All Forum Posts by: Aaron Hu

I've been looking for an answer to the water/sewer bill question as well. I've been using $50 per bedroom on my cost estimates.

I'm in the same situation as you and I live in the same place as well. The 3 markets I've considered the most are Sacramento, Central Valley (Stockton) or vacation area like Lake Tahoe or Hawaii. Each has some trade off of cash flow, appreciation, volatility, distance. It depends if you prioritize cash flow now or the appreciation in your long term goals, and how far away you're comfortable with buying. 

The biggest help I've received so far is having a realtor that's also an investor. They can give you the different angles to what you can do in the local area. Personally, I've scratched SF off the list and the east bay will be off the list soon.

I believe the ARV to be close to the selling price of $290k. All of the comps in the same area are selling for about that price to my untrained eye. Also, the work I'm doing is mostly structural and I don't believe that adds value to the property?

What are some scenarios that could come from the appraisers assessment? During the pest inspection, the estimated pest repairs to be around $20k. Since this is FHA, will that most likely mean the appraiser will not allow close of escrow until pest/foundation repairs are completed? Right now, a lot of the windows don't open/close and some of the doors are having fitment issues.

Hi BPers!

I’ve been interested in Real Estate Investing for awhile and have read Rich Dad, Poor Dad + Loopholes of Real Estate and The book of Rental Property which brought me to BP. This is my first purchase so I’m hardly the expert.

I’ve got my offer approved and just got my pest, home and appraisal done. Here’s the deal:

https://www.zillow.com/homedetails/2313-Cantalier-St-Sacramento-CA-95815/26089509_zpid/

1920 built with 3 separate structures for 3 units. Decent curb appeal in a D neighborhood but the street the house is on is definitely nicer than the rest of the area. Front unit is 1035 sq ft, 2BR/2BA with attic converted to 2 small bedrooms for kids. Backyard has a unit which is 600 sq ft 1BR/1BA with kitchen, and a 400 sq ft studio without kitchen. Each of the back units has a separate yard and a separate entrance. Studio shares electricity with 2BR and studio and 1BR share a water heater. House had the interior repainted and recarpeted.

Listing Price: $290,000

Offer accepted at: $290,000 + $5k credit + $2,600 loan credit

ARV: Unknown

Holding cost: Unknown how long repairs will take.

3% closing cost - $7,600 credit = $1,100

Gross Income: $2,800 - 5% vacancy = $2,660

FHA @ 3.5% down ($10,150), 3.5% interest rate + $196 MIP = $1,429 PI+MIP.

Rehab (Dry rot removal, 2 piers in foundation need replacement and cracks in foundation, add kitchen to studio): $25,000 - I’m still not 100% sure of this cost.

Expenses: $280 (10% CapEx + Maintenance) + $302 for property tax + $260 (water, sewer, garbage) + $50 for pest control every other month + $100 house insurance = $992

Cash flow = $239/mo

Cash @ closing ($25k + $10,150 + $1,100) = $36,250

Cash on cash ROI = 7.91%

Your opinions are welcome about my first home purchase. Is this worth pursuing? Is my math correct? Is this property too much problems for too little gain?