first deal 6 houses need help

Rehabbing, Fix and Flip, Rental Properties
1 
    As I stated this is my first deal. Also my first post.  I am a little nervous about the whole thing.  I am purchasing 6 houses all owner financed.  5 are form 1 seller he has owned them for 26 years.  owns them free and clear.  The properties are old shotgun houses not the best looking home showever they are built well.  No major problems and very few minor ones.  Most tenants are established.  1 is vacant and 1 is extremely under-rented.  it is rented now for 125. It should be 375.  maybe 400  The total purchase price for all 5 is 92300 I am doing his price my terms.  My terms are 15 yr. amortized loan with a balloon in 5yrs.  Insurance is approx. 75-85 a month for all homes.  Taxes are 1000 a year for all.  My payment will be roughly 835.  setting aside 8 percent for repairs misc cost. and setting another 12 percent off for vacancy periods. I will stil cashflow nicely off of these They are in groups of 3 on two blocks. 
    The other is 12500 from another person she is selling because she needs to let go of her husband who has passed.  We live in a strong military  area just outside of Ft. Benning( The troops Bush has deploying majority of that is here That is my battalion going fortunately my company is on dwelling time because we jus got back 3 months ago. side sorry)  I did not know her husband but he died serving our country.She will owner finance. We meet with her friday morning to work out the details.  Unfortunately this one needs about 2500 put into it.  Her husband had finished demo and started rebuilding when he was deployed.  So it is over half way done.  Just needs some basic kitchen cabinets, a tub surround, have the floors sanded and finished(hardwood) and it will be rentable for 350 it is the only 1 bd. Also the only one with central heat. all other have gas heaters.  
I am searching for advice on where to coem up with the money to do this upgrades with out coming out of pocket.  So far my only expense has been a notary.We should b e closed on all fo this by early next week probably tuesday.  I will be getting all security deposits should I use this and in turn just replace it right away.  and with the info provided.does this sound lieka wise investment. I have done the numbers and have sat down with the president of my local reia and the numbers with him. I am just nervous I gues first deal and 6 houses in one deal. 15 is my golden number and my goal was to buy a min. of 2 this year.  I will ahve to set a new one for next month of a min. of 2 and see what happens.

Thanks alot and if there are any rehabbers in the eastern alabam and western georgia area let me know I have 2 great deals looking at approx 20-30000 profit. I wont charge just let me hang out and learn the ropes. I will provide all info for deal for the knowledge I gain from an experienced investor
Thank you Jeff

2

Jaff,

You have ommitted the vast majority of the expenses. However, this may still cashflow well IF the rents are right. It is absolutely critical that you see the leases before you buy these properties to see what their status is. Hopefully, all the tenants are on a month to month lease and therefore you can raise the rents to market value. Remember that you are stuck with the existing leases if they have not expired. The tenant COULD have a 100 year lease at $125 per month. You MUST find out. What will the gross rents be (based on market rents)? What is the demand for rentals in the area? What is the market value of these properties? You need to know all these answers if you are to make an informed decision.

You also need to be sure that there are no liens on the property. A title search and title insurance are a must! The insurance number seems very low. Is that for liability only?

Good Luck,

Mike

3

I am sorry I forgot that there is only one with a lease and it rented for 350 the lease is up at the end of may At which time I wold raise the rents accordingly. I know that the area demands alot of lower rent homes. WHIle we were looking at them a person came to the door of the recently renovated one and asked if they could rent it.They were willing to do a month to month for 400 a month on that one. Although it is the most recently renovated. Goingot look around the houses we have seen notes attached to the door asking how much to rnt and when they could move in. That was nice to see. We have driven the neighborhoods for the last 3 months and found some interesting things in terms of growth. Of course I can try to sell you and everyone else by speaking only of the good things in the area and how it is great blah blah blah
Here is the answers you have asked fo Insurance does seem rather low I have called two companies and was told about the same from each I am unsure of how to insure them for rentals However I figured that thye owuld be able to figure that out being that there profession is insurance I will call a couple more tomorrow and see if they were just trying to get me to switch to them.