Ok, I think I have completed Steve’s homework assignment, but I’d like to find out if my numbers are correct, and which of my figures you think I should change.
You can download my deal calculator spreadsheet at http://www.hep10.com/internal/dealcalc.xls
Have I got it right?
email: g e n e r a l g h e r k i n @ y a h o o . c o m
phone: 0405 411 098Hi Nathan,
I had a quick look over your numbers.
I think it highlights well how one property might just cross the line under one strategy but be a good +ve cashflow spinner under another.
Some things to think about:
1. Did you allow for vacancies in the B&H figures?
2. Did you allow for rental management in the B&H figures? At what %?
3. The lease option deposit of $1,000 seems far too low. I’d be wanting $3,000+ as a minimumStill, you have made a good start and already learned a valuable lesson in that +ve cashflow investing is not so much about the property, but matching the right property to the right strategy to the right person.
Bye
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Steve, thanks for taking a look. I think one big thing for me is it showed the difference between the normal way people would do it and lose money, and a lesser-known way of doing it (i.e. lease option) and make money.
Question, what is B&H? Also, with rental management, are you simply talking about maintenance and stuff? How would I work out this figure?
email: g e n e r a l g h e r k i n @ y a h o o . c o m
phone: 0405 411 098Hello Nathan,
1)B & H stands for Buy and Hold.
2)What % I think what Steve is talking about is what % is allowed for the management of this property,repairs and maintenance is a extra cost on top of that.
Property Manager’s I think charge around 6 to 8% but it’s like anything can negotiate one you attain more properties.Paul
“You can change your tomorrow,if you seek your dream today.Well said Paul.. that is exactly what I was talking about.
[
]Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
ah, cool. thanks! so, when you say allowing for vacancies, I assume you are mainly referring to the time between when I make my first mortgage payment and when the tenant comes on board?
Edited by – [email protected] on 10/01/2003 3:59:58 PM
Ah, nope, not quite.
Vacancies refers to the length of time that you allow your property to be without a tenant each year.
Initially if it is vacant it is the time you expect it will take to attract a new tenant.
Then, in later years, the time that it will vacant in between one tenant moving out and another tenant moving in.
Personally, I allow 2 weeks each year for vacancies.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Nathan,
1) “Vacancies” when you have a property and you rent it out most of the time it is a 6 or 12 month lease.
At the end of the 6 or 12 month if those people decide to move out for some reason the property become’s Vacate.
It may take you or your property manager a couple of weeks to find a tenant,so you just have to take the vacancies(what if the property becomes vacate)into consideration when working out your cost’s for buying & holding.Hope that helps (not very good at putting things into words)
Paul
“You can change your tomorrow,if you seek your dream today.yep that does, thanks
email: g e n e r a l g h e r k i n @ y a h o o . c o m
phone: 0405 411 098Oh, I forgot to ask. Since property management costs are based on the rent collected, if I set up a lease option deal where the rent is, say, $100 above market rent because it’s being credited to the final strike price, so for example, if normal rent is $120 and I’m charging $220pw with $100pw credited to the purchase, is the 6-8% property manegement fee going to be taken from the $120 or from the $220?
email: g e n e r a l g h e r k i n @ y a h o o . c o m
phone: 0405 411 098That would depend on how well you can negotiate Nathan…..
Enjoy
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