year or two. I will keep my eyes peeled though. Thanks for the advice!

Bob, thanks for your comment as well. Since I'm new, perhaps you wouldn't mind explaining why cap rate doesn't matter for a SFR. I included it in my estimate for just this kind of feedback, and because the BP recommended reading for new investors calls it the single most important number when evaluating a rental property. See http://www.biggerpockets.com/renewsblog/2010/06/30/introduction-to-real-estate-analysis-investing/ . I appreciate you pointing out that it might not matter, but if you could explain further I'd be glad to hear your reasoning. Thanks Bob.

Forgot to include our max purchase price of $60k.

Calculations of cap rate and cash flow are based off of J. Scott's 2010 spreadsheet.

Hey all. My wife and I are considering making an offer on the following SFH:

3/1 with 1340sq.ft listed at $64,900. Built in 1954. Its an estate sale by the only child of the deceased homeowner. Vacant for over a year; on and off the market since June of 2013. Decent neighborhood. Lots of seniors, blue collar folks and some college kids.

$4500 in DIY renovations estimated: drywall repairs for small mold & water spots; painting interior; ripping up carpet & installing hardwood laminate; ripping up vinyl & installing tile; replacing oven/stove, refrigerator, & dishwasher. Can live with roof and HVAC but will probably need attention w/in 5yrs. We plan on living in it the first year and then renting it out.

20% down for 30yr fixed at 4.3%

Estimate $850/mo. in rent. Median rent in area estimated at $750/mo. Upper end is around $1000/mo.

Estimated cap rate: 7%

Estimated annual cash flow with 10% PM factored in: $3263

What do the BPers think? Thanks!

Thanks folks!

1) Do they exist?

2) If you answered YES, should I expect the rate to differ from a larger loan?