Warning:We Purchased Rental Property Number 5 (Nicki Minaj)

As I told you guys before, I’m going to give you the actual break down of my current and future rental property purchases.

For all our properties I give you the month by month break down of income and expenses.

For this go around you get all the numbers starting at purchase price.

Why Am I Doing This?

I have two reasons for doing this. The first reason is that I want to be 100% upfront with you. Many people have aspirations of being landlords, and they usually don’t take the time to run the numbers. I’m not here to sell you a dream. I want you to know exactly what you’re getting into when you decide to get into the residential real estate game.

My second reason is that, it forces me to analyze and review my properties numbers on a monthly sometimes weekly basis. Running the numbers constantly to ensure you’re on track is paramount to success.

What Does She Look Like – Meet Nicki Minaj

 

NickiMinaj

How Much Did It Cost You?

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Here is the exact cost breakdown fresh from my lawyer.

Rental Property #5 Closing Statement

Rental Property #5 Closing Statement

 

Rental Property 5 Repair Breakdown

This needs a roof. I was quite hesitant about going after this one because of such a big job is needed up front. However, after seeing the repair cost I moved forward. Also I had my team go through a few more checks of the property. Here are some actually emails…

XYZ (name removed) Plumbing did the water pressure test and it was good.  He said the sewer drain is functioning properly, that there is a house trap in place, and because of that house trap he can’t run a camera down the line.
Dominique:
Here is the break down for the necessary funds to begin.
$   500 Open Portfolio Reserve
$   150 Re-key
$     80 Certificate of Occupancy Permit Fee
$   100 utility expense reserve
$4,515 roof repair
———
$5,345  total to wire

 

Cap Rate!

CapRateNew

OK, let’s discuss best case and worst case scenario for cap rates. Oh, you don’t know what cap rate is? Here is a nice definition.

 

Capitalization Rate is the Net Operating Income divided by the Market Value, or rather the Capitalization Rate helps in determining the current market value of a real estate property on the basis of Net Operating Income.

Moderate Returns (Most likely)

Gross Rent = $800(monthly) or $9600 (annually)

Property Management Fee = $80 (month) or $960 (annually)

Other Expenses = $195 monthly) or $2350 (annually)

NOI = $Gross Rent-All Fees = $6,290

Cap Rate = NOI / Purchase Price = $6,290 / $20,220.32 = 31.11%

As you can see, that even in a worst cast scenario we will make a serious return on our investment.

Conservative Returns (Worst Case)

In this scenario I will show you my simple formula for sizing up a property quickly.

Projected monthly gross rent * 12 * 50% (Expenses) / purchase price = >20%

I like using this formula because it under estimates rent and over estimates expenses. So, if a property works in this formula it’s a sure bet!

Projected Annual Gross Rent = $750 * 12  = $9000

Fees = 50% of Project Annual Gross Rent = $4500

Projected Annual Net Operating Income (NOI) = Projected Gross Annual Rent – Fees = $9000 – $4500 = $4500

Estimated Cap Rate = Projected Annual NOI/ Purchase Price = $4500/$20,220.32 = 22.25%

Whatisnext

Fix the roof and get Nicki Minaj rented out!

 

Come to find out Nicki Minaj is already rented out. I have to take this time out to thank my team. I love all the hard work.

I received this email from my property manager:

The good news is that the roof job is started, I have the c of o inspection scheduled for Monday 8/12, and I rented the house for 9/1 at $825

hold-up-wait-a-minute-let-me-put-some-pimpin-in-it

With those kind of returns who needs the stock market!

So what’s keeping you out of the real estate game? Would you invest less in the stock market and focus on real estate if you could duplicate my returns?
 
If you want more information about my deal check out my one on one real estate sessions by clicking this link
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0 comments

  • Will /

    Where is the property located that you can get a somewhat decent investment property at that price range????

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