Posted by KevinMiami on March 12, 1999 at 02:11:48:
Sorry I took so long but I wanted to check it out and my people have told me that here in Miami/Ft. Lauderdale area you would pay about 8% - 10% of total monthly income, as a management fee. I am currently in the process of purchasing a cash flow property and I am hoping to get good tenants like you have.
Cash flow on abandoned property? - Posted by Marc Dyer
Posted by Marc Dyer on March 04, 1999 at 23:21:59:
I am looking at building a financial model for acquiring abandoned property. My Primary goal is cash flow. My problem is; after construction costs on most abandoned property I have spent maybe 10 to 20 thousand dollars less than the property is worth on the market. Other than holding paper myself how can I get the cash flow I desire. I have rehab investors but they dont always fit. Heres the scenario:
I can acquire on paper or contract for deed
Income property that can support the note and expenses after its rented.
The construction costs I can fund with my lines of credit (I am a contractor)But the credit lines are usually for the construction period and due after the project is completed (another problem).
No matter how I slice the numbers
Acquisition and closing costs 20-30
Renovation 30-40
Renovated value 80-100
Equity 10-30
Gross Income 1650-1800 per month 18,000-20,000 annually
After expenses 200-300 per month 2200-3300 annually
That seems dismal to me. Am I expecting too much? What am I missing here?
These buildings are all over the place where I live. Maybe there’s a reason for that. Any info appreciated.
M.D.
P.S. sorry so long winded
Re: Cash flow on abandoned property? - Posted by BankRobber
Posted by BankRobber on March 05, 1999 at 22:58:42:
firstly I base my calculations on a 12 month year rather than an 11 month year. 
Secondly I think the generalized cashflow numbers you posted seem low for the property that you describe. A 20K annual gross with an 80K mortgage should net you alot more than 3300 unless you are paying all utilites and extremely high property taxes.
Re: Cash flow on abandoned property? - Posted by annieNC
Posted by annieNC on March 05, 1999 at 19:55:08:
Marc,
I’m a little confused with the numbers also…are these single family, multi family or commercial properties?
Re: Cash flow on abandoned property? - Posted by HankM
Posted by HankM on March 05, 1999 at 11:35:40:
I’m a little confused … on one hand your rehab numbers seem REAL HIGH … on the other hand you say you’re a contractor, so I assume you know what you’re doing. All I can say is you’re doing too much to the property.
I figure something like this … fix code and structural defects if any … nice kitchen (not gourmet), nice bath … floor finish (carpet or sand) paint and clean … now there will be some drywall and plaster needed somewhere, but I can generally get all that stuff done on a 3-4 br 2 bth for 12-17K … less than half what you are estimating.
Also, it seems that you might be trying too upscale an area … 1800/month is a lot of rent … maybe that explains why you need to spend so much (the market demands it) …
A real deal I have just bought … cost $60K … I’m doing everything above with an estimate of 16.5K … after which I expect to get $100K … netting maybe 15K is I sell with a broker and after my holding costs …
that’s what I do, i wouldn’t dream of holding a rental … but that’s just me.
Hank
Re: Cash flow on abandoned property? - Posted by KevinMiami
Posted by KevinMiami on March 05, 1999 at 24:00:12:
Maybe I’m missing something, but why are your expenses so high?
Re: Cash flow on abandoned property? - Posted by Marc Dyer
Posted by Marc Dyer on March 07, 1999 at 20:21:45:
What do you do for cash flow?
Re: Cash flow on abandoned property? - Posted by Marc Dyer
Posted by Marc Dyer on March 07, 1999 at 20:26:53:
Hi Kevin,
My expenses include management.I am basically generalizing the numbers that are the norm in my area. Our code department requires that the building be up to sanitary code. That includes plumbing and electrical. I think I may be doing to much but if I dont invest in the mechanicals I am limited to who I can sell to and I cant rent it.
Re: Cash flow on abandoned property? - Posted by KevinMiami
Posted by KevinMiami on March 08, 1999 at 01:37:57:
Yeah, but even @ 12% mortgage your monthly should be at most $1000 and say $100 - $200 for managment? And that’s too high too. Unless I’m missing something?
Re: Cash flow on abandoned property? - Posted by Marc Dyer
Posted by Marc Dyer on March 10, 1999 at 23:33:03:
What the hell should I be paying this manager!?! Am I paying too much! I’m getting a fixed fee regardless of vacancy and she sends me a check every month like clockwork I send the maintenance guy over maybe twice a month to check on things. What is the norm…I think I am way off with my expenses.
And let me ask you another thing, in this day and age do you know anyone holding on to property these days? I have no real problems with my tenants…It just seems that I am paying too much.