All Forum Posts by: Wayne Holliman

Thanks Greg. So if I can Reno and get my monthly gross rents income up to $14,000 and I can get the property purchased for $1.1 mil, using 50% expenses would yield me a 7.6%CAP, correct? But I think my biggest issue is cash flow if all I put down is the 20%.

Hi Folks,

This is my first multifamily (Apartment) deal. I have 10 SF and 1 Duplex but want to be sure I am doing the numbers currently on this deal.

Asking Price: $1.4 million ($87,500/unit)

Current monthly rental income: $9775

Monthly Expenses: Water, sewer, taxes, insurance electric and garbage: $1123

This complex owner purchased this place in 1990. It was built in 1971. It is fully occupied in an area of town that is growing very rapidly. There are 5 2bd (750sf) and 11 1bd (450-575sf) units that rent for $500 - $725 per month. The complex needs a new roof ($40k) and driveway improvements (Optional). It has a laundry building but no laundry. It has parking, but no covered parking. A new 96 unit Apt Complex was just sold for $15 million about 2 miles away. It had all the amenities, pool, club house etc. They rent 1bd for $1000 and 2 bd for $1200/mo. 

My plan, if the numbers work, is to purchase, renovate, raise rents to $800 on 1bd and $1000 on 2bd. My reno budget is currently $150,000, but I havent dug into each unit yet.

Questions:

1. With this limited information, what would you pay? I had an appraiser friend tell me to use 8.2% CAP Rate

2. How do I reduce the 20% down that the bank wants me to pay? 

3. Thoughts on owner financing all or part of it?

4. How does the cash flow look to you? 

@Randy Campbell Also, don’t be intimidate with managing up to 5-10 Properties. It’s not to bad as long as you have a good reliable plumber and electrician. The renter interaction can be fun. We take a friendly approach but always let folks know up front, “we will evict you“ If uou dont pay rent. Wayne

@Randy Campbell Randy, When we did our first house we talked with several real estate agents about rental property and leases. We live in a very small town outside Birmingham and folks here are pretty laid back. The agent recommended a closIng attorney abd I went and met wIth her. She had a lease that she recommrnded and gave me for free. The attorney will help you with the state rental laws and keep you from having a 30 page lease. You will want an attorney familiar with real estate on your team. They will be handy when you Tenet issues. Talk to bankers and real estate folks about local attorney’s, then go meet them. It’s a free meeting and you are interviewing them. Good luck Wayne

I haven't thought about that. I'll run that past my CPA and see what he thinks. Thank you

Hey Bryan, Our houses are about 1250sf each. I can do tile work, paint, redo cabinets and carpentry work. So it's about the same if you double the size of the house. It takes longer to get the house on the market, but my profit is great and I enjoy the work.

We are 8 months into our BRRR strategy and on our 3 house. The first 2 homes we bought about a month apart. Rehab went great, renters are great all good. Then came Refi. When we bought the first house, I titled it in my name. The second I titled in the LLC name. At closing, the first house went great. The second house failed to get approval because it was my LLC name. Now the lender has instructed me to do a quick claim deed on the last 2 homes and change to my name, but I have to wait another 6 months to Refi!!! Are there lenders that will lend to an LLC? Any suggestions???

My wife and i have done 3 total Brrr gut jobs. Bought 2 homes for $25,000 each and 1 for$40,000. I do a lot of work my self, but on plumbing and electric i get a pro. We usually put $15 -$20k in each house. The result has been refi appraisals that are at $80,000 each, i get $850/ month rental and I get very good renters.

Your on the right path by doing it right. But buying the house right and getting your numbers on rehab cost are key here.

I wanted to update and thank you guys!! We applied at a local bank to Refi the house for $50k. Appraisal came back today for $80k!!! Super pumped!!! Also, my wife handles renting and admin for us and she rented the house for $850. So the numbers ROCK!! Since my first post, we have purchased 2 more low cost, $25-$40k home and rehab both. One is rented and getting $850 and the 3rd is about finished the rehab process and should bring $900-$1000/ mo. We close the loan at the end of Sept and will look for more!!

That is what we are looking at. Hopefully we can put 2 - 3 four family plex on the property. What are your thoughts on Crowd funding vs bank?