Investment Analysis- Duplex

Hi Prospects & Friends,

 

I wanted to share with you all this duplex I drove by to see a couple of days ago. I'm waiting for the #'s to come down & will try to make an offer. If seller doesn't want to reduce listing price, then I will move on to the next property for my investment portfolio. I currently manage & own 7 investment properties & looking for 5 more to make a total of 12 to complete my investment portfolio, my deadline goal is to have the other 5 investment properties by 2014. I will starting explaining why I want this duplex to come down in price. First here are the #'s & details of the duplex:

Listing Price- $164,500

Contract Rent- $1,590/mth

Taxes- $230/mth

Maint Fee- $85/mth

Proposed Ins- $150/mth

Total Sq.ft. 2,770- Side 1 $795/mth, Side 2- $795/mth

Side 1- 3Br/2Ba- 1,385 sq.ft.

Side 2- 3Br/2Ba- 1,385 sq.ft.

After carefully applying my investment analysis I've come to the conclusion this property can still come down some more in list price to even give me a better opportunity. I will explain see below:

Rents are currently renting for $735/mth not $795 even though the current owner has signed lease contracts stating so. To apply my investment analysis rule to this property see analysis below:

Rents from owners current tenants are paying $795x2=$1,590-$465 (expenses)=$1,125

So $1,125x6.00/1000=$187,500 (6% interest rate)

$1,125x7.34/1000=$153,300 (8% interest rate).

So based on $1,590 rent ($795x2) range is $153,300-$187,500 this range is off because rents are not consumerate with the list price. This is where many people mess up I take it a step further see below:

Contract rents say $1,590, but current market rents say $1,470 ($735x2) so I will re-apply but work with my #'s see below:

Market rent is $1,470-$465=$1,005

So $1,005x6.00/1000=$167,500 (6% interest)

$1,005x7.34/1000=$$=136,900 (8% interest)

See how my range looks $136,900-$167,500? My range is saying I can offer as low as $136,500 or offer no more than $167,500. The current list price is $164,500, so it's falling in my range of $136,500-$167,500, but I like to keep watching people reduce the list price on a property that has great investment #'s like this one, because you can't loose! So fact is I based my range of $136,500-$167,500 on the market rent & not the contract rent to negotiate so I don't over pay, once property is bought it doesn't matter if rent is $1,590, why complain about someone paying you more in rent than market says? My investment analysis range of $136,500-$167,500 says two things:

1. I wont over pay for property currently listed @ $164,500

2. I based range on market rent which is $1,470/2 or $735/unit. So if tenants don't renew I know market rent is $735/unit & not $795/unit & when I list to lease I will always have enough rent to service the expenses @ the $735/unit because I made sure I didn't over pay from beginning to cause the mortgage to be over $1,005/mth.

I use my investment analysis equations on all my investment properties I analyze & if the #'s don't work I walk away & move to the next. Soon I will offer another helpful article about investment properties.

Business Text Messaging

Hi Prospects & Friends,

 

I wanted to share with you all how business texting has found it's way into my company A. Colette Harris Properties, LLC. permanently, & how valuable of a row it is to allow it. I manage tenants & with everyday company duties I handle, one would think a simple phone call would work. Well my conversing with my tenants has shifted from phone calls/emails to texting for repairs, to when was rent received & general questions about the rental property. I have adopted the texting, because many of the tenants work at companies where they can't use company email for personal use or restricted to making personal phone calls while at work. I get text messages throughout the day/night concerning questions the tenants may have or want to ask me. I reply quickly & get the needs of the tenant accomplished while their at work. For example I had a tenant text me last Friday, saying the bathroom sink has a leak & could a plumber come out to fix it? I texted tenant back asking what is causing the sink to leak, & tenant explained. I said I would have a plumber out Monday, & tenant texted back , "OK thanks". I would say about 5-8 texts were sent back & fourth with I & tenant to converse the repair problem. Another example is most of my tenants want texts with me saying "Received Rent" with the date included in text message. I get texts now from many of my tenants & have accepted it as part of my business & think it's a great business strategy to keep everyone happy I manage. This may not work for many of you who run businesses, & many of you may think I have adopted a un-professional communicating strategy. Well at first I thought I did, and wanted just the email/phone calls during normal business hours, but as I continue to grow the communicating continues to change with technology & people, & in my case I'm accepting the best strategy that works for my tenants. I always thought I would only received texts from family & friends, but now when my phone goes off, it will be a tenant texting me too. My rule for tenants is I will take texts until 10:00 p.m. Monday-Sunday after that the phone gets turned off.

Tax Forms/Service

Hi Prospects & Friends,

I wanted to share a business experience I had awhile back with one of my friends who is a CPA. As a small business owner I try to minimize my business expenses by carefully analyzing the situation/costs. I ran into a problem last year where I was emailing my CPA friend every month asking tax questions about 1099 misc forms, and other related tax forms. He told me April your a good friend, but I'm going to have to start charging you because your causing me to actually engage in consulting, than just a short email answer. So I said ok what is your consulting price, and he said $80/quarter (every three months) with unlimited email questions. So I then said ok I will send you the check, as I said that my brain started thinking there has to be a way to figure this stuff out by myself. So I started surfing the web and came across the Internal Revenue Site. After surfing the site for an hour I came across these things:

A. They offer free tax forms with maxi um of 1,000 for small businesses, and will deliver to your office or home for free.

