All Forum Posts by: Anna L.

@Henri Meli, thanks! That's a good one to add.

@Scott Skinger, thank you for the info and breaking everything down!

Few questions:

1. Estimated Closing Cost in your example is roughly 2%. Is this realistic? What are the typical closing costs associated with buying 10+ unit building? What is the broker commission? If my husband has RE license, can he and his broker get a %? Or typically, only seller's broker get's a %?

2. Debt to Replacement Reserve - why did you include this into NOI calculation? Isn't that part of CAPEX once expense actually happens, and CAPEX shouldn't be included into NOI?

3. Interest of 4.75% and Amortization (30 years) - how realistic to get these terms for someone, who is just starting out? What should I prepare myself to? 5% and 20 year? 

4. Have you ever re-fi after you increased NOI? How does appraisal works in that case? What are the typical conditions of the re-fi loan?

5. I noticed that your loan included Principal and Interest in that example. Why would some people want interest only loans? When they need cash to remodel and then re-fi? 

I know it's a lot, so I really appreciate any info you can provide!

Thank you!

I wanted to start investing in multi-unit properties(5+), and before I jump in, I need to understand the basic math behind this type of investment.

I want to try with classic strategy of buying a value-add property, where I can increase the rent and decrease the expenses after acquisition. Basically, the goal is to do BRRR and pull as much cash out as possible after refinance.

Can you please look at the math example that I put together and critique it? Is it directionally accurate?

The biggest unknown for me right now is how the bank evaluates the property value after the increase of NOI. Do they use the same Cap Rate and that's how the value increases?

I know I missed the closing cost and the cost of potential rehab or expense related to efficiency improvement. So, anything that you can add from a real life example is highly appreciated.

FYI - my example is hypothetical, but I would love to hear from you if those numbers are even close to realistic in B-C type neighborhoods. 

Thank you!

@Tatsiana Shanina, how is your search going? I am in the same boat, as we just moved to Switzerland and we just started exploring European RE market.

@Daren H., can you please let me know if you did your own appraisal before you bought the house? I.e. how did you know that it would appraise for that much more? What kind of rehab work did you do with $3K invested? Also, can you please recommend the lender you used?

Thanks! 

Hi @Oksana Babinska, I am interested in investing in Pocono Area. Can you please recommend communities with low HOA fees and close to entertainment? $150K budget for a nice rental sounds like a good investment. How much do Property Managers charge in the Pocono Area? How much do you need to pay to HOA every time you rent?

Thanks!

I did talk with someone at the Dominion. They sounded solid and legit. But I ended up finding another lender in my REA group.

Interested in recent feedback too. I am about to get pre-qualification. So, far I had a pleasant conversation with one of the managers. But want to make sure I am sending my data to a reuptable company.

Thanks!

Anna

@Chris K. thank you for such a detailed explanation. 

To add more to the conversation:

The husband was the only one that signed the mortgage and the note (according to lawyer). They stopped paying the note in 2012 and bank never went after the property to foreclose on it. However, since the property is non-occupied, bank sent over someone to winterize the property. After owner's  found out, his lawyer contacted the bank and told them that they had no right to be there and next time he'll call cops for trespassing. After that incident, bank sent an apologetic note to the owner's son...

I asked the lawyer if he believes that the son (POA of his mother) can actually sell the house. He said yes.

I wonder if I can structure the contract so that I am protected from any leans on the house?

Here is an interesting paragraph from another article - http://palawblog.stark-stark.com/2011/03/articles/...

To illustrate how a tenancy by the entireties benefits creditors, the 2005 Pennsylvania Supreme Court case of Regions Mortgage, Inc. v. Muthler is instructive and eye-opening. In Regions Mortgage, a husband and wife applied for a Mortgage jointly. The Mortgage Company, in a unilateral mistake, prepared the Mortgage with only the husband’s name, however the Deed named the husband and wife as grantees, creating a tenancy by the entireties. Shortly after recording the Deed, the husband passed away, and by operation of law the wife became the sole owner of the house, however the debt to purchase the property did not pass to the wife. The Mortgage Company then sued the wife to “reform” the Mortgage to make the wife responsible for the debt. The Pennsylvania Supreme Court held that the Mortgage Company could not reform the Mortgage to make the wife responsible for the debt, and when the husband died, the wife came to own the property free and clear of the Mortgage Company’s Mortgage Lien.