All Forum Posts by: Mitch Dowler

Jon Russell how are you sourcing your duplexes you are rehabbing? That is great positive cash flow for a duplex in Pierce County. I think I need to expand my horizons a bit. I wouldn't mind buying dinner to talk about this. I have investments out of state, a single family and duplex here. I am working on a third single family now under contract. I live in Frederickson.

You don't have to live where you invest! I live near Seattle but invest locally, and in Dallas, St. Louis, and Indianapolis. These areas like Florida have strong cash flow and will work even with property management. You can live anywhere but invest where the numbers make sense.

Kyle I invest in different areas, Washington, Texas, Missouri, and Indiana so far. Texas, Missouri and Indiana are strong cash flow areas with fairly flat appreciation. Washington has weaker cash flow with much stronger appreciation. I don't know the reason for the failed sale. Isn't that information proprietary? I always, always hire a vetted, licensed inspector and will have the inspection scheduled as soon as the office reopens Monday. We have our share of flippers and investors here but the Homepath option seems to have not been noticed by many investors. There were changes in December that improved Homepath for Investors. Positive cash flow allowing for maintenance and an 8% vacancy rate will be $100 to $150 per month. The big immediate draw for me is the $30,000 plus immediate equity combined with our appreciating market. This really pumps up the Internal Rate of Return to 26.5% using the more conservative $1,400 per month rent (most likely I will rent for $1,450).

I could have purchased a property for $61,500 with the same square footage in Birmingham, AL with an IRR of a little less at 24% that would have cost me about $3,000 more to close on. The cash flow would have been stronger at $245 a month but it would have zero found equity at full retail price and experience little in appreciation. If I sell in 3 - 5 years which property will give the greater return?

Over 3 years the Birmingham property will return $8,820 in rents and little if any appreciation. Now the Washington property will return $3,600 in rents and $30,000 in equity even if it appreciates zero over the next 3 years for a total of $33,600 and costing me $3,000 less in cash to close. Even if both properties appreciate at the same rate the higher priced property will still generate a greater return because of it's much greater price point.

I am happy with my decision to include both strong cash flow and strong appreciation type properties in my portfolio. I do recommend starting your portfolio with a concentration on strong cash flow to help support your stronger appreciating properties you may or may not want to add later.

Sometimes things move slowly but they do move! I wanted to give an update as this Homepath property purchase progresses. The list price for the 1550 sq ft home was $206,900. After a failed sale it was reduced to $174,900. After negotiations we mutually accepted at $169,000 with Fannie Mae paying $5,915 in closing costs. Per my mortgage broker I should get a 5% interest rate. After the mortgage, taxes and insurance this should leave me $308 a month positive cash flow if I use a very conservative $1,400 per month rent. Most likely I will get $1,450 per month as I have another property in the same neighborhood that I just increased rents to this much. The property also comes with new stove, refrigerator, dishwasher, washer and dryer.

Now for the best part, Fannie Mae just put over $12,000 in renovation to the property. It is newly painted on the exterior and interior, new carpets, hardwood floors down stairs, new bathroom fixtures, kitchen cabinets, two car garage. Looking at recent sales for surrounding homes and in addition looking at Zillow we will close with $50,000 equity in the property!!!!

Sometimes things move slowly but they do move! I wanted to give an update as this Homepath property purchase progresses. The list price for the 1550 sq ft home was $206,900. After a failed sale it was reduced to $174,900. After negotiations we mutually accepted at $169,000 with Fannie Mae paying $5,915 in closing costs. Per my mortgage broker I should get a 5% interest rate. After the mortgage, taxes and insurance this should leave me $308 a month positive cash flow if I use a very conservative $1,400 per month rent. Most likely I will get $1,450 per month as I have another property in the same neighborhood that I just increased rents to this much. The property also comes with new stove, refrigerator, dishwasher, washer and dryer.

Now for the best part, Fannie Mae just put over $12,000 in renovation to the property. It is newly painted on the exterior and interior, new carpets, hardwood floors down stairs, new bathroom fixtures, kitchen cabinets, two car garage. Looking at recent sales for surrounding homes and in addition looking at Zillow we will close with $50,000 equity in the property!!!!

Devaluation of currency is also known as inflation. As you know our U.S. currency has no actual intrinsic value, it is a fiat currency based on the full faith and credit of the United States government. A faith and credit that is in steady decline. The good news is inflation can work to the benefit of real estate investors. If you attach debt service with a fixed interest rate to the real estate that debt is locked for 30 years. No matter how much our currency devalues during that time the debt service and payment remains the same. Meanwhile the value of the property as measured by the fiat currency will increase. The rents you collect will also increase as the currency devalues. Jason Hartman calls this "Inflation Induced Debt Destruction".

Some of the utilities provide some type of assistance for landlord's to separately meter utilities such as water. The idea is the tenant will conserve more water if they pay for what they use instead of the landlord picking it up. You would need to check with that local utility. It also makes the property more valuable to have separately metered utilities.

The assistance could be a grant or just an interest free loan, or maybe it is not available but worth it to check.

I don't think this deal is actually Seattle. There are not duplexes in Seattle going for such a low price or such low rents. I own property in Dallas and western Washington. The investments perform very differently in both locations. Western Washington is an appreciating market in most developed areas from north of Seattle to Olympia. Prices will be much higher than Dallas but appreciate much better. Whatever the case the property has to make sense now. What are your investment goals? Do you want strong cash flow or do want appreciation? Dallas is having some moderate appreciation that I am enjoying now but western Washington has much stronger appreciation and rising rents.

For a duplex I would be having the tenants pay for their own garbage which is the norm around here. Why would you pay the water bill, have the tenants do that. If it is one water supply several utilities are providing assistance to have the water separately metered. Sounds like sewer may be septic but if not I would have tenants handle that as well. I have a duplex with 2 bedrooms, 2 baths, garage, 1,200 sq ft per unit. One side is leased at $1030 and the other side at $1080. It is located near JBLM in Spanaway.

I am negotiating price on a Homepath 10% down deal. I am pre-approved with my broker I have used before on a refi which is Ridge Lending who is not licensed in NJ. It sounds like PNC and Wells Fargo are not familiar with Homepath and are giving you the script read answers. I see that both PNC and Wells Fargo do Homepath but it is probably done in a specialized department that the drones you spoke with are are not familiar with.

I suggest calling around for a broker who deals in Homepath. An agent who has Homepath experience should be able to give you a referral. I would want both my agent and broker to be experience to avoid a failed sale.

I just did a Fannie Mae refi on a 5th property on April 28th and didn't want cash out. The APR was 5.298% (includes closing costs so it appears high). I don't see the LTV mentioned on the closing documents anywhere but I'm sure it met that limitation. There was also no appraisal required.