All Forum Posts by: Trevor Scheiderer

Hey Sonya! This looks like a great opportunity for a positive cash flow on a SFH. If I were you, I would slightly adjust your repair and CapEx rates from 5% to between 8-10%. Being that this is a SFH, vacancy may also hurt you more being that you are more dependent on having tenants as compared to a multi-family where you have multiple tenants to help with that expense. I would budget 7% or higher for that portion. If my quick math is correct, after these adjustments, you are looking at a cashflow closer to $290, which is still very good. My final thought would be to always, always, always include a miscellaneous category expense. There are some things that you just can't plan for. For a property like this, I would think that $50-$75 per month would be a good starting point. Then, as time goes on, you can credit that miscellaneous expense to a different expense category if you notice one area becoming low in budget, or notice the miscellaneous category becoming too high. Good luck and happy investing!

@Charles Price It all depends on what you value. While a 13.9% return is very good, are you comfortable receiving $115 per month in cash flow? Is the deal worth the hassle of purchasing? Are you content with an extra $1,380 per year knowing that something may go wrong where you have to utilize those funds? It is still a risk to take, but these are important things to be aware of just in case something goes wrong.

I would agree with Jaysen on the 15% for Capital Expenditures and repairs. I would also continue to include the property management cost whether you plan on managing it yourself or not. Reason being that if you want to scale and purchase more deals, eventually, you will not want to handle property management in the long-term. If you are managing the property, pay yourself that fee and choose whether or not that money goes back into the property or gets factored into cash flow. 

Also, your cash flow currently seems very low. Investors typically must shoot for around $150 per unit per month with a 12% or higher cash on cash return. This deal sounds like it may have potential if you can continue to play with the numbers. 

Final thought, I noticed you don't include an interest rate or potential mortgage points in these calculations (I am assuming you have). But this can play a large role in deciding whether you cash flow. This can be taken out if you are purchasing the entire property for cash, but to that point, having debt on property can be a positive thing if it allows you to purchase more property at a greater rate of return, compared to the interest rate. Happy investing!

I believe, in most areas, you are able to put 3 potential properties on this list within the 45 day period. These are all questions that a qualified accountant or tax professional should be able to help assist you with. Hopefully they can give you more detailed answers.

Long Distance Real Estate Investing By David Greene

Out of State A Practical Guide to Long Distance Real Estate Investing by R.M. Andrews

Hey Joann! If this is your first deal, a total rehab may be difficult to organize on your end. There are so many spontaneous expenses that may occur and wreck any chance of profitability. Personally, as a first deal, I would prefer something that requires a smaller amount of rehab, and learn what that takes. If you plan on purchasing a multifamily and living in unit while renovating, remember to see if you qualify for and FHA. These are typically available to people living in 1-4 unit properties and require about 3.5% down. With today's rates, it makes it hard to beat. Then you can control your costs a bit better and not blow the $150k on a single property. Hopefully, these thoughts spark some ideas. Good luck!

Hey Michael! I would prefer Blue Flamingo Properties. To me, homes sounds like it may be more of a single family home play, but if are planning to go into multi-family, properties may make more sense. Plus, I also think it provides more credibility for your industry. Homes could also refer to being a home building company. Hopefully that helps!

Honestly, it looks like your rates are fair market value. Given that rates are expected to climb within the next 12-18 months, I would say ride them out and reinvest into more property. If you are making an 8-12% return on real estate, why pay off a loan that is charging you 5%? I know it is intimidating to have debt, but it is important to remember that debt can be used as a wealth builder in the right instances, and by getting access to more credit before the next rate hike, banks are more willing to lend now. Reinvest and ride out those loan terms to avoid the prepayment penalties. 

Hey Brendan! It sounds like your father is not in the condition to be around the renovation process. If this is the case, I would if there is potential to have him live in your current place, while you stay in his to renovate, that may be something to think about. Hard money may work well for this, as you can let them know that they would charge you about 9-13% and 1 or 2 points on the loan. If there is enough money to be made on the deal, hard money lenders will help you out. I hope this is helpful.

I agree with @Ryan Boehner. If you feel really uncomfortable with numbers and terrified that you might misplace dollars, then I would consider software, but being that it is a smaller triplex, and that you have opened up a credit card and checking account already, and Excel sheet should be just fine until you start to scale to 6+ units.