All Forum Posts by: Justin B.

since it's REO they are minimal. it's just an in house evaluation as opposed to a full appraisal. It's only a few hundred bucks and that is calculated into my ConC return. Otherwise looking at just the down payment, it's 212% :)

So before people get on me about bragging, please notice I did put this into the real estate success stories forum :). We are buying our 10th property (a milestone by itself), but the real story here is the numbers. I'm constantly surprised with what's out there. Where did we find this one? The REO list from our bank. I'm also posting this because I want to show people that fantastic deals are out there.

The numbers are really insane. Below is what we're looking at.:
-- Area: OK. Not great, but not bad either, but OK areas is where we typically invest.
-- Purchase Price: $37,000
-- Down Payment: 5%
-- Property Management: 10% fee monthly
-- Rent: $750/month (You are reading that correctly).
-- Taxes: $900/year
-- Insurance: $300/year
-- Vacancy Rate: 0% (It's already rented upon purchase)
-- Money put into it: $0 (Upon inspection there is nothing for us to do).

Here are the results from my analysis spreadsheet:
Cash on Cash Return: 170.15%
Debt Coverage Ratio: 2.378
Vacancy Breakeven: 44.43%
Operating Expense Ratio: 23.33%
BreakEven Ratio: 55.57%

Capitalization Rate: 18.65%
Gross Rent Multiplier: 4.111
Net Income Multiplier: 5.362
LTV Ratio: 95.00%
Monthly Rent to Value %: 2.03%

Cash Flow: $331.20/month - The amazing thing about this number is it's WITH a property manager taking 10%.
5-year IRR (using 2% appreciation): 175%
10-year IRR (using 2% appreciation): 172%
Present Value: $11,678
Net Present Value: $9,328
Profitability Index: 4.97

Before anyone starts to say how a price this low isn't somewhere they want to be, listen to this. It's a 1,200 sq/ft 3 bedroom, 1 bath house. It's a typical SFR. I happen to invest in MS where prices are lower than most other places in the country. The house is in great shape, already rented, and we have to put $0 into it. Anyway, just felt like tooting my own horn for 5 minutes :)

The BP Meeting for April is a GO!  If you didn't receive an e-mail from me, please check your junk folder or send me your e-mail if you haven't already.  See everyone Tuesday night!

I've bought 9 properties and none of them had "Investor attention" or any wording like that on them.  Take that for what's its worth :)

I work with Curt over at BuyMempisNow.com.  We have 2 properties with them we purchased about 3-4 months ago.  They got 2-year leases exactly at the rate they advertised on their site.  I own 9 properties and this was more of a test for us (low risk).  So far it's worked out wonderfully.  The numbers are slightly lower than the properties we purchased ourselves but that's to be expected.

I am not affiliated with them and they didn't pay me to say that.  Just a satisfied customer passing along a recommendation.

For anyone who didn't know this was April's Fools the moment you saw the title of the post, please take this advice.

Stay off the Internet today, it will only end badly for you :)

wow, opinions on all fronts.  Someone only wants month to month and others would love 3 years.  I have only done 1 or 2 year leases.  Never done a 3, never been asked.  However on a couple of 2 year leases I have built in increases.  For example, year 1 - $895/month, year 2 - $910/month.  It may be only $15 instead of the $30 or $40 I might could get otherwise, but as long as your property is profitable, who cares.  In my personal opinion, unless you're in $300/month really low income type properties, your tenant is much less like to break a lease than to stay with it.  I've got 9 properties and had ~20 leases.  Only once has it been broken and we were still able to collect on the rent plus late fee (I'm sure that's lucky).  But either way, leases have worked very well for us.  I'd be willing to be NO ONE will post and say I've done 50 leases and had 28 of them broken for example.

I think 10% doing something is even a high number.  It's probably more like 2 or 3% (if that).  Spending 10s of thousands of dollars (or more) is just incomprehensible to most people.  Most of the people on this site have already gotten over that hump and understand the value that spending the money in real estate can bring you.  It's just a matter of doing it.  Almost no one here believes in that go to school, get a job, work for 45 years, and retire off interest from your retirement account mantra.  We all want more.  I went to school, got a job, found real estate, and I'll be retired 20 years earlier than most. 

That's why there is only 270k people on this site and not 270 million.

Try going up to 100 people on the street with a normal job and saying "I'm over a million dollars in debt and I couldn't be happier.  And btw, I make more money per month than you do and I don't really have to work."  99 of them will look at you like your crazy.  It's good though.  If EVERYONE did real estate, then it wouldn't be so lucrative for the rest of us.  We need that 90% because that's who rents our properties :)

I've got 6 so far and we're a week out.  Trying to get to 10.  If you didn't get a follow up e-mail from me, let me know.

Our next meeting is April 7th at 8pm.  If you didn't receive an e-mail from me around the same time as this post asking for RSVP's, it's either in your junk mail or I don't have your e-mail.