All Forum Posts by: Aris Alexiou

Hey guys,

I talked with a builder earlier today about my desire to have him built some duplexes for me. I have around 350k liquid ready to deploy for buying land and securing a construction loan. He told me that he prefers to partner up on something like this and instead of charging a fee, he wants to have equity. It was an informal conversation (nothing on paper, we agreed all this is going to be done thru LLCs and Joint Venture agreement with everything spelled out but we haven't gotten there yet), but from what I understood, he wanted to be 50/50 partners when all is said an done.

He mentioned it was going to be about $125/sqft to build at cost, no fees, and when I asked how much would it be if he was charging me a fee, he said approx. $190/sqft.

I would be putting all the cash (as I understand) to buy the land and secure us a construction loan. Does that 50/50 sound fair? Wouldn't the actual fair deal be more like the following:

Total Project Cost: Land Cost + Construction Cost + Fee

If I am putting all the Land Cost + Construction Cost then I need to have equity equal to the percentage of those 2. If per the numbers I gave the above, his fee is around 35% of the cost to build / sqft then he should have 35% - Land Cost in equity.

Thoughts? Sorry my for me syntax, English is my second language.

Hey guys,

I talked with a builder earlier today about my desire to have him built some duplexes for me. I have around 350k liquid ready to deploy for buying land and securing a construction loan. He told me that he prefers to partner up on something like this and instead of charging a fee, he wants to have equity. It was an informal conversation (nothing on paper, we agreed all this is going to be done thru LLCs and Joint Venture agreement with everything spelled out but we haven't gotten there yet), but from what I understood, he wanted to be 50/50 partners when all is said an done.

He mentioned it was going to be about $125/sqft to build at cost, no fees, and when I asked how much would it be if he was charging me a fee, he said approx. $190/sqft. 

I would be putting all the cash (as I understand) to buy the land and secure us a construction loan. Does that 50/50 sound fair? Wouldn't the actual fair deal be more like the following:

Total Project Cost: Land Cost + Construction Cost + Fee

If I am putting all the Land Cost + Construction Cost then I need to have equity equal to the percentage of those 2. If per the numbers I gave the above, his fee is around 35% of the cost to build / sqft then he should have 35% - Land Cost in equity.

Thoughts? Sorry my for me syntax, English is my second language.

I am also very interested in this. I've been here for about 1 yr and looking to replace my landlord.

@Bryan Noth

Hey Bryan, thank you for taking the time you read and comment on my post.

1) I agree that is a little confusing with the cap ex and reserves. The property was just rehabbed by another investor. No one has lived in it yet. It's in the final stages of completion which a few remaining finishing touches.

To my understanding, of course, if I end up going thru with this I will have a professional inspection done, it has totally new electrical and plumbing systems. Same goes with water heater, but I will double check. Roof seemed is pretty good shape too.

2) regarding the vacancy, I am really unsure how to obtain representative data from the local area'

. That why I called it 10% as in my mind that seemed conservative. The population here in the city is booming. The downtown area is very desirable to live by so I was thinking, if priced correctly, it should rent out somewhat fast.

3) regarding the PMI, I went to talk to the mortgage officer and she run me thru all the costs of the mortgage and such and offered the option to pay around $1000 in advance for the insurance of the mortgage in case of default and avoiding the monthly premium for the lifetime of the loan or until 20% equity. It seemed a trade off between initial capital and cashflow.

Hey fellas,

I went to see a duplex today near the very desired to live area of downtown today. This is potentially my first investment.

I wanted to buy it as house hack it. I run the numbers on it and they seem ok i think... I was looking for some feedback and get some suggestions from fellas that are steps ahead of me.

Here are some details.

Asking Price: $380,000
Potential Rent: $1,300-1,350 (2 units total, but 1 for me to live in)
Initial Investment = $38,000 (down payment) + $5,000 (closing costs) = $43,000

SCENARIOS

1) While I live there:

Monthly Expenses:
Management: $0 (only property that I would have, so i can solo it)
Repairs Maintenance: $100
Taxes: $175 (4% tax, SC law)
Insurance: ~$100
Reserve: ~$100
Mortgage: $1,584 (w/ 10% down @ 3.75%)

Total Monthly Expenses = $2,058

Monthly Income:
Rent: $1,350
10% Vacancy (being conservative) = $-135
Total Monthly Income = $1,215

Net Cash = $-843

Comments: Note that current I pay $1,500 in rent which I am getting out of in March. This house-hack would save me about half of my monthly living expenses which is why I find it very attractive. This way I can save up more capital and go towards the next deal in a year or a bit more.

