All Forum Posts by: Shawn Reisner

I can't do that price.  I'll ask around for you though!

Hey, I'm from Albuquerque.  Tell her I'll drive over there and buy it from her today for $100k.

A house I'm looking at needs its roof replaced in a few years.  How much does that typically cost around here?  The house is a little shy of 1,000 sq. ft. and I'd be putting your standard asphalt shingles on.

Hey guys!  I think I found a good candidate for my first investment property, but I wanted some feedback and what you think of my numbers.

The property is a duplex where each unit is a 1BR/1BA.  The total monthly rental income is $1,230 ($585 + $645).

I'm told the roof will need to be replaced in 3 - 5 years and the deck will need to be replaced within 2 years.  The property seems like it's in good shape otherwise.  Also, the property is in an okay neighborhood.

Values with squigglies are estimated.

Asking Price:  $94,500

Closing Costs:  ~$2,500

Rehab:  ~$500

Down Payment:  20% ($18,900)

Prepaid taxes, insurance, and interest:  ~$1,000 (not sure how to estimate this so this is just a guess)

Initial Investment:  $22,900

Mortgage Remainder:  $75,600

Mortgage Interest Rate:  ~4.5%

Mortgage Period:  30 years

Monthly Payment:  $383.05

Monthly Costs

Property Taxes:  $167

Insurance:  $50

Utilities:  $0

Lawn Care/Snow Removal:  ~$50

CapEx:  $100

Vacancy (5%):  $61.50

Repairs (5%):  $61.50

Management (10%):  $123

Total:  $996.05

Total Monthly Rent:  $1,230

Cash on Cash ROI:  12.3%

Do my assumptions seem reasonable?

@Michael Guzik  Good looking out.  Thanks!

Aha, you're right.  I was dividing the wrong numbers.  

I'll have to find out if it's a single property or not.  That would be a deal breaker for me.

Thanks for the help everyone!

Wow - thanks for all the replies!

Since this is really two properties, one with 4 units and the other with 2 units (it's a house and a brick building sitting side by side but listed together), does that still mean it's in the "commercial" classification? I suppose so, right? What if I could get two separate mortgages? I'm going to assume that I can do that for the rest of this reply, just for the sake of practicing analysis if nothing else. Here are my adjusted numbers:

Price of Property

• Asking Price: $225,000
• Negotiated Price: $195,000

Upfront Cost

• Estimated Closing Costs: $5,000
• Estimated Repairs/Rehab Cost: $1,000 $12,000
• Down Payment: $195,000 x 20% = $39,000
• Total Initial Investment: $56,000

Mortgage

• Mortgage Amount: $156,000
• Mortgage Period: 30 years
• Estimated Mortgage Interest Rate: 4.5%
• Monthly Payment: $790.43

Monthly Expenses

• Taxes: $331
• Insurance: $100 $400
• Utilities:  $600
• Vacancy: 3% of rent 5% of rent ($177.25)
• Repairs: 5% of rent ($177.25)
• CapEx: 10% of rent ($354.50)
• Property Management:  8% of rent ($283.60)
• Total Monthly Expenses: $3,114.03
  • This includes my monthly mortgage payment.

Based on these assumptions, this puts me at a profit of $430.97 a month and a COCR of ~15%.  This is assuming I can get the property at a hefty, improbable discount.  If I were to buy the property for the asking price of $225,000, my monthly profit would be $309.37 with a COCR of ~11.5%.

It looks to me like even if I buy the property at the asking price, as long as my other assumptions are correct, this is a good investment.  That being said, I wouldn't buy the property without further investigation into the assumptions I'm less clear about (which is most of them).  A few of these numbers I feel are pretty optimistic, so I'll spend some more time investigating to get them to what are hopefully closer values.

Someone mentioned not being able to get a 30 year amortized loan.  Is that common, or were you referring to a commercial mortgage?  Would it be a potential issue if I were able to get two separate residential mortgages?

Hi!  I'm looking for my first investment property!  I found a 6 unit apartment complex that consists of a building with 2 units next to a building with 4 units.  All 6 units are rented out already for a total of $3545 per month.  Here's what I'm looking at to analyze the property:

Price of Property

• Asking Price: $225,000
• Negotiated Price: $195,000
  • This is the value I'd try to negotiate for the property since it's been on the market for well over a year and the county assessor has assessed the property to have a value of $172,400.

Upfront Cost

• Estimated Closing Costs: $5,000
• Estimated Repairs/Rehab Cost:  $1,000
• Down Payment: $195,000 x 20% = $39,000
• Total Initial Investment:  $45,000
  • This is equal to Estimated Closing Costs + 

    Estimated Repairs/Rehab Cost + 

    Down Payment.  I use this to calculate COCR.
    

Mortgage

• Mortgage Amount: $156,000
• Mortgage Period: 30 years
• Estimated Mortgage Interest Rate: 4.5%
• Monthly Payment:  $790.43

Monthly Expenses

• Taxes:  $331
• Insurance:  $100
  • This is just a guess but doesn't affect the final numbers very much
• Vacancy: 3% of rent ($76.35)
• Repairs: 5% of rent ($127.25)
• CapEx: 10% of rent ($254.50)
• Total Monthly Expenses:  $1679.53

The problem is that with that much monthly cash flow, my COCR is close to 45%, and I'd allegedly be bringing in almost $2,000 per month in profit. I feel like I must be missing something because this property has been on the market for so long and not bought up yet. Let me know if you'd like more information.

I have two questions:

1. Am I missing anything obvious with my numbers here?  Anything else I should take into account or that looks wildly off?
   
2. What reasons might there be for this property to have stayed on the market for so long that I'm not seeing?

P.S.  This is my first post - am I allowed to directly post the realtor.com ad for reference?

@Raymond J. Rodrigues The whole point of a forum is so that other people with the same question can see the answers in the future.  Why not just post your response here instead of in a private message?