Here you go guys…some secrets for out of state buying(rentals).
Call the We BUY GUYS and see what they have, get on there calling list, remember they generally assign good properties to other investors as well.
Find some local realtors they deal with investors and have them find you properties that will cashflow. Many realtors also have inhouse property mgmt co or deal with one to find and manage the properties.
Look for sellers who currently have the property being managed by a property mgmt co. From what I have found, they just want to keep the property so when title changes they will not charge you a new fee to have them manage the property as they will just change the contract to your name…
Be able to set aside at least 10% for misc. fees…
Get properties with 20-30% equity of course…
Apartment complex’s are generally easier to buy since they are larger, good cashflow and generally have property mgmt in place…
Now for some deals…Here is one now…
Located in Alabama…
25 unit apartment complex…
Purchase price $400,000
Appraised $590,000
Repairs needed $ 30,000
Downpayment (10%) $ 40,000
Loan (90% +closing cost) $370,000
(seller also paid part of closing cost)
Gross Rental Income(monthly) $12200
PI payment $3000 month
Taxes $400 month
Insurance $400 month
Property Mgmt fee $ 1300 month
(advertising included-rental apps, etc)
15% reserve fund $1800 month
(reserve for repairs)
Water/Gas $400 month
15% vacancy fund $1800 month
Total Expenses $9000 PER MONTH
GMR - NOE = 12200-9000 = $3100 (NOI)
Also keep in mind, I received from the seller $70,000 cashback at close to cover my downpayment and repairs needed to complex. Property management company stayed on and I was not charged any new fees, we kept existing contract in place. Normal charge from them would have been about $1000 for 1st month plus 5% rental income.
The contract with seller to recieve $70,000 back was a seperate contract with between buyer, seller, realtor and escrow agent to dispurse funds to me after closing. it is not listed on the HUD statements.
Also the avg rents are $350 to $575 per month, with 20units of the 25 on section 8 housing. the other 5 units are regualar tennants and all longterm over 5yrs in apartment. (all rents were raised about $50 per month to market rate when leases expired to increase rental revenue)
So not a bad deal here, and really the cashflow is much higher if i decided to tap into the reserve funds I have set up for repairs and vanacies. Property mgmt charges 5% per units monthly rent plus extra for landscaping and general maintnace to bring it to 1200 per month fee. yes they do get some from my reserve ever few months, but it has grown considerable and soon will be used to leverage other deals…
So out of town deals work, if you find them… How i found this deal was from another investor. He came across it from a local contact but was afraid of an out of state deal. So I talked to seller and his management co taking care of property. All seemed good, he was motivated to sell because he was in his 70’s and ill and wanted to leave his family money and not real estate when he passes on…