All Forum Posts by: Sam W.

I whole-heartedly agree with everyone's common sense advice...take someone with you - even if you have to talk your brother/sister/cousin into going with you.

Shawn Blount

Quick math, but seems to be an awful skinny cash flow on this one.

Even with the anticipated 12% rent increase, you are only averaging $361/month per door before any expenses or mortgage repayment....knock out 50% for expenses and you are at $180/month/door ($1620/month) to pay mortgage, utilities and yourself.

The 10/15 mortgage puts your PI just about $180/month/door...so zero cash flow here

The 5/20 will give you about $38/month/door cashflow.

Don't like the financing or this price point you the truth.

A good deal around $165K....and this assumes there is not a significant capital expenditure needed to rehab/repair.

Andrea M.

Foremost offers multi-property discounts.

Great old(er) thread...absolutely agree with Joshua Dorkin and others.

I've been a happy BP'er for a few months now and am amazed at those who swoop in like migrating birds, drop their...ad....and then take off, never to be seen again. Like a vitual "yellow letter" campaign.

Also, as an aside - The ads that tout, "cash cows", "amazing cash-flow", or "stunning returns" without giving the slightest hint of financials or other deals really don't do much for me...but I'm probably just not imaginative enough to get it.

Alex Henriksen

Some quick napkin math using the 50% rule:

Assumptions:

Selling price $194K
Financing: Non owner occupied, 25%down, 5%, 30 year
Monthly PI = $781
Tenants pay all utilities
No big capital expenditures needed.

Expenses = Gross rent *.5 = $2320 x .5 = 1160
This leaves $1160 each month to pay your mortgage (PI), utilities, and yourself.

Cash flow = $1160 - Mortgage = $1160 - 781 = $379/month. A little tight in my book for a 4-unit.
Cash on cash return = 9.3%

If you managed the properties yourself you could use the 40% rule and your cashflow could be $1392 - $781 = $611. Much better
Cash on cash return = 15.1%

Basically comes down to what your desired returns are and comfort level regarding managing the property yourself.

Good luck.

Sam

Lynn M.

Yes, as you said, mortgage interest is generally calculated on the last day of the month....so for a twice-monthly payment plan, there is no difference.

That said, there is a difference between a bi-weekly payment plan and a twice-monthly payment plan. In a bi-weekly plan you pay every two weeks, for a total of 26 payments / year (vice 24 payments/year for a twice-monthly plan). This will reduce the total life of the mortgage and total interest paid.

Yep....certainly could depending on the fees the lender charges for the bi-weekly payment plan. The OP should check the fees the lender charges and see if it is worth it. Many times it is better just to make a 13th payment at the end of the year since most lenders apply the extra 25th and 26st payments at the end anyway.

The bi-weekly payments reduce the lenght of the mortgage (and the total interest paid) because you are making 1 extra mortgage payment every year.

You pay 1/2 mortgage every 2 weeks = 26 total payments = 13 full mortgage payments / year.

Craig Sturgill

One of things I enjoy about real estate investing is that I am the boss. I don't want to -- nor do I feel the need to -- hide behind a mirky owner/manager arrangement. As I wrote earlier, the buck stops with me. I know it and the tenants know it. In my mind, if I can't look a tenant in the eye and give them a definative "yes" or "no", perhaps business ownership isn't for me (or I should get a management company to look after things for me).

Sam

Hey Craig,

My take...

I'm with you regarding honesty. I dislike the clunkiness of pretending to be someone else - reminds me of when the jig was up for the Wizard of Oz My, "Pay no attention to the man behind the curtain".

Tenants know I'm the owner and "the buck stops here"....for good and bad things. Also, have never had a rogue tenant come looking for me (but that certainly doesn't mean it can't happen).

With regards to an LLC name, I like using words rather than personal names. Just me.

Sam