All Forum Posts by: Ben Tilbury

Hello Fellow BP Members,

I am from California and live on the Central Coast in San Luis Obispso, so I have been looking in more affordable areas inland to find cash flowing multifamily properties. I recently came across a    4-Plex which I feel may be just what I am looking for. It's a short sale 4-plex priced at 225,000 which has 3 of the 4 units rented currently. This property does need a new roof, fix roof leak damage, some interior fixes, new A/C units and eventually a resurfaced driveway. My idea was to move into the vacant unit and manage the renovations on the complex and that unit during the week, until it is ready to rent out.  The real estate agent I've been working with is trying to encourage me to put in an offer at full asking asap, but I'm a bit weary so figured it best to post on here first, plus I'm still looking for financing although I have a few investors I can approach for cash. 

Rough Estimate on Repairs (Since I have not done an inspection on the property yet)

New Roof: $15,000

New A/C Units: $5,000 (Not sure yet how many will be needed hoping its not all 4)

Interior Repairs: $10,000 (Drywall, paint, texture where necessary from leaks) 

New Resurfaced driveway: $7,500 (Hopefully a high estimate)

This property is currently bringing in $2100 in while the 4th unit is vacant but has the potential for $2900/month.

I am new to this and want to get some other opinions on my best plan of action. Should I offer full asking price or come in a little low even though it is a short sale? The current RVM (Realtors Valuation Model) for this property is $353,000 so it does appear to be a deal if purchased at the right price even if 40-50k in renovations is necessary. I will also be looking for investors who may be interested in this property or other multifamily properties for flips and Buy & Holds. I am still trying to figure out if this would be best for a flip or a buy and hold myself but I guess lender terms or if I JV with someone on this we can determine that once an offer is accepted. Please give me some helpful feedback, I have to quiet this voice that gives me doubt, and forge forward into getting my first multi under contract. Thanks for your help in advance!

-Ben

This morning I met with a local mortgage broker here in San Luis Obispo, CA in order to get an idea of what I might need in order to qualify for my first mortgage. I am searching for a multi-family property within my area although since prices are outrageous here ($650k+ for multi-family properties) I am also looking out of state. As a first time buyer, I figured a FHA loan might suit me in order to keep the down payment smaller. I went into the meeting with an open mind knowing that since I haven't filed tax returns in the past few years that I would not be at the stage of applying for the actual loan, it was solely my goal to find out the requirements and more facts on the best loan option to suit me hopefully in the near future, as its my goal to purchase my first property by the end of the year. The first thing she said was that a 2 year employment history (in the same field) with tax return filings is a necessity in any loan application. This was not a huge surprise but already I could not supply these since I have been doing under the table contract work the past few years and working on a start up which shows no profits currently. I did just start another job to supplement my income but its a serving/bartending job at a well known establishment which still doesn't pay enough to qualify me for a loan even if I was working there for the past 2 years. As a sample loan we ran the numbers for a $400k conforming loan with 5% down and a high 7% financing fee; which after taxes and property insurance came out to around $2900 a month. Now considering most banks require you to make at least 2X and sometimes 3X the cost of the payment that would mean my taxable income would have to be around $6,000 (which it is not). I have heard that the potential income generated from the other units of a multi family rental property may be used in adding it to ones own income on the FHA loan application? Another factor she brought up was that if we did go the route of FHA (which she recommended against) the insurance premiums on the FHA loan were recently raised to 1.75% in the past year (and tend to be constantly changing) as well as the annual premium of around .85% which makes a large difference which must be paid monthly until the end of the loan. Although I have a very positive mindset this has me thinking that I will have to find a different route to getting financed and eventually purchasing my first property. If anyone can lend some helpful information or describe their first purchase if it was under similar circumstances then I would be grateful. Thanks for reading! I look forward to hearing many of your experiences and out of the box techniques to finding financing for an investment purchase, I appreciate your help and time. ~Ben

Sounds like an Epic summer! Congratulations on the new properties. That's a very inspiring story and you've got a great vision, I wish you the best and hope everything continues to go smoothly with your business! #operationpassiveincome