All Forum Posts by: Aram Kuzmak

Alright gang. I've recently been presented an opportunity to buy an unlisted property in my home City, a City that has been experiencing rocketing rents and property values. The seller and I agreed on a price, and I approached several local lenders only to find that they would not finance this property, for a few different reasons.

Property Details:

This is a "2-unit" building, technically. For 80 years the 1st floor was occupied by a Deli and Grocery that the building owner ran. It has been closed for 12 years, but still contains a large walk-in cooler and some display shelving, and has no bathroom. Obviously this was strike one with the Banks. Once these items are removed it is essentially a 900 sqft room with high ceilings and wood floors; it could be a chic studio. Worth noting is that there IS an interior staircase that joins 1st and 2nd floors. In order for the 1st floor to be a habitable unit, I'd need a kitchen and bathroom installed. More on this later. Also, it has a massive attached 3-car garage.

The 2nd floor has a 900sqft living space with 3 small "bedrooms" that is generally very nice; crown molding, ceiling medallions, mantels, typical 19th century City charm. The caveat being that the bathroom has never had a sink in it, and the kitchen has never had traditional counters. Strike 2. With $2-$3k of DIY work, this unit would be lovely and my goal is to occupy it.

Money Details:

We agreed on $100k when financing was on the table. If both units were renovated, each would eventually rent for ~$900, plus garage income if I wanted. 

Buying Options:

Here's the fun part. I need to decide whether to 1) Walk Away, 2) Use a Homestyle Rehab Loan and accept that using this lengthy process will likely add $55k to the loan and put me at the mercy of the Bank and GC's, or 3) Buy with cash (hopefully for even less), slowly renovate out-of-pocket/DIY, and then do some sort of Cash-Out Refi, whether Delayed Financing Exception or otherwise once the building is in a condition where an Appraiser and Bank will like it.

Considerations:

Buying this in cash will consume nearly all of my liquid savings... How do I know that my DIY work will be approved by an appraiser? Would it be easier to just make the 1st unit part of the 2nd, and go single fam? The time, effort, and money involved in converting the 1st floor. This is a fairly hot area, and opportunities like this are rare. 

What say you, BP Brain Trust? Some photos of 2nd floor only are attached.

Thanks for that. The idea isn't to quit my day job, but instead to eventually need it less, if that makes sense. My initial goal for my first purchase was to have someone else pay my mortgage quite simply. Investment wise, the Owner-Occupy 3 Family is the smarter move I think, but the SFR in question is one that I've been wanting for a while. Knowing that I can later rent the SFR for enough to cover my costs, does that make it a decent move?

Do you recommend FHA even for those who can afford a higher down payment?

Hi Everyone,

This is my first post on BP, but I've been reading posts and articles for a while now. Anyhow, here's the scenario: I'm debating on whether or not to make my first RE purchase 1) A 2 or 3 Unit that I would occupy and rent, or, 2) A SFR in an up & coming area, which I would live in. I'm trying to not make the emotional buy, but it is the type of space that I've always wanted.

About me: 

- 36

- Single (long-term GF)

- Upstate NY 

- $60K Annual Income

- 0 Debt & 800 Credit

- Around $100k in savings (liquid)

- Currently renting for wayyyy below market ($800 split 2 ways, Utl included,  garage, 1,500 sqft)

The SFR is $150k w/ property taxes of $3000. That said, it's currently assessed very low, so it's likely that taxes will jump in the next few years considerably. This property is in a "hip" area, and may see appreciation in the next 5 years. It's an 1,100 sqft loft style home, with a large garage on the first floor. It was fully rehabbed 10 years ago, so maintenance shouldn't be too extreme. If I chose to move from here after buying it, I think I could get enough rent to just barely cover the mortgage, tax, and municipal utilities ($1,200).

An example of the MF I'm looking at: $170,000, 3-Units; 1 3br, 1 Studio, 1 2br, with $925, $550, and $1,000 rents respectively. I would occupy the $1,000 unit, leaving $1,475 in rents to cover the mortgage. Owner pays heat and hot water. This property seems less likely to appreciate in value than the SFR for a variety of reasons, but would be seen as an asset by most regardless of that fact. I estimate that large repairs aside, the 2 rents listed above would cover my mortgage, tax, and most of the included utilities.

I would be looking to use a 10/1 ARM for either purchase, but am open to other options.

PS: I'm a car guy, and having a garage means a fair bit to me. That said, I'm not naive to the fact that i could simply defer that requirement for a year or two in order to position myself better financially.

I need some guidance here as a first-time buyer, and would appreciate any input. Thanks