Barring any last minute hold-up(s), we are set to close on House #2 next week - FINALLY. I just can't wait to get this property off the books and move on to something more lucrative. I told the agent I would be going to the property one last time over the weekend to clean up the place a final time (i.e., the grass/weeds are back, so I will mow and weed eat, plus do spot cleaning inside). I still won't know what my bottom line profit/loss on this property will be until we close, but I'm guessing about -$1,000 to -$2,000 (not counting any tax savings/hits). A tough loss, but I learned a WHOLE lot in dealing with this one problem than any book, course, tape, or whatever could have taught me. I'll definately have a clearer set of eyes with the next, and any other future, property.
I notified the listing broker for House #1 to take off the statement about having potential Buyers' agents calling me before seeing the home. My wife wanted to keep it on to see how much traffic we get, but based on what the agents who called me said, I feel it's more of a headache. This way they won't be burdened about calling me or wondering why a vacant property with a lockbox needs to have the owner called first. We are just starting the big home buying season, so hopefully I'll get this property sold quickly. I also called a local carpet cleaning company to clean the carpets tomorrow. The previous tenant had a dog and cat, and while there isn't any "pet smell" that I can tell, I just feel it needs a good, thourough, professional cleaning - especially since it's on the market as a resale. They quoted me $120 for the whole house, which is the cheapest price I could find. They came highly recommended by another RE investor I'm good friends with, who just used them to clean up one of his rentals. Like with House #2, I haven't run hard numbers on this property, but I think I'll do a LOT better when it's all said and done (around +$20,000, or thereabouts).
Also in the works is a potential 4-unit purchase. I've been conversing with the listing agent for a while now, and all my numbers point to a good buy. I even used Mike's formula of "50% of gross rents as operating expenses" and still show a monthly net profit of over $200. The issue I'm having now is with property management. The property is located too far for me to manage myself, and I'm finding there are almost NO PM companies nearby. The listing agent said her assistant used to manage a 24-unit complex and has experience. I asked her what I'd be looking at as far as cost and services provided if I went with her, and got an uncomfortable response of "At this point, I believe the management fees are negotiable. Let me know what services you would require, and we will work something up."
2 comments:
Hey Steve,
Isnt $200 a month cf on a quad kinda slim? Thats only $50 per unit. & unlike prop manager you will not be able to do any of the managing or maintenance yourself.. If your patterning your evaluation properly, then you'd be looking to get atleast $100 a unit running 45/50 percent expenses.. & hopefully unlike your blog buddy Shaun you wont have to put 10-15k down (on a 40k no less) just to get it to cashflow using "guru" type numbers.. negotiate a better price or put %5 percent down
Regards,
Starsky
I spoke with Mike before, and he says the "50% rule" covers EVERYTHING - PM and maintenace reserves, included (as well as court costs, if needed, CPA fees, etc). Matter of fact the $200/mo I quoted should have been $300, and also included a vacancy factor - IOW, I counted it twice. My own figures, based on the figures my agent relayed to me from the seller is more like $500/mo. The "50% rule" puts it more in the $350 range.
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