All Forum Posts by: Steve Kim

@Alfred Litton

The only 2-4 units in town are 70+ years old and are in C-/D neighborhoods ... so no real comps at all. 

He said the price was based off of price per sq feet of single family homes in area.  The most recent home that was sold with very similar amenities sold for $135/sq ft so the seller is saying I'm already getting a discount at $104/sq ft. 
 

@Alfred Litton

That’s good point. I did verify the current tax (which has been consistent at $4800 for past 3 years) but you’re right- I didn’t think about the city reassessing and nearly doubling taxes...

Is there any way to know beforehand/be certain of how much it would increase by or if at all?

@Lucia Rushton

It has two car ports per unit and it is properly zoned (verified).

There’s zero comps as it is the only newly built duplex in this entire area thus making my analysis a bit more difficult.

I’m in Wichita Falls so I also won’t be seeing appreciation like you would

@Sebastian Marroquin 

He's selling because he's building his dream forever home and needs cash. 

There are handful of other properties that are performing at >10% CoC are at least 50 years old and are all very outdated and in C class neighborhoods which I assume will have significantly larger maintenance/CAPEX costs and lower quality tenants.

So I guess my question is, how do you factor in the age of the property and its higher end finishes? 

I will be self managing for first 3 years which would save me $9000. If I roll that $9000 back into my calculations (subtract it from closing and down payment costs), my Cash on cash jumps to 7.4% and if I can get the seller to come down just $5,000 on sales price, my CoC is at 8%.

(Yes I'm aware of time value of money but just trying to keep it simple as possible)     

And I'm pretty sure I can raise rents by $50 in 3 years which would increase my CoC further.

Is my logic valid or am I starting to get too emotionally attached to this property?

I actually am co-located with the property and will be self managing for at least 3 years but I still accounted for management fees. 

Hi BP!

I currently have one rental property (primary residence turned rental) and this will be my true investment property purchase and wanted to make sure I'm on the right track.

Anyway, my agent who is also a builder/investor is selling his 3 years old duplex (1450 sq ft, 3bd/2ba per unit) , built ground up with all new/relatively high end amenities (tiled bath, quartz tops, custom kitchen, laminate everywhere). 
This is in north Texas so cash flow is typically weaker than other regions. 

Here are the numbers:

Purchase price: $300K
Closing: $5K
Down (20%): $60K
Rental Income: $1250 per unit ($2500 total)/ mo

Monthly Expenses:
Management: $250
Maintenance/CAPEX: $250
Vacancy:$125
Insurance:$100
Tax: $400
Total: $1125

Debt Service: $1030

Monthly Cash Flow: $345
NOI: $16,500
Cash on Cash: 6.4%
CAP: 5.5%

There are no comps for a new duplex so I've analyzed a few single family homes with similar square footage (1300 to 1600 sq ft range) and most of them perform at around same or slightly lower CAP and CoC rates.

I know the numbers aren't too strong but I believe that I can consistently get high quality tenants and can easily utilize one of the units as a short term rental because of the nice finishes.  Also this is the perfect house hack duplex for other buyers in the future (My wife refuses to house hack so no go for me)

Any input/feedback would be greatly appreciated!

may I ask how you're cash flowing in LA?  Even if I avoid buying retail, numbers just don't work for me.

What part of LA are you primarily investing in?

@Jordan Berry @Tony Kim

If you’re looking to replace old machines, do a full laundromat rehab, or even considering converting a retail space into a laundromat, shoot me a message.

My father specializes in that area with over 15 years of experience working with laundromats and hotels/spas all over Southern/Central CA.

@Dan Kim

DM me. I’m interested