All Forum Posts by: Will Gates
Will Gates has started 7 posts and replied 77 times.
Post: Would you hit this one?
- Rental Property Investor
- Maryville, TN
- Posts 80
- Votes 53
I like the numbers. Seems like your COCR would be pretty good especially since there's been Capex and repairs made over the past few years that you probably wouldn't have to do for several years... I've read a lot about the headaches that can come from D neighborhoods...
If you're willing to handle some possible headaches in exchange for some potentially solid cash flow, then go for it and keep us posted as time passes after you go for it (if you decide it's worth it)!
Post: My Intestinal Fortitude is Weaker Than I Thought
- Rental Property Investor
- Maryville, TN
- Posts 80
- Votes 53
Yikes, thanks for sharing... It's definitely worth it to view those properties, if possible, that seem toooooooo good to be true. I've learned that almost anything that hits 2% rule or higher could be more of a headache than the "paper analysis" makes it seem like.. Granted, there will be exceptions where a person could hit the jackpot with the 2% rule (there was another thread about people and their success with 2%+ properties).. but the majority of 2%+ properties seem to be pains.
Post: Out of state turnkeys
- Rental Property Investor
- Maryville, TN
- Posts 80
- Votes 53
Originally posted by @Larry Fried:
Originally posted by @Will Gates:
When you're all considering calculations.. do you factor in the leasing fee (typically 50% to 100% of a month's rent -so on a monthly calculation it'd be 1/12th of a month's rent assuming 12 month leases) in addition to the PM monthly fee, too?
When I'm analyzing a potential deal, I've been factoring leasing fee (1/12th rent per month) + PM Fee + 7.5% CapEx + 7.5% Repairs + Principle + Interest + Taxes/month + Insurance/mo + Vacancy (10%)... going with the thought that tenants in single family rentals will be responsible for mowing the lawn and all utilities.
Is this too strict in terms of analyzing? Or should I also factor in utility costs, too?
Right now, I'm not finding a lot of viable options based on asking prices + market/estimated rents using these numbers... experienced folks...thoughts?
Your calculation of 1/12 rent per month to cover the lease up fee is not going to be universally applicable. As you mentioned sometimes the lease up fee is less than a full month's rent, maybe 1/2. But what you didn't say is that a tenant may stay in place for more than 1 year. In fact, that is one of the things I look for in property managers, their average tenant occupancy. I like to see 3 years or more as an average. Of course their could also be renewal fees, and you should know about those as well. But these are usually far less than the lease up fee. Some of the better providers may also focus on longer leases 2, even 3 years, like my turnkey provider in Jacksonville, FL. There I have tenants that signed renewals this year of 2-3 years, after already being in their homes 3 and 5 years respectively.
Property management is such a critical part of the long term success of your investment, and truly projections are not one size fits all.
Good point, longer leases would be great!
Post: Taking Action - What's your excuse?
- Rental Property Investor
- Maryville, TN
- Posts 80
- Votes 53
Originally posted by @Dennis M.:
I've found myself in this mindset before... scared that I'll lose the money I've worked hard to save up..... I'm working on changing my mindset to the fact that it's just money! Money can be gained and lost in so many ways... so why not go for something when a person has evaluated the risks and benefits and understands how to minimize risks. I like this thread!
Post: Out of state turnkeys
- Rental Property Investor
- Maryville, TN
- Posts 80
- Votes 53
@Srini Ramkumar, Leasing fee is a fee most PMs charge to owners for getting a tenant in place, which is often 1 month's rental charge. Most PM-tenant contracts are 12 months long, so if you get a new tenant each 12 months. PM would charge you 1 month rental fee, so if you consider it a monthly breakdown that'd be broken to 1/12th of rent per month into your calculations. Does that make sense? If not, I'm sorry - I can try to find a better way to explain it.
CapEx - things like roof repairs, big purchases that will eventually need to happen, so you consider CapEx % taken from monthly rent so you're not shocked when big ticket expenses occur.
The 50% rule is good to consider, but if you're able to pull data to break down the expenses further to get a better idea (area taxes, insurance quotes, PM %, etc) it'll make things more accurate.
Post: Analyzing expenses - include PM leasing fee?
- Rental Property Investor
- Maryville, TN
- Posts 80
- Votes 53
Good day!
When you're all considering calculations.. do you factor in the leasing fee (typically around 100% of a month's rent -so on a monthly calculation it'd be 1/12th of a month's rent assuming 12 month leases) in addition to the PM monthly fee, too?
When analyzing a potential deal, I've been factoring in the following:
leasing fee (1/12th rent per month)
PM Fee + 7.5% CapEx
7.5% Repairs
Principle + Interest
Taxes/month
Insurance/mo
Vacancy (10%)...
going with the thought that tenants in single family rentals will be responsible for mowing the lawn and all utilities written into PM contract. (or should I not do this?)
Is this too strict in terms of analyzing? Or should I also factor in utility costs, too?
Right now, I'm not finding a lot of viable options based on asking prices + market/estimated rents using these numbers... experienced folks...thoughts?
Thank you!!
Post: Is this considered "House Hacking?"
- Rental Property Investor
- Maryville, TN
- Posts 80
- Votes 53
Originally posted by @Andrew Fredrickson:
Don't focus on the "HOUSE" part of "House Hacking" too much. The main idea is to buy a property that you can use as an investment as well as your primary residence. If you can rent a room and make enough to cover or even exceed your own housing expenses, you're way ahead of most people! Just my thoughts.
Best,
I agree with this... if you can have the person who is paying rent cover a good portion of your expenses.... that's a solid win.
Post: Help Analyzing My First Buy & Hold
- Rental Property Investor
- Maryville, TN
- Posts 80
- Votes 53
Were you going to purchase with cash or financing?
Post: Out of state turnkeys
- Rental Property Investor
- Maryville, TN
- Posts 80
- Votes 53
When you're all considering calculations.. do you factor in the leasing fee (typically 50% to 100% of a month's rent -so on a monthly calculation it'd be 1/12th of a month's rent assuming 12 month leases) in addition to the PM monthly fee, too?
When I'm analyzing a potential deal, I've been factoring leasing fee (1/12th rent per month) + PM Fee + 7.5% CapEx + 7.5% Repairs + Principle + Interest + Taxes/month + Insurance/mo + Vacancy (10%)... going with the thought that tenants in single family rentals will be responsible for mowing the lawn and all utilities.
Is this too strict in terms of analyzing? Or should I also factor in utility costs, too?
Right now, I'm not finding a lot of viable options based on asking prices + market/estimated rents using these numbers... experienced folks...thoughts?
Post: Anyone put David Greene's OOS Investing book to action?
- Rental Property Investor
- Maryville, TN
- Posts 80
- Votes 53
As we're getting started long distance, we're approaching OOS or long distance properties from more of a turnkey perspective to get started as that might allow us to get experience with minimizing headache from rehabbing from a distance, plus that could potentially allow us to use the turnkey network (property management + their access to recommended contractors, etc.)