All Forum Posts by: Willy Ayala

5% Vacancy
Self managed
$1000 year for repair/maintenance
$1000 year for reserves
Investor effective tax rate of 15% (you sent me property tax info, effective tax rate is specific to you and off your tax return.
3% Appreciation as requested, for Texas, i doubt it... I would personally use 1-2% to remain conservative.

The projected year 1 returns are as follows:

(1) Pre-tax Cashflow (Also known as Cash on cash) $1,817 (3.42%), (2) After-tax Cashflow $1,997 (3.77%), After-tax + Principle Pay down $5,980 (11.28%), Total Return (After-tax + Principle Pay down + Appreciation-3%) $13,930 (26.28%).

As far as single family goes in Texas, the returns aren't overly enticing for a generally speaking, cashflow heavy market. These returns are indicative of a highly appreciative NW market and my operating expenses may be a tad low. In my opinion, for what its worth, keep shopping. But if you have questions about my analysis, shoot!

Hi Cory, wow!! Thanks for the detailed analysis and all the information regarding the property. I have a better understanding of how to analyze future deals and will be sure to count for repairs and have reserves. Thanks a lot for your time and guidance. Stay healthy!

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@Chad Carrodus Thanks in advance for your feedback and your experienced insight.

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@Tim Herman Wow, you are absolutely right! I did not account for a lot of potential future expenses. The list of expenses you provided is definitely something I must account for and have reserves for those items. Thanks for your insight and your feedback. I will continue looking for other, more profitable, deals. Thanks

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@Chad Carrodus - I thought about it, but I feel that with a full-time job, I will not be able to be present for multiple tenants and do not want to make my ROI profits slimmer by hiring a Property Management company. I will definitely think about it and keep that in mind. Thanks for your feedback!

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Originally posted by @Cory Carlson:

The 1% rule is a catch all i see mostly used in no-low appreciation markets - please just use it as a quick reference. Highly appreciative markets on the west coast almost never see 1%. I will run a much more thorough analysis for you if you can provide me with some information:

1. What is the expense load breakdown? You said $1503. I am looking for taxes, insurance, repair/maintenanc, management (if applicable, likely 8%), and reserves.

2. What is your effective tax rate?

If you don't know i can make some guesses just for illustration purposes.

@Willy Ayala

Hi @Cory Carlson,

Thanks for your feedback regarding the 1% rule and for helping me analyze this deal better.

1 - Expenses:

P&I = $ $906.40

Insurance $102.51

Taxes $497.62

I did not account for repairs as they seller offers a home warranty of 12 months and I will manage the property. Perhaps, I should have account for vacancy and maintenance nonetheless.

2 - Taxes

CWY (Wylie City)	0.688454 (2019 Rate)	Collin County Tax Office
GCN (Collin County)	0.174951 (2019 Rate)	Collin County Tax Office
JCN (Collin College)	0.081222 (2019 Rate)	Collin County Tax Office
SWY (Wylie ISD)	1.538400 (2019 Rate)	Collin County Tax Office

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Originally posted by @Michael King:

That doesn't hit the 1% rule. 1% is a good starting point to determine whether to explore the deal more in depth (for me). Those numbers in my mind don't allow for vacancy or repairs.

That said, I have 3 properties that are right at 0.73% on the 1% rule (yours is too). My properties were brand new when I bought them, so minimal to worry about mechanically. Something to think about.

Hi Michael, Thanks for explaining the 1% rule. I will keep this in mind when analyzing future deals, very handy. This property is about 12 years old and the inspection did not throw any red flags. Being that it's somewhat new, would you consider it an Ok deal with .76 COC RIO and move forward? Thanks

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Originally posted by @Ryan Hill:

Hey Willy, that's great you are starting to invest! The numbers seem a little bit tight to me just looking at the price/cost ratio. Using traditional financing, how fast are you going to be able to accumulate enough rentals to get to your goals? For example, when I'm buying rentals, I aim to put down between 3-10k per deal between points/closing costs/cash on hand in case unexpected expenses arise but I'm using the BRRRR strategy and using hard money!

Hi Ryan, thanks for your feedback and insight. I'd need several rentals to get to my goals with traditional financing. I have decided to do the buy and hold strategy, for now this would be my first rental, but I agree with you, the numbers are tight. I like your idea of having a reserve of 3k-10k per rental for unexpected expenses.

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Hi BP Family, I have been listening to the BP podcasts and watching the videos for quite some time. I am a new investor and would like your feedback regarding the following deal in Wiley, TX.

Single-Family Home - 265k - House appraised for $275K

Interest rate fixed 3.625

Down payment & Closing Cost $70258 (20% plus closing costs)

Tenants have an 8-month lease left at $1950 a month and will most likely renew their lease (same rate).

Income: $1950

Expenses: $1503

Cash Flow $447

COC ROI = 7.63%

What do you think about the COC ROI percentage? I was thinking about holding the property and then doing a cash-out refi to get some money back to get another property.

Thanks in advance for your input and feedback.

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All Forum Posts by: Willy Ayala

Willy Ayala has started 1 posts and replied 8 times.

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