All Forum Posts by: Brian Collins

So in this instance I would have to have a quick offer accepted and a quick closing to be able to substantiate all of this. May be hard to accomplish this on a REO where I am dealing with banks.

@Chris Mason, at what point in the acquisition of the second property do I have to have the signed lease with the proof of security deposit? Can I get a pre-qualification letter before that in order to put an offer in? I will see what I can find out locally. 

I have rented it out before, but my area has had some appreciation in rent prices. What if I were to get a BPO or Appraisal, I think that would help my circumstances? Can I ask for a manual underwriting?

Hello BP,

I have recently been trying to pre-qualify for a mortgage on a second home. I want to find a way to get around the requirement of having rental income on Schedule E for 2 years in order to use it as income to boost DTI. I am looking to keep my principle residence and convert it into an investment property. I have heard that I am able to use 75% of the monthly rent as income so long as the equity in the home is at least 30%. This strategy is all that I have been able to dig up to get around reporting on Schedule E for 2 years.

Is this true and if so, can any brokers be recommended that can close a loan in Indiana without the use of the Schedule E? 

I am certain my principle residence has more than 30% equity, but the home has only had 1 year of Schedule E reporting. It was on my Schedule E in 2015 but not in 2016. Does even a previous year two years back help in qualifying?

@Paul Flynn, I think the big thing is that you make sure the duplex has enough equity so that after purchasing and renovations, you are able to pull that cash back out (cash out refinance) and pay back the HELOC. If there is anything left It would be best to keep it for another investment. Once you pay back that HELOC it is ready for action again. Most HELOC's have a 10 year draw period and as long as you are paying the balance off it can be redeployed on other opportunities.

Have you checked out any articles on the BRRRR strategy?

@Anthony DiRico How did this play out for you? 

I am in the same situation. I am thinking of buying a 4-plex that needs about $75,000 rehab and would have an NOI of $17,724 but purchase price would be around $22,700 - $35,700.

Could anyone give me a little insight into ARV based on income?

Each unit would be rented for $675. With a $75k rehab, it would be pretty low maintenance for a few years.

Update: 

I have not made any offers yet and am currently putting together my business plan for purchasing the properties. There is a lot to this property that I want to make sure I follow through on. 

My Financing Plan - Working on getting a HELOC on personal home where I have over $50k in equity. Both properties prices were just reduced and if still available after I receive my HELOC I will make an offer on the building that is in better conditions than the other. My offer will possibly be a cash offer of %40 less than list price and earnest money would be 25% of the cash offer.

Goals for moving forward if offer is accepted - Renovate one unit that is in the best condition out of the four. Get it rented out to use the cash flow to pay the debt services of the HELOC. Continue this pattern, but at this point I will require more funds for the renovation of the other units. Will seek out $45k from a private or hard money lender.

Ideal budget will be $11,250 per unit for renovations and will seek more funds to cover the cost of replacing the roof. These funds that I would be seeking would NOT need to be paid back.

Goal for completing renovations of first building would be 12 months (3 months per unit)

A timeline that may overlap the renovations of the first building would be the purchasing of the second building if still available. This is a depressed city and the poor condition of the building makes me think it will be on the market for a while. May consider purchasing it near the same time as the better building.

Currently am in contact with the local government to figure out permits and getting referrals to have contractors give bids on some areas I don't want to mess with. 

Purchase Price (if offer accepted) : $22,500 for better property

Purchase Price (if offer accepted) : $21,900 for lesser quality of the two

The following are numbers for 1 unit.

Rent for first unit renovated : $450

Each additional unit (2,3, and 4) : $575 - $650

Income-Expense Ratio : 1.87%

Gross Rent Multiplier: 2.68

Debt Coverage Ratio: 2.69/2.01 after refi

Cap rate: 3% 

ARV based on Cap Rate : $428,954.13 (according to biggerpockets analyzer)

Please provide me with your thoughts.

Thank you.

Hello BP Community,

Going to look at a couple 4-plex's on Monday. They are currently listed for $39,900 and are directly across from each other, Fannie Mae properties. I have ran some numbers using the rental calculator on here.

https://www.biggerpockets.com/calculators/shared/6...

*These properties are identical.

What should I be looking for while I am looking at this size of a building?

Are there advantages to these properties being Fannie Mae properties?

Also, I am in need of a good resource to do a HELOC on my personal home. I want to be able to tap into my equity. ~$41,000 I have tried once but was told my DTI was to high.

Thanks in advance for you thoughts and advice.

Hello BP Community,

Going to look at a couple 4-plex's on Monday. They are currently listed for $39,900 and are directly across from each other, Fannie Mae properties. I have ran some numbers using the rental calculator on here. 

https://www.biggerpockets.com/calculators/shared/6...

*These properties are identical. 

What should I be looking for while I am looking at this size of a building?

Are there advantages to these properties being Fannie Mae properties?

Also, I am in need of a good resource to do a HELOC on my personal home. I want to be able to tap into my equity. ~$41,000 I have tried once but was told my DTI was to high.

Thanks in advance for you thoughts and advice.

@Luka Milicevic It has been some time since you posted this. Have you had any success? 

I have properties in mind that are vacant and I have located the owner's address. I was interested in knocking on the owner's door, but was not sure if this is advised or not.