All Forum Posts by: Claude Sicard

Hi fellows,

I'm currently talking to a broker in Green Bay, he is proposing me this revised analysis on this property.  I'm still new at this kind of investment, and I'm on the learning curve here. I've already posted the first proposal, in the "Multi-Family and Apartment Investing Forums" I got some good real-estate pieces of advice 2 days ago. Here is the link to my previous post. (I've tried to bump the 5% maintenance to 10% with Cap X/repairs and he viewed as unnecessary... Hum)

After, I went back with some numbers and a more creative approach. Below is the new proposal. Any thought? Also, What should I be more cautious about this 2snd proposal? It seems to little be above the 1% rule, If Am I correct? 

550x 4 month:$2,200.00 Yr:$26,400.00

Total $26,400.00 -

Income

Rental Income $26,400.00

Coin-op $1,200.00

Vacancy/ Credit Allowance 5% $1,320.00

Total Income $26,280.00

Expenses -Best guess and ests totals

(5% min $200)

Management $2,400.00

Utilities Water Power $3,436.00

Maintenance $2,640.00

Insurance $1,500.00

Property Tax $3,447.00

Total Expenses $13,423.00

Total Expenses $13,423.00

NET OPERATING INCOME $12,857.00

Returns Analysis

Capitalization Rate 9.89%

Project Cost $130,000.00

Price Per SF $50.00

Debt Amount $104,000.00

Equity Required 20% $26,000.00

Debt Service $7,895.46

Net Operating Income $12,857.00

Net Cash Flow $4,961.54

Leveraged Return on Equity 19.08% $64,022 net worth accumulation

Principal Payment- 1st Year $3,282.67

Return on Equity after Principal Payment 31.71% $66,660.35

DSCR 1.6284033

Year 1 $8,244.21

Year 2 $10,239.54

Year 3 $13,061.54

Year 4 $16,013.54

Year 5 $19,101.54

Thanks in advance for taking the time to look at this deal.

@Chad Nagel thanks for giving me an insight. I just read and learned the 1% rule now!  

@Spencer Gray thanks for the creative approach and showing me another angle into this property. I'm asking him few more questions on this part now. I did look at the laundry projection this will help rent + value added. Rent seems to have variable based on the sqft and location. I don't know the property location, yet. I'll look at it for sure, it's a life learning lesson for now. 

@Bryan Pham

Yeah, Sounds like a plan @Bryan Pham

Hi,

my name is Claude, I'm 32 and about 8 months ago I graduated with a master degree. I 'm currently working in SV as an Email Campaign Specialist and slowly gaining stability. I already owed an SFH in Florida which provides me a cash flow. However, I think I'm ready to look into preparing my retirement plan(jk or not). I'm looking into 3-4 units MFH to start as my next investment. I got two opportunities in terms of starting capital:

1. My house equity for an HEL or HELOC (I need to learn more about these two to see which one is best for my situation)

2. Cash capital $50000-$70000

Now the complex part:

- I can use both or either approach.  (If you have suggestion plz let me know)

- I have a dream! Of buying an MFH in Cali, but I think it is high above all hope. (From SF to SJ it needs some serious money). I look over few cities such Fresno, Sacramento, Stockton etc... If you have invested in those areas I'll love to learn or hear more about your journey!

- Last Indianapolis because of Salesforce. I lived in Indy, and I know for a fact the city is growing well due to the arising Tech companies. I'm scouting around the city for an opportunity, but I don't find any MFH deals. (If you have invested here this would interest me too)

- Last but not least: I'm trying to learn, read, and grow my real-estate network. If you don't mine to spare some "Tips or Tricks" for a newbie like me.  It'll enlighten me! 

Thanks,

Claude

Hi 

I'm trying to learn, read, and grow my network in real-estate for about 1 month. I'm fairly new to the whole concept of investing into an MFH, but I think I'm ready to look into my next investment. I definitely don't want to precipitate myself into any first deal, but I need to start somewhere. I currently talking to a broker about his 4units MFH on the market and here are the specs for this deal:

Rent Roll:4x $550      monthly returns:$2,200.00        yearly returns:$26,400.00 

Income & Expense 

INCOME

Rental Income $26,400.00 

Coin-op $1,200.00 

Vacancy/ Credit 

Allowance 5% $1,320.00 

Total Income $26,280.00 

EXPENSES (Best guess and ests totals 5% min $200) 

- Management $2,400.00 

- Utitlties: Water, Gas, Power $3,436.00 

- Maintenance $1,320.00 

- Insurance $2,000.00 

- Includes Trash Property Tax $2,826.00 

Total Expenses $11,982.00 

NET OPERATING INCOME $14,298.00 

RETURNS ANALYSIS

- Capitalization Rate 7.15% 

- Project Cost $199,900.00 

- Price Per SF $50.00 

- Debt Amount $159,920.00  

- Equity Required 20% $39,980.00 

Net Operating Income $14,298.00 

Debt Service $9,723.49

Net Cash Flow $4,574.51

Leveraged Return on Equity 11.44% $64,022 net worth accumulation 

Principal Payment - 1st Year $2,579.85 

Return on Equity after Principal Payment 17.89% $64,022.38

DSCR 1.4704591

Year 1 $7,154.36 

Year 2 $9,852.51 

Year 3 $12,674.51  

Year 4 $15,626.51  

Year 5 $18,714.51  

Debt Service Assumptions 

Interest Rate 4.50% 

Amortization 30 

LTV Ratio 80%

(Properties located in Wisconsin City Green Bay)  

Take for a fact: I don't know the surrounding economy of the city at the moment and the area of this property. It seems to be a good deal, but I'm wondering what are some of the questions I should ask? and what should I pay the most attention to this deal or future deals? 

He advises me to refinance the property after the 3 years and reinvest the money into another 4units to grow my real-estate? I have recently learned from the forum this part actually is a good advice by not trying to complete the mortgage because it would be considered as lost at a long run. (If I read correctly). 

Last point: He advised me to take a small HELOC or an HEL of $50000 on my SFH which already paid off.

Any pieces of advice or suggestions are more than welcome!