All Forum Posts by: Alexander Zurn

@Edgar Figueroa simply put that would be borderline mortgage fraud. FHA requires you to be owner occupied. I don't know to what extent but my logic is to not even risk it. If the purpose if for work, maybe that is something that is available but if it is to deceive the FHA by using them to put 3.5% down and not actually live there, I don't recommend it.

Also - be aware that for 3-4 unit properties, FHA requires that the lesser of 75% current rents OR 75% fair market rents (determined by appraiser) must equal or exceed the PITI (mortgage payment). I had a loan go all the way to UW before I discovered that. Because the current rents had not been moved for over 8 years, they didn't come close and I therefore could not get the loan or property.

Good luck! 

@Ralph Noack you've come to the right place! Stay active on the forums, the blog posts, the podcasts. The more you involve yourself with it the more you will learn!

As for a timeline, everyone is different. Some start looking right away and learn as they go, some self educate for months or YEARS before actually watching their market. I recommend a combo.

Self-educate yourself whenever you can. Literally, during lunch, before going to bed, find any available time in your schedule to get in a podcast, search the forums, read a few pages in your book all while keeping an eye on your market. Sign up for automatic updates on sites like Zillow, Redfin, Trulia. Get in touch with a real estate agent for MLS access.

It may seem far down the road but the more you jump right in the more exciting the process is because you'll always continue to learn something new.

Good luck!

@Scott DeLange it is a tough market in a lot of places right now. You are not alone.

I recommend branching out a bit. Expand the area you are covering. See what is available on the outskirts of your preferred area. Prices could be lower and inventory higher all because of extra 5 minute drive. Who knows maybe the rent market is stranger there because its less expensive but you'll have more tenants applying.

Good luck!

@Account Closed if you google the county the property is in + property assessment you should be able to find a searchable portal of properties within the county. You can usually search by address. Do this and you'll find the properties parcel card with the history of the property, the info on the property, the assessment. You can really use this information to help you.

Good luck and be careful!

@Brittany King review your numbers and I can't say enough to be conservative. You want to know it will cash flow. If it doesn't, maybe it's not the right property. It can be frustrating to play the waiting game but it just makes it that much more worth it when the right property comes along.

Don't forget that your first property may not be your best deal. You will continue to learn and get a better deal every property you end up with.

@Jonathan Santa seems as though you have done you're homework.

When putting an offer in, the old adage goes that if you aren't embarrassed by it, you offered too much. To that respect, you should offer what you feel comfortable offering. If you feel that you're analysis is correct and you have done you're research submit your 75% of asking price offer and give reason to it. 

"I am offering 75% asking price for this reason. It is the very best offer that I can do." Wait for a response. If they counter, hold firm. Do not go above the max number you have on this property. If they don't accept, it is not the right one.

Good luck

@Brittany King good questions! Let's break them down:

1. Cap ex = 5% Repairs = 5% Trash = local (I use $50 depending on property and # of units); Water & Sewer is about 60-100 a month (again depends on property size and number of units - use higher number when calculating expenses). Vacancy rate is VERY location oriented. Some places are 3% some places are 15% - to be safe I go with between 8-10%. I do this by calculating different scenarios. You can't go wrong using the BP Rental Analysis Calculator

2. This depends on what you want to do. Do you have to have cash flowing properties? Do you want to house hack? By defining these (among many other) criteria, you find what is most important to you. If you want to house hack you're not going to have a cash flowing property at least until you move out. If you want appreciating properties (i.e. buy low and let it appreciate to sell high), cash flow may not matter as much either. For me and I think most other investors, a property with absolutely no cash flow doesn't seem too appealing. Even if it has minimal cash flow, hopefully you can find ways to add value or cut expenses to make room for it.

3. Reserves are a lower calculation but are, again, based on the property. If the property has a lot of repairs needed you'll obviously want to have higher reserves. For calculation purposes, I use between 2-5% of reserves. 

Hope this helps

@Jose Escobar I am not sure as don't have the experience but I'm sure you'll get some good advice from RI.

I've been taught to explore credit unions and small banks for refi's. If you can't get the offer you're looking for don't be afraid to leverage one bank against another. "This small bank said they'd give me 70%, can your credit union do 71%?" Keep repeating until 75% ... adjust the dialog accordingly though!

Good luck

@Kevin Mckee this is a classic newcomer question - which is great because it means you've started just like everyone else!

You'll hear this a lot but it really comes down to what you want. Define your goals. So you want a duplex. By when? With cash flow? Whats your price range? Area? I'd recommend the BP Beginners Guide (education department of this site - it's free), this will help layout what you need to define.

20% for your first property (I THINK) is too much. You're only a first time homebuyer once and Illinois I'm sure has a great program that probably includes downpayment assistance (a simple google search should help find that). You could get a property with NO money out of pocket (if you play right).

BP will be here along the way but educate yourself, define your goals, and continue to go through the forums and blogs on BP.

Good luck

@Account Closed I'm not sure the details but my first thought is that he is not the owner. Seems very odd he has no friends, family, agent, property manager, lawyer, etc. in a state he owns real estate. Sure it's possible and I could be reaching but that was what my first instinct was.

If you have full faith he is the owner (you could easily search the property's county public records by googling it) why not just facetime the person? Go through the house on facetime - then mail the key back?

Good luck