All Forum Posts by: Tom Scott

There is a home for sale locally that has had a sinkhole repair. By all accounts the problem is solved but it's value is obviously damaged irreparably. Would you buy a house with a repaired sinkhole to be used as a rental? Can you get insurance for such a beast? 

Tom

Yeah, I've got all the prices and labor broken down by job, I used J Scott's forms to create an automated price sheet. What I'm really after is more of a high birds eye view form that will allow me to calculate square footage of individual rooms with notes associated with each explaining all the stuff needed in each room. I could then use this simple form to fill out my rehab cost calculation spreadsheet. I've tried entering data into the spreadsheet while I work, but I'm typically in a hot smelly house that I want to blow through as fast as I can while still being accurate. 

I have a walk through later today in which I am going to try something new. I went to the county website of the house I'm looking at and printed the counties drawing of the building footprint. I then blew this up and fit it to an 8.5" x 14" piece of paper. Now I have a drawing of the house outline that show garage, living , and porch space. Now all I need to do is to roughly sketch room dimensions within the house outline and make notes. I don't need exact dimensions, I just break rooms down into simple square anyway. I figure it adds additional buffer into my estimate since my dimensions are always 5% or 10% over actual anyway.

I'm leaving the office in a few minutes and I'll post how my new process worked later tonight or this weekend. 

Tom

I should also note that currently I just sketch rooms by hand in a notebook. I then use this data to do an estimate off site. 

Tom

Do any of you guys use a paper form to help on your walk through of a property? I have spreadsheets and things to calculate repair costs. What I am after is a form that lets you go from room to room noting dimensions and defects. I'm thinking something simple like a square for each room with some spaces for dimensions and an area for notes off to the side. The square would represent the room and I could note location and size of any defects or things like counter tops, sinks, toilets, light fixtures etc. 

Any thoughts? 

Tom

Earlier I posted about a 28 unit deal I was looking at. Well, now it's time for the other side of the coin. I got a call from an investor looking to sell his town home. It sounds like I can probably get it for $32k or so. This is a blue collar area and the rents hover between $650 and $750 so I would be doing a bit better than the 2% rule. This is one of the large models in the development so I am pretty sure I can get $750 pretty easily. The previous owner claims that he had it rented at that level for a few years. I am going to see the unit next week, but the owner says it has a new kitchen and is in over all good shape. There is an association in place but it doesn't sound like they have any real power to levy assessments but I will of course check all that out before I move forward. Water and power should all be metered separately. 

So, it all sound like a good deal assuming the place is in good shape and it's rent ready. I'd be curious to hear your thought on the numbers and some possible pitfalls. 

I plan to finance it since it is so small, I can get a loan at my local credit union for 10 years at 4%. I assume I'll have to put 20% down. 

Tom

Jean Bolger The property management fee is supposed to be the actual number as well as the insurance. I'm also not sure what other units like this are selling for. I'll research that. Tom

Gerald Harris I agree that the owner wants them gone. The realtor played it down a bit, but it would seem the property manager isn't doing a great job and the owner has been using family to do some of the rehabs when rolling over a unit. If I buy this I want it to he a long term hold. So it needs to be sustainable. Tom

Gerald Harris no this does not include debt service. I'm gonna have to get creative to swing the deal since it is so large. I'm curious what kind of terms I could get on something like this. Tom

OK guys, I'd like your thoughts on some numbers that I'll list below. The complex is a 28 units total consisting of 14 buildings with two (2) 2/1 units in each. The roofs have all been done around 2003 and most of the AC units have been changed in the past 6 years as well. The neighborhood is what you would expect. It's no a war zone, but it aint the Ritz Carlton either. Buildings themselves are basically bullet proof. They are split face block building so anything short of foundation issues won't be a problem structurally. There have been some issues with drugs on property, but I think if one were to work with the police a little bit you could get that under control. Additionally, it sounds like the current owner isn't enforcing rents very well. It seems like he is allowing folks to get behind and I imagine that that is hurting his quality of tenant as well. Walmart just built a super center about a mile away and the area, I think, is going to grow more in the next few years. Vacancy right now is 3 units I think and rents in the area seem to hover around $450-$550. I think if one were to get strict with rents and get a little better tenant class in then you could raise the rents to $550 over time and add some value. The current owner hasn't raised rents on the long term occupants in many years. I'd like to know what you all think. I think the asking price is too high but I'm not sure how much. 

Tom

Asking price: 840,000

Gross rents @ $485 avg: $162,960

Vacancy @ 15%: $24,445

Effective Gross Income: $138,515

Expenses

Property Management @ 10%: $13,851

Property Taxes (2013): $9,412

Insurance: $9,800

Reserves @ 5%: $6,926

Maintenance (plumbing, electrical, misc.): $11,000

Association fees (Lawn, Trash, HOA, Grounds Insurance): $7,280

Pest Control: $1,344

Write Downs / Bad Debts: $2,820

Total Expenses: $62,433

Net Operating Income: $76,082

Cap Rate: 9.1%

Welcome Jon, 

It's always good to have another tech savvy guy around here. I'm an engineer near Gainesville so we are practically neighbors. So even if it is belated, welcome to the forum.

Tom