Triplex Deal Analysis - Need Advice/Help

[Joshua S.]

Hello all my BP friends. I'm still pretty new to Bigger Pockets and I think I may have found my first deal. I will break down the numbers below in hopes that you all could give me some advice and insight. I'm just going to list all my thoughts and questions and hope you read it all. :) It is a foreclosed Triplex located in southeast Virginia (Hampton Roads area), listed on the MLS by the bank. So right away, I'm wondering if there is anything I should know about buying a foreclosure. I've never done it before. I've only bought primary residences. Started with a townhouse then bought a single family home and am renting out my townhouse. I like being a landlord and feel I am pretty good at screening tenants. The triplex isn't in the greatest part of town, but not in the worst. It's listed on Zillow for $74,900. Zillow said it foreclosed at $61,000. Tax assessment shows as $123,680. It has 3 units, each with 2BR/1BA. Total sq. ft. On Zillow is 2,040. I'm also having trouble finding comps to determine ARV. So I'm looking at the tax assessment for guidance on what it could be. So I'm thinking I could buy it somehow by lowballing an offer and then finance with private money or hard money and fix it up. I have excellent credit, but limited capital (around $8,000). This is what I imagined: 1. Get hard money or private money loan for $95,000. Hopefully negotiating interest only payments for first 3 months, if that's even possible. Not sure. 2. Purchase for $70,000, leaves $25,000 for repairs. 3. Replace flooring, paint walls, install cheap, but new, cabinets, countertops, and appliances in kitchen. This assumes roof and structure are good. 4. Rent units as they are completed for $700 each. 5. Refinance with conventional mortgage for $95,000, repaying the hard/private money loan. Rental Income: $2,100 - Mortgage (P&I): $454/mo - Taxes: $130/mo - Insurance: $85/mo - Water: $0/mo (I believe it's metered separately) - Electricity: $0 (I believe it's metered separately) - CapEx: $105/mo (assuming 5%) - Routine Maint: $105/mo (assuming 5%) - Vacancy: $147/mo (assuming 7% for the not great area) $2,100 (income) - $1,026 (expenses) = $1,074 (monthly cash flow) I know I'm probably leaving out some factors. But if anyone has any good information on hard money loans, private money, interest only payments, or literally ANY INFORMATION would be helpful. I have a slight construction background, primarily electrical with some HVAC sprinkled in, but I'm now working as a an IT government contractor. Good pay (>$75K/year) and stable contract. Thanks all!!!

[Jason D.]

The numbers look good on paper. I would factor in property maintenance but, even at 10% it's still a good deal. With hard money you have to factor in a couple things.... 1) The usually lend based on ARV so there has to be equity in the property after the renovations (they will usually max at about 60% - 65% LTV) 2) They will require you to have some money in the deal. For someone with no flip experience it is usually 20% of purchase price, plus closing costs, so you may need a little more up front cash. All hard money lenders that I've contacted are interest only loans so you are good there. Hope this bit of info helps but as always, to get the best info, co tract a few lenders yourself to see what they think about the deal. Good luck!!!