All Forum Posts by: Afam Agbodike

1) Do you have a late payment penalty on the least? If so, make sure you apply it.

2) If the lease prevents long term guests, you can give them a notice on this, if not, you can potentially require them to add the guest to the lease, although depending on your state you only have a certain amount of time period from when you first become aware to when you can require them to be added

3) Do you have an anti smoking clause? If so, you can send notice on this as well.

Best move is to talk to an attorney that specializes in this, so you can see what are your legal rights, but you should also think about how much of an issue it is. The tenant can fight you, and depending on where you live this can be worse than living with the bad tenant.

Thanks for the feedback @Tim Herman

The owners are mom and pop-ish, with poor records, no interior photos, and the agent is slow to respond. The owner currently self manages, and I don't know PM costs, but assume 10-12%.

The $20k is just my estimate for the minimum level of keeping it from further deterioration. If it is worth offering on, then I'll investigate further if I get in contract during due diligence on whether it makes sense to upgrade from that point or keep as is or back out.

My bad on taxes, this is my first use of the calculator, and I missed that section, he taxes are about $4,000. I updated it in my version, but it doesn't seem to have changed the linked report PDF. It brings the monthly expenses up to about $5,700.

Perhaps I should delete this post (if possible) and repost with updated numbers?

I'm looking for advice on this property. It's a total of 14 units across multiple building, about half of them are efficiency units, and then a few 1, 2 & 3 bed units. It is in a low income neighborhood, but I don't yet know if it's low income, or gangland.

The numbers in the report are from 2020 taxes, and the agent has updated rents showing about $7,600 per month, although there are 3 vacant units with estimated rents in that number. I don't have latest expenses, but I'd imagine some increase there.

The utilities expense is quite high, and are entirely paid by the landlord. I don't know what the "other" expense is yet.

The buildings are old and look like there is quite a bit of deferred maintenance.

I'd greatly appreciate any advice on this

View report

*This link comes directly from our calculators, based on information input by the member who posted.

Quote from @Nicole Heasley Beitenman:

Also, why do you have to put 20% down for a conventional loan if you're going to occupy?? That doesn't sound right.

Good point! FHA or conventional should allow as little as 3.5% or 5% respectively, assuming you a conforming loan on an owner occupied property.

Quote from @Kaylan Haight:

@Afam Agbodike

Yeah, I believe the $225,000 is the loan amount if Im not mistaken.

The MAO I came up with is about $163,000. Not sure if it would work then.

Depending on how old the deed is, the owner could have paid it down quite a bit, they don't necessarily update that info on deeds... Are you in contract, negotiating price, talking with the owner, or just doing analysis?

Oh, and getting contractor references from other people (investors, agents, architects, friends) that you trust goes a long way. I've done 2 rehab projects and got my first contractor from my agent, and the 2nd from my architect, and they were both great.

What sort of problems are you experiencing? That should determine where you can focus on improving your process in finding the right contractor. A lot of it comes out before making your decision.
Talk to their references, check online for reviews, how good are they at responding quickly during the interview process, how is your interaction with them?
The other potential issue I've seen is lack of clarity in letting the contractor what you want. If you give them vague direction, they will still do the work, but either the quality or the cost will be out of line with your expectations. The more detailed you can be with the description of what you want the better

@Hannah Espejo

I agree with Charles, focus on saving as much as possible now, and idealy increasing your income. It will be pretty tough for you to find a property in your budget with $5,000. Even with a 3.5% down FHA loan, that only gets you a little over $145k. I don't know your market, but that seems low for a 4 unit property in most places. But every $1,000 you save will get you another $28,000 in loan value, assuming your income supports the purchase price. Saving more will also reduce your expenses, which means you will likely feel more comfortable taking on a bigger mortgage.

@Kaylan Haight As Scott mentions the warranty deed doesn't have anything to do with the value of the deal. What is the purchase price? That is what determines whether the deal is good. Are you saying the price you can buy it for is $225,000? That would put the all in around $300k - $320k, which seems like an OK deal, but if the purchase price is much more than $225k, then not so good

I agree with Jon Kelly, it's all about the opportunity. If you can find a good deal now, then jump on it! Don't worry too much about whether you can get the best mortgage possible. If the deal is good, it doesn't matter too much what kind of financing you get, and the VA loan will always be there for the next one. Even if you have to wait, don't focus too strictly on buying exactly within a year. It is great to have the deal a year goal, but if it winds up being every 13-14 months, you are still doing great. The plan is a guide, not a requirement for success, you will never be exactly on course with your plan