All Forum Posts by: Adam Detig

One option I've seen is that the tenant would forfeit their security deposit. 

To my knowledge, you will need to refinance your current FHA loan to a conventional loan as you can only have one FHA loan at a time. The conventional loan will only loan up to 80% of the value of your home, so if you put 3.5% down on your first current FHA loan, you most likely have not built up to 20% equity in the first year (unless you got a great deal on the house and gain equity when you purchased). If you are currently below 20% equity, you will need to pay out of pocket to get to 20% or stay in the home under the FHA loan until you get to 20% to be able to refinance.

Hope it helps.

@Jacob Vingua, Welcome to BiggerPockets neighbor! I'm currently in Lowell and looking to begin as well! If you have any questions, feel free to reach out!

I want to correct my previous post. I used NOI, but I think you should Cash Flow instead. If you use NOI, your %'s will be higher than what you are actually profiting because you would still have to take out the mortgage payment. Using Cash Flow gives you the most conservative outcome. In your example, you wouldn't have a mortgage payment until after you refinance but it would be good practice to use Cash Flow instead of NOI.

Here is one humble method to calculate real time IRR. Seeing as how you are rehabbing this property, there will be a lot of expenses in a short time (monthly), with a large cast back when you refinance. I suggest breaking it down quarterly and take your calculated NOI and subtract additional expenses (rehab costs, etc) and add additional income (the income you received from the loan payout, etc). Each quarter, take the sum and use that for the IRR.

Example of this:

Month 1: -$35K purchase

Month 2: +$725 NOI

Month 3: +$725 NOI

Month 4: +$22k cashout refinance and +$725.

Month 5: +$725 NOI

I broke this down monthly for simplicity, but take the sums of each month (or quarter if you want) to use in the IRR calculation.

PM me if I need to explain this further.

I have heard of charging a percentage of the utility bill based on the percentage of square footage for each unit. That way it's relatively fair and the tenant is still responsible for how much they use.

Hey Tony.

These are very broad questions. It's similar to "what is the best type of food". It comes down to location, preference, and end goals. I will attempt to address these questions the best I can though.

SFH vs MFH: It is said across BP that MFH (house hacking) is a great way to live for free (having tenants pay your mortgage) and begin to learn about landlording and the ins and outs of investing. However, some people don't want to share a wall, yard, or possibly front entry way. While you education yourself further on real estate investing, take some time to figure out what fits with you.

Flip vs Buy and Hold: When it comes to this question, these are two different/distinct events at the same olympics. Flipping is a good way to increase your capital. You can find, buy, rehab, and sell in a matter of months and make a good one time chunk of money that way. Or you can buy and hold a property and get a small sprinkle of cash coming in every month. Deciding this question will require you to analyze your financial situation to figure out if you can afford to buy a place in your location, or if you need to build up some capital in order to do so.

There is no better way to do anything in real estate. It comes down to preference and end goals.

Best of luck!

Here is the link:

https://www.biggerpockets.com/renewsblog/2013/04/1...

It was top 21, not 20. My bad.

Hey Dee,

One beautiful aspect of real estate investing is that it investing is an emotion-free endeavor. The decision to buy, to hold, or to walk away comes down to the numbers. If your numbers say that 25K less than what the agent wants is the max you can do, don't offer more. Your description of the agent sounds like he is not working for your best interest.

I'm not sure the process for using another agent at this stage in the game. But when it comes to your offer, you should be slightly embarrassed by how low your offer is (not my quote, maybe Brandon Turner. Can't remember).

Another way I have heard to get the agent to work for your best interest is to set a threshold amount that your numbers support, then tell the agent that any amount he negotiates the price below that threshold, give him a percentage of the difference.

Whether you get this house or not, based on your description, get a new agent for next time.

Best of luck.

Hey Corbin!

I'm new to investing also. I've been doing research/education for the last 4 months. I would suggest hitting up BP's top 20 books list. I've read about 12 of them. There is a mix of business (mindset) and real estate (how-to's, actionable steps) books. You can tell which is which by the title. Also keep listening to the podcasts, and if there is ever a phrase your don't understand, look it up.

I'm just now able to start going to REI groups/meetups and that has been very beneficial as well. You can search for some on Meetup.com or by googling "REI association [your area]". There is only so much you can learn on your own. REI is a system built on relationships. Gather what knowledge you can to understand the lingo and get out there and meet people. Don't consider other investors competition, as everyone can learn something from anyone else.

Good luck!