B. They offer free samples of tax forms, so you can use that as a go-by when trying to fill in your own tax forms.

C. They have a free tax # to call for your tax form questions, and a rep will assist you

D. They offer business seminars to small businesses

E. There link is http://www.irs.gov/ favorite/save it on your computer so will have

So after analyzing after an hour of the Internal Revenue Website, I decided it didn't make sense to pay my friend who is a CPA $80/quarter for tax questions, when I could get what I needed from this site for free & talk to a rep for free. I called him back the next day and said why didn't you tell me about the Internal Revenue Website? He said April I have to make a living just like you and mentioned he was upset with me for going on my own to get my tax question stuff answered for free. I realized I wasn't wrong for what I did and realized he has to make a living just like the rest of us, but my personality trait of being a curious small business owner/entrepreneur caused me to go on my own to get my tax form solutions myself. So my summary is I've replaced my CPA friend with the Internal Revenue Website as my consultant which is free, and saved my company $80/quarter for tax form questions.

"Don't get me wrong my CPA friend was actually a great friend and allowed me to get away without paying all in 2007 and mid of early 2008, but it was around April 2008 he said the recession started to affect a bit and decided to charge me $80/quarter consulting fees. So I then thought because I never paid him anything for the consult emails I was use too getting for free, I had to think quick/fast. My idea about leveraging the Internal Revenue Website was generated the same day he said he would start charging me after I hung up. So I never ended up paying the $80/quarter consulting fee".

FYI- I only leverage this site for my free tax forms and tax related free questions with rep for those forms, because it's saving me $80/quarter than with my friend CPA. *My biggest gainer is I'm saving my business from paying unnecessary consulting money* This site allows me to get my tax questions answered for free unlimited and tax forms free also. I'm just not paying anything, and all its costing me is my time. The site will benefit each business differently, so can use however like.

Foreclosure Trip Tip

Hi Prospects & Friends,

I went by to see this foreclosure last Saturday. The house is nice in size being it is 4,654 sq.ft. & listed for $209,900. The only thing I don't like about it, is the color & design style, other than that the house is perfect, because all the #'s work. I'm on a destiny to find myself a foreclosure to fix up & live in for myself that has an elegant style & rich in taste, as well as priced right & #'s work in my equation like this house. What I mean by #'s is calculating the taxes, maintenance fees, & insurance to estimate what my p&i mortgage payment/sales price should be. See example below based on this foreclosure:

Yearly Taxes- $7,810

Annual Maintenance- $400

Proposed Yearly Insurance- $3,300

Monthly Totals- $959.16 (Taxes, maintenance fees, insurance)

Monthly rents in this subdivision are going for .52/sq.ft. So this house is @ $2420.08

Mortgage p&i payment for this foreclosure only should be no more than $1,460.92/mth., based on my analysis.

CMA Value- $73.92/sq.ft (this foreclosure's value is really worth $344,000, based on CMA in last 6 months for this subdivision)

A interest rate will make or break your situation, so let's compare 6% & 8% interest rates on my example & investment analysis equation.

**********************************************************************************

Listing Price $209,900

Interest Rate 6%

Down Payment 20%

Allowed Maximum p&i $1,460.92, expenses $959.16

.52/sq.ft. say value should be at $244,000 ($1460.92/6.00x1000)

So in this case with 6% interest your p&i is $1,007.52 which is less than the $1,460.92 I said was your maximum amount you shouldn't go over with p&i mortgage payment, add this to $959.16 & your safe @ $1,966.68, which is less than $2,420.08. #'s work @ 6% interest & in this case prospect can settle at list price of $209,900 or lower if want.

**********************************************************************************

List Price $209,900

Interest Rate 8%

Down Payment 20%

Allowed maximum p&i $1,460.92, expenses $959.16

.52/sq.ft. say value should be at $199,000 ($1460.92/7.34x1000)

So in this case with 8% interest your p&i is $1,232.53 which is less than $1,460.92 I said was your maximum amount you shouldn't go over with p&i payment, add this to $959.16 & your safe at $2,191,69, which is less than $2,420.08, but CAUTION your .52/sq.ft. says you shouldn't be paying more than $199,000 for this house!

**********************************************************************************

So conclusion is the 6% & 8% interest rates both have total monthly payments falling below threshold of $2,420.08, but both have different value analysis based on the .52/sq.ft. investment equation. 6% is safe because it says current list price is ok for this buyer & should be @ $244,000, but 8% says for this buyer list price isn't ok & should be @ $199,000. You don't want to over pay for any property, not even a foreclosure based on your interest rate. So play smart & raise your financial smarts!

I will offer a book about my investment analysis equation I use. Will offer another helpful article soon.

My First Blog

Hello Everyone,

I've decided to keep you all informed with me and my services by adding a blog to my websites for you all. I will posts regular stuff I feel will be productive to you all. Hope I make many friends and prospects with offering my information.