All Forum Posts by: Barbara G.

Why don't you start with a 3 1/2% FHA loan? House hack

Buy a multi family.  Tell a partner you can get a 3 1/2% loan and live in the duplex?  That sounds a little more doable then finding a partner when you know very little.  Are you paying rent now?  Will you move?

@Kay

Tax =         $2,400

Insurance = $1,800

Total =         $4,200

So you are saying you will be paying $350.00 a month for your rent.

Don't you pay for Garbage? Don't you pay for wter and Sewer?  and if so how much?

Don't you pay for electric for shared hallways.  Who cleas the hallways?  Who does the Landscaping?

You should figure paying a regular rent of $700 to $900 to cover any additional expense

We bought a 25 year old house and the first year along with all our other expenses, we had to replace:

1 Refrigerator

3 electric stoves

1 kitchen cabinets and counters

Paint 1 apartment

3 Bathrooms

Things happen

 We have narrowed it down.  You want to live in this area.  Is this the way you want to do it?  Is the $800 or $900 rent you will be paying a good deal?  You will also learn how to be a hands on landlord owning this property.  That's worth something.   How much is your water and sewer and garbage collection?  If I was young I would pay a big premium to live in Greenwich Village in New York, or in the 80ties near the Museums and that would be great.  Is this area  easy to sell when you want to move on.  How much, as every one is asking is a similar apartment renting for in a similar building?

 Look at this site on the internet

http://www.state.nj.us/dca/divisions/codes/offices...

ab seee what they tell you

Kay has told us this multiple times. She loves this building, she loves this area. Some investors think she will be OK with this investment. Her rent, it sound like, will be under $900.00 and that's cheap for that kind of apartment. She is paying down her principal, about $2,000.00 a year, and they think it should appreciate 3% a year and that's a good number. She got that great FHA loan and if she's right she will be able to raise the rent. She will have a tax write off and that will put more money in her pocket. Its beginning to sound better. Let her do her thing. God Bless her and Good luck to her. Just Keep us Posted blow by blow. We are pulling for you.

@Joel Owens  (how do you high light the @?)

You are right.  Why would you buy something for $150 and do all that work when you could buy it for $165,000 with the work done

Well we did that.  We  bought 2 duplexes for $165.000 each where we have worked for one year rehabbing it with the cash flow.  I think we would have had to pay at least $225,000 if these duplexes were in good condition and I think we would not have done that.  So we will be putting $30,000 or $35,000 into it (plus sweat) all from the cash flow and it will take us 1 1/2 to 2 years to pay for it out of the flow.  But it has been a job.  We don't want to go down to another crawl space

We did it because that was all we could afford or so we thought.  It was the first thing we bought as an investment property

Now we are looking at 2 more duplexes that are very new (about 1 1/2 years old) and nothing has to be done. Its a little further away and in another town  (we don't like this town as much as the first town but its good)   We think we can get them for $190,000 each?  Thats only $35,000 more or $70,000 total but   Nothing has to be done (they are new)  and the rent roll is the same and the expenses are close?  We can use the cash flow from the first month, instead of putting it back in to rehab for almost 2 years.    So you are right but sometimes you do what you have to do.  

@kay Hamilton

I see what you are saying

Suppose you just look at this as a flip.

If you add up your entire rehab costs and add it to the price of the house you bought (cost + rhab)  will you come out of this with  profit?  What do the real estate comps say about your house rehabbed. What price can you selll this house for once it is rehabbed?   Does this give you a reasonable profit??

When you occupy the apartment will you be figuring your rent at market value, after all you do have to pay rent?  Then you have to add your profit or subtract your loss to the end selling price.  If you made some cash add it, if you lost cash subtrract it.  

I don't know if I am explaining this correctly?

Where are you after you do this?

These 2 responses have been very reassuring.  Unfortunatley everything in these duplexes are at the end of their life span and there were a few problems with the electrical and plumbing and water damage that had to be addressed.  We knew about them ahead of time but still we imagined some of the things would hang in longer.  The new aluminum siding front was cosmetic but we wanted to do that.  

We bought 2 Duplexes.  Side by side, identical duplexes.  Our first buy.

last year. for 2014 we used all the cash flow (approx 24,000)  to do maintanence on the property  The houses were 25 years old and nothing had been done.  We did major stuff and used all the cash flow to do 1 new roof, gutters, front, 3  bathrooms replaced 3 major appliances and one co kitchen and apartment when there was a vacancy for 2 months.  We spent all the cash flow on the improvements,  but did not use any of our money.  We still have almost one more year of renovations that probably will leave us nothing out of the cash flow for 2015. or almost all of the 2nd year.

We feel the 2 houses will have appreciated at least 100,000 (for the 2) when we are finished. Tax wise We got a $5,000 tax write off that we needed and we paid approx $2,000 off on our principal.  

We put 25% down approx $83.000 and the 3rd year our cash flow should be approx $20, 000 0r $22,000a year with the 2 upleses  worth $100.000 or $125,000 more.  Now is this a bad deal, a so so deal or a good deal???  We self manage it, general contract it, know consturction, and do handi man work on it

What does BP think here

You are all in now.  Just work it.  If as you say it is cosmetic and you can carry the expenses you can just renovate it slowly.  Perhaps you can rent  a room to a student?  What is your cash flow from your house A ?  Are your expenses higher now then when you were in Property A?

You should be sharing your detailed budget with us so we can see what you are talking about.  What is the cash flow on property A?  What are your detailed expenses on property B?