All Forum Posts by: Alexander Ball

Hi Alan, At the end of your post there you posit that you have 350 of cash flow because rent income - mortgage = 350. I'm a newbie but aren't you leaving out some very important expenses? I'm sure you still cash flow even considering them and the rehab probably diminishes the chances for most CapEx for the short term. I'm just curious now -- how much of that 350 is going into a reserve for maintenance/CapEx and how much is going to sewer water landscaping etc etc. Congratulations on your deal! Can't wait to post my own.

Originally posted by @Chris Collins:

I'm learning how to analyze deals, so bear with me?

Here's the "deal" I analyzed. 

https://www.biggerpockets.com/calculators/shared/3...

Here's the loopnet listing (I know loopnet is where deals go to die, but I'm using it to learn how to analyze deals, good and bad).

http://www.loopnet.com/Listing/19454637/2827-Danah....

Its 2 houses on 1 lot.   I would live in 1, and rent the other out.  What do I need to be considering / change / understand if I'm living in 1 house, and renting the other out?   How will it affect those numbers in the grey box?  (Cash flow, etc)

Thanks!

-Chris

 Hi @Chris Collins

I noticed you already received some answers, but I'll give a brief reply and echo what has been said a bit already.

I've been told the best way to analyze a deal is to assume 100% financing.  For a househack situation (which I guess this is, but different than others I've seen where its a shared roof and not separate buildings) to just assume it is rented out on both sides.  That way when you do move out, it still makes sense as an investment.

Not that my opinion is worth too much, but I can confirm that this seems to be a tried and true method to approaching REI. House hacking turns what is normally a liability (your home) into an asset, as well as gives you a small taste of what being a landlord is like.

I'm looking forward to finding the right property, learning some handyman skills along the way, and doing anything that is safe and reasonable for myself to do to save some money.  I have my eye on one spot that could potentially get me close to a 2% deal.

It seems that most believe the best way to analyze the house hack situation is to look at it as if you were financing 100%, and if you were renting to yourself.  If the numbers look good then, and you are conservative with your estimated expenses and cap ex, you are well on your way to finding a great deal.

It seems like many of the guys interviewed on the BP podcast, including co-host Brandon Turner, started off like this and STILL have that property where they used to live.

Good luck friend.  I hope you get rich helping people solve problems.

Some context for where I am at in my REI education:

I've read just about every blog post here.  I've looked at various videos on property analysis.  I've listened to about 15 different BP podcasts cherry picked for my interests by title name, and I've spent about 20 hours looking at random Multifamily properties in my area, looking at the numbers, researching expenses, and trying to figure out at what point the properties will reach the: 2% rule, the 50% rule, and the $100/door guideline. 

Not much, but enough to be able to speak about REI in general terms and not be in over my head.

Hi BP Community,

The super sleuths out there may see that I have been 'on' BP for seven years.  I think the gap in use and the wisdom that seven years has brought me warrants a new introduction.

Hello!  My name is Alex Ball, and I am an academic at heart, and a non-profit bureaucrat by trade.  I turn 30 this year and recognized that while I do important, life-saving work I make a pittance compared to my talents, skills, abilities, and frankly -- desires.

I own a home in south Belleville, which was an emotion purchase based on the needs of my family member. As he ages, he desires less space and so I am looking to start my REI career with a househack in the Ypsi/Ann Arbor area. It is where I want to live, and I know I can find a deal if I look hard enough and I am willing to sacrifice.

I'm planning on going back to school for my graduate degree soon, and I believe I have turned a corner recently in what I want and realizing what I need to do to get there.  I think Real Estate is right square in the middle of the vin diagram of Alex's Interests and Alex's Strengths.

I'd love to speak with you, learn more about REI, help you out in some way to make myself indispensable to you. Please drop me a line if you're interested in finding some way we can help each other. I am a rank newbie, but I am intelligent, hard-working, people oriented, and passionate. There has got to be something there that you could use!

Thanks for reading.

--Alex

Hi Anthony, I'm no expert by any means but it does seem that most analyze the property as if you were renting from yourself. That way the numbers make sense for multiple exit strategies.

Originally posted by @Mindy Jensen:

Do you have to sell your house before you buy the new place? If yes, then put the property on the market now, and if it sells, find a month to month lease until you find your new property to buy.

 A little wrinkle in this for me -- I have a dog that restricts my options for renting in a very substantial way.  I have found only one apt complex that would allow us, and it isn't the type of place I'd like to live.  

I own a home, and I want to sell that home and move into a multifamily 2-4 unit home and be an owner occupant.  House hacking.  It makes sense for me, I have a specific area I'm looking for across two different cities.  How do I time the sale of my house with finding a property I want.  I don't have anything that looks like a deal so far that I can find through realtor.com, hubzu, etc -- but perhaps my agent I am bringing on-board will be able to help with that.

I can't really put my house on the market without having a property in mind, because the longer my property sits on the market without me being able to accept offers, the worse it is going to look to potential buyers.  Why hasn't this house closed over 130 days of being available?

Can anyone out there help me navigate the timing on this system?  I know you can write into the sale of the house a move out date, where you essentially become a renter to the new owners.  Will it make sense as I get closer to finding a sale for the house?  How long can I expect to stay in the home waiting to move out?  Am I just putting the cart before the horse?

Thanks for taking the time to read.

--Alex

Originally posted by @Patrick Vassell:

Lucas Machado thank you Lucas! I was wondering will I only be able to get a conventional loan? I was looking to get the FHA loan so I could put 3.5% down rather than the 20% would this be ideal? Or are there stipulations that would restrict me?

 Hi Patrick,

I'm in the same boat. You CAN purchase a multifamily building with an FHA loan, as long as it has between 2-4 units and you live there for ~1 year. 5+ would not qualify for an FHA loan.

Originally posted by @James Stokes:

@Alexander Ball I do not have a RE license. I am on the MLS, Homepath.com, Hub zoo & sheriff sale web site. My wife will be working on getting her RE licenses, so I can go in as many houses I want without annoying a RE agent (that's a whole story in its self).

I'm showing my ignorance here. Is not a RE license a requirement to access the MLS?