2) After I move out:

Monthly Expenses:
Management: $0 (only property that I would have, so i can solo it)
Repairs Maintenance: $100
Taxes: $350 (6% tax, SC law)
Insurance: ~$100
Reserve: ~$100
Mortgage: $1,584 (w/ 10% down @ 3.75%)

Total Monthly Expenses = $2,234

Monthly Income:
Rent: $1,350 x2 (after a move out, maybe 1-2 years)
10% Vacancy (being conservative) = $-270
Total Monthly Income = $2,430

Net Cash = $196

Cash on Cash ROI = 5.47%

Comments: In all these calculations I tried to be conservative. I used high reserves and maintenance I believe as the properly was just rehabbed and "should" have too many things to fix. Also the 10% vacancy is a big excessive i believe. I know 5.47% CoC ROI is not considered great in the rental world but i really like the deal due to the house hack potential which will allow me to get into the next deal a lot quicker. Also note that this assumes I will pay the full asking price of $380,000 which I will of course try to offer around $350,000 which will bring the CoC ROI to a healthier 9.64%. This property is also located on one of the best school districts in the area.

Edit: Forgot to mention this lot has permission to add another structure in the back side of it like a 2/1 down the road.

Hey fellas,

I went to see a duplex today near the very desired to live area of downtown today.

I wanted to buy it as house hack it. I run the numbers on it and they seem pretty decent i think... I was looking for some feedback and get some suggestions from fellas that are steps ahead of me.

Here are some details. 

Asking Price: $380,000
Potential Rent: $1,300-1,350 (2 units total, but 1 for me to live in)
Initial Investment = $38,000 (down payment) + $5,000 (closing costs) = $43,000

SCENARIOS

1) While I live there:

Monthly Expenses:
Management: $0 (only property that I would have, so i can solo it)
Repairs Maintenance: $100
Taxes: $175 (4% tax, SC law)
Insurance: ~$100
Reserve: ~$100
Mortgage: $1,584 (w/ 10% down @ 3.75%)

Total Monthly Expenses = $2,058

Monthly Income:
Rent: $1,350
10% Vacancy (being conservative) = $-135
Total Monthly Income = $1,215

Net Cash = $-843

Comments: Note that current I pay $1,500 in rent which I am getting out of in March. This house-hack would save me about half of my monthly living expenses which is why I find it very attractive. This way I can save up more capital and go towards the next deal in a year or a bit more.

2) After I move out:

Monthly Expenses:
Management: $0 (only property that I would have, so i can solo it)
Repairs Maintenance: $100
Taxes: $350 (6% tax, SC law)
Insurance: ~$100
Reserve: ~$100
Mortgage: $1,584 (w/ 10% down @ 3.75%)

Total Monthly Expenses = $2,234

Monthly Income:
Rent: $1,350 x2 (after a move out, maybe 1-2 years)
10% Vacancy (being conservative) = $-270
Total Monthly Income =  $2,430

Net Cash = $196

Cash on Cash ROI = 5.47%

Comments: In all these calculations I tried to be conservative. I used high reserves and maintenance I believe as the properly was just rehabbed and "should" have too many things to fix. Also the 10% vacancy is a big excessive i believe. I know 5.47% CoC ROI is not considered great in the rental world but i really like the deal due to the house hack potential which will allow me to get into the next deal a lot quicker. Also note that this assumes I will pay the full asking price of $380,000 which I will of course try to offer around $350,000 which will bring the CoC ROI to a healthier 9.64%. This property is also located on one of the best school districts in the area. 

Edit: Forgot to mention this lot has permission to add another structure in the back side of it like a 2/1 down the road.

@Will Gaston Interesting coincidence, I am actually working with Christopher on this haha! Yeah I am not really out of state but I do live in the southern part of Greenville, SC. What you say totally makes sense. I will keep all this in mind moving forward! 

@Will Gaston Yes it is on 29203. What do you think of that area? What makes you say that out of town owner might be more challenging in that neighborhood? 

Hello fellas!

I am very new to real estate and I am eager to get into it. For the past 1-1.5 months I have been constantly listening to book, reading the forums, looking at YouTube videos and doing everything I can to get educated. I network with a couple of real estate agents trying to get some listing my way that could be worth while investments. So far this is one is the one that stands out to me:

1 SFH home, in Columbia, South Carolina. It is about 7-10 min away from a pretty big hospital and very close to it there are neighborhood with houses in the 150's.

This is the current status. It is currently leased for 625 per month on a month to month lease and it seems below market. I know the current tenant in quite upset cause the house has roof problems. My plan is to go in, buy it and fix the roof (around 5k) and ask for the current tenant to pay 675 or 650 if he agrees to sign a yearly lease. 

Without Increase:

With Increase:

To me, and from what I have heard, the ROI seems pretty low as well as cashflow. I have been having a hard time finding anything that meets the 2% "rule" and most things I come across are in the 1.5% max. I wanted to include property management fees for the sake of being conservative (I live about 1h30min from that house) and probably do not want to manage it forever. 

Just wanted others to get an eye on this and let me know your feedback. This house has some potential for a BRRRR also. It is quit dated and needs a lot of fixes.

Thank you for taking the time to read and I appreciate any feedback!