📈 Market Snapshot

🏷️ Properties for sale

• Deal #1 $270k 2BR1BA Duplex for sale in Franklinton, Columbus, Ohio | details here

• Deal #2 $33k 6BR2BA wholesale deal in Cleveland, Ohio | details here

• Deal #3 $230k 5BR2BA Duplex deal in Columbus, Ohio | details here

Interested in a property? Reply “#1”, “#2”, or “#3” to be connected with the realtor/wholesaler.

🏚️ Deep dive

You buy a property.

You wait 10-12 weeks for the renovation to be done.

You get tenants in.

Another 2-4 weeks.

You see if they suck (0-8 more weeks?)

That’s a typical deal.

You spend $15-$50k of your money and you know if it’s a good decision roughly 6 months later.

Then you spend another $15-50k and figure it out again.

This is why so many people churn out of real estate investing - the feedback loop is much slower than stocks.

And requires you to have either a lot of patience or a lot of capital.

That’s why it’s important to analyze deals well and get them right the first time.

If you get the following 5 things (just 5!) right with reasonable certainty…

You know you can buy the property and it’ll be a good deal.

Here they are:

1. Purchase price

2. Cost to rehab

3. Interest expense

4. Operating expenses

5. Post-renovation rent

Most first-time investors don’t spend enough time on these 5 things.

Here’s how you should calculate them.

Purchase price: This changes the most (negotiations, folks!) and is usually an output based on projected expenses + the return you want. More below on how to model it.

Cost to rehab: Get your contractor in at the same time as the property inspection (at this point your offer has been accepted). Take his/her number and add 20% to it.

Interest expense: Be conservative - use 7% and be happily surprised if you can refinance in 1-2 years.

Operating expenses: You do not need to spend hours on these - try to make quick educated guesses.

• Insurance: Call farmer’s insurance and get a direct quote for the property you’re looking at - they can put something together in 2-3 days.

• Property taxes: 2-2.5% is usually fair for Ohio.

• Maintenance: Reserve 10% of your revenue for an expense fund.

• Utilities: Triple check all utilities are paid by the tenants and submetered (so that it is possible to calculate and individually charge tenants for usage). Expect $150-200 per unit per month if not.

• Property management: This can be 7-10% of rent. Back when I signed on with my property manager, they were offering 7%.

Rents: Use rentometer.com 

Great, now that you have all of your inputs, you want to build all of this into an Excel model.

Online calculators suck and don’t enable you to build scenarios.

You want to be best friends with scenarios.

Scenarios help you answer real-life situations.

Real-life situation: Your contractor thinks your rehab will be $20k more expensive than you thought it would be.

How much do you need to negotiate off of the deal to make the ROI still work for you?

Having a quick answer in those moments is critical.

Don’t have a quick answer? You’ll lose the deal or risk overpaying.

I built a model - it took ~5 hours but saves me 10x that time in headaches.

You can build it…

…Or you can just take mine.

I’ll even include a walkthrough video on how to build out every single assumption.

Get it here along with a bunch of other goodies in the Multifamily Blueprint I put together for you.

📊 Chart of the Week

Rents (nationally) are softening in multifamily vs. single-family, largely because of a surge in multifamily unit completions over the past 18 months.

My hunch is this softening is disproportionately impacted by the overbuilding of luxury-forward units and that multifamily would look much similar to single-family if that data was taken out.

🐤 Real Estate Rizz

#1

Long story short, the killer was a tenant who got into a drunken fight with the owner.

Be nice to your tenants! And if you’re not….. don’t swing by to meet them, I guess….

#2

I’ve said the past few weeks - no data suggests we’re going to solve the lack of housing supply in the near or mid-term.

See for yourself!

🔥 Want everything you need to buy 1-5 units this year?

Check out the Duplexx Blueprint and get all of these goodies:

Note: If you’ve joined in the past 2 weeks, you’ll automatically be taken to a special page to receive 80% off. 

• Cash-on-cash returns calculator

• Guide with 75+ items for your next rehab

• PM/Contractor interview guide

• 30-minute mini-course on finding deals