All Forum Posts by: Michael Baradell

@Troy Sheets any suggestions? Of course I am having an electrician come out for an estimate, but I didn't know if there was an option I may be overlooking. There is a way to make aluminum wiring safer by pig tailing the ends with copper, but because I have to disclose this with a potential buyer and the insurance company, they will still not insure due to the presence of aluminum still in the walls.

Joe,

Aluminum wire is actually not up to code in residential housing in my area. I'm sure codes are different all throughout the country, but as for this particular city , aluminum wiring is not up to code. In doing some research I have found that aluminum expands and contracts due to heat which over time can lead to loose or faulty connections where the aluminum connects to the outlets, which in turn may lead to fires. This is the reason some, if not most insurance companies will not insure a home that has aluminum wiring. I have been told that rewiring an entire house of this size could cost upwards of $15k. $15k of unexpected costs in any deal I feel is worth negotiating for. Especially considering at this point if I terminate the deal, the owner will have to repair it himself or compensate the next buyer for the expense. I was just curious if anyone on here has had any similar experiences.

Hey BP world!! I am happy to say I am officially under contract on my first property!! The property was a succession sale that I got at a great deal. The property was inspected today and the inspector discovered that all of the wiring is aluminum. Any of you savvy investors out there have any suggestions on how to deal with aluminum wiring? I know of all possible remedies, but my main concern is insurability. Since the inspection was preformed late on a Friday afternoon, I was not able to contact any insurance companies. I spoke with the listing agent about the possibility of the owner subtracting the cost of rewiring the house from the sale price, but he is not willing to do so due to the fact that it was already discounted a lot and that there are 4 backup offers ready and waiting for my deal to fall through. I'm open to any and all suggestions.

Thanks for the quick response guys. Jon the reason I say the rents can range from $1100-$1300 is because I can rent it as is for $1100 or if I put some updates into the property I can get around $1300. Will, after subtract the 50% for expenses, do I subtract P & I from the other half to get the true cash flow? Also, I only provided all other info just because I appreciate when posters include all info so I can get a better picture of the deal.

Hey guys!! Rookie question here. Can someone give me a breakdown of the 50% rule using this example? I have already calculated it myself, I just want to be sure I am doing it correctly.

Purchase price- $75k

Rehab cost- $10- 15k.

Taxes and insurance- $300 month

Minimum potential rent- $1100-$1300

Other info:

New roof, new a/c, ARV $125k - $130k

Any insight on the 50% rule or 2% rule will be appreciated.

Raymond,
The home will rent in the $1600- $1800 range. This market is becoming a sellers market. Homes in that area that are up to date are selling in less than 60 days.

Hey guys,
Im looking into purchasing a distressed property that will become my main residence. My current home will become my first rental property. The home I am looking to purchase will need extensive repair. My question is, would the 70% rule still come into play here since I am planning on living in the home for at least the next two to three years? I plan on holding this property as well when we decide to move again. I want to be sure I am not overpaying for the property, but being that I will be living there makes the numbers a little fuzzy to me. Should I act as if its a traditional fix and flip and go with the 70% rule? Here are some numbers: ARV= $190k - $200k. Two comps have sold for the $220k range recently but I'm staying very conservative. Rehab costs = $30k - $40k (total reno) home can be livable for $10k - $15k. Asking price is $150,000 reduced from $241,000. Any suggestions?

Bill, not sure what CLTV is but this is a Fannie Mar Home Path loan. It's a great program the only problem is, there is a 15 day grace period that is for owner occupants only. Investors only get to offer after that period. This home is not out of the period yet so I'm crossing my fingers it is still available.

The rental property I am looking to purchase is as follows: 3/2 SF, purchase price and rehab $75k, piti~ $520/ month. Will rent for $1050 - $1100. Financing is 10%dp 30yr fixed with current rate and no pmi. Seems like a solid property to me. Home is 15 years old.

Does the 50% rule apply to single family homes? If so, what is a good cash flow spread to expect? The property I am looking at will probably yield about $250/month cash flow according to the 50% rule. Is this enough?