All Forum Posts by: Ben Reiss

Thanks Keith, I'll keep that in mind and adjust my bid. Do these number seem about right. I want to do a lot of the work myself but that would mean pushing back till the summer when I'm not teaching. But I am trying to make sure my numbers include paying someone to do the work so my labor is not free.
Ben

Looking at a place and active comps put ARV about $135K-140K. Sold Comps put it at about $125-135K, but those weren't really updated. Place is a 3/1.5 built in the early 1900's. has updated funace, hot water heater, 100amp panel (looks like a small bit of knob and tube was left in), new carpet downstair.
Roof needs to be looked at since their was a leak (seller said it was fixed but I don't think I trust his maintnace guys), some small issues with brickwork I will be getting a estimate on later in the week. figure about $1500 for roof work and flashing fix and another $1500 for the brick work (mostly some re pointing a small area and a couple little things)
Now the place needs:

New kitchen(small)- tile floor (have the 18'x18' travertine that IO got for a steal), cabinets, countertop, appliances, lights ($6K)

New half bath-tile floor, vanity, toilet, lights ($1500)

Back stairs re done ($1K~1500)

Open stairs to attic and turn in to hatchway and use floor space for closets ($1K~1500)

Sub floor repair upstairs (stiffen a bit and fix 1 hole) ($750)

Carpet Upstairs (700 sqft) ($1K)

Upstairs Bathroom- Tile floor, Tile tub srround, build in tub since it is a corner tub now, toilet, sink, ect ($3K)

Paint and some drywall/plaster repair ($4K)

Fix 3'x8' second floor deck off Master BR-railing and some clean up ($500)

Fence backyard and some landscaping ($3K)

Misc $2K

call it about $27K in rehab to make it nice and well in the top of the comps.
I could also do less but was looking at making it shine and moving it quick.

I figure I have to get into it at low 60's, Owner owns free and clear. Will hold the note and owner finance. I have not talked exact numbers with him yet (but is open to somewhere around that) since I don't have a solid idea on exit value with regards to how much of a rehab would be needed.
other strategy is it would rent for about $1K/ month now and for about 1200-1400 with a small investment in rehab.

This will be my first rehab where I am not doing all or most of the work and also in the city. Do my costs seem about right for you guys on rehab cost or am I just going off the free labor (well my labor ) that I had on other work. I am trying to figure out wilmington De a bit more but still not 100% on ARV and rent figures.

Thanks
Ben

thanks, This is the first year I sold any rentals.
To follow up though. If I had a rental that was losing money on paper (lots of repairs and some lost income in between tenants) after i sell it will a mortgage broker take that into account to be able to show the income on my schedule E. As in since thta place is sold now and I am not using it in regards to applying for a loan will it not effect it or will they still look at as if I have this negative cash flow from the unit going forward since it is on my schedule E for this last year?
Sorry if this is a repeat of the question. I guess I am looking to hear from someone who knows underwriting well. many times I get contradictory info or just plain wrong from the first round of loan CSR's.
Thanks Ben

If I have been taking a loss as the house is empty while it's on the market. Will it hurt my chances to get another loan this year as my schedule E will show a slight loss on paper once the units are all averaged. The place will be sold by the time I go to buy another property adn the rest of them cash flow very well. ( by bank standards one makes 1480 after rent8.75-PITI, another about 800 after the same, I know that's not the real cashflow but for qualifying it will be bonus to my DTI)

should I not show the loss on my taxes and just eat it (since I don't want to risk not getting a loan if it hurts my DTI) or will it not matter to the bank since it is sold and was sitting empty since I am looking for a retail OO buyer.

Sorry if this is a dumb question- I am finding differing opinions on this and a few of the mortgage people I have dealt with in the past have been pretty clueless for underwriting anyway.

I figure since the property is sold they will not care about it since there is a valid reason for it sitting empty for a few months to sell to an OO, they will only carre about the properties I still own when applying for the new mortgage. Please correct me if I am wrong.
Thanks
Ben

Sorry for the long winded question, I don't have many people to bounce ideas off. Joined a REIA but still networking and meeting people.
Biggest question I have is would any of you guys do it with 6-10 year amortization? I have about 30K in cash and another chunk tied up in a rehab. Just something I would be venturing out of my element. So not sure if maybe I should just try to wholesale it.

Houses nearby go for between 60K-100K based on size and block it's on. Having trouble nailing down a solid number since it's in the city and a block or two makes a very big difference(best est is about 85K-90K ARV if it's in "good" shape, say 5K in rehab). Originally I felt that at $65K it would be a good deal, now thinking I have to get it around $55K or so to make it make sense. Owned free and clear and the guy just doesn't really want to deal with it. he owns the funeral parlor next door and the house has been in the family since his grandfather bought it new in the early 1900's. He said he would float the loan and I think he would be ok with anything that pretty much gets him out of it. He has had it sitting for the last 9-10 months since the last family he had in got in paid one month and destroyed the place. he was renting at $1,000/month but does not know how to screen.

Owner has a $0 basis at this point so everything is taxed. I was going to offer to have him do owner financing on a 6 year ammoritization for the full ammount and pay 3% on it. this pretty much means rent will be simply paying PITI with me coming up with any other money infusions needed for the 6 years. But then it will be paid off. I think he will rather have the short ammoritizationa dn i don't mind having to put in for any of the repairs.
I currently own a campus duplex but will not have the cash to get into another one for at least a year, figured this would get me into something else with only closing costs and about $3K-4K in repairs(only needs to have some of the roof touched up and would like to throw in soe new tile in the baths and some carpet in the bedrooms.

Ideas on this, this will be my first time looking at some cretaive financing and getting out of campus rentals. I have had no issues with the student rentals but this blue collar area has me stumped on finding a firm value and idea of costs on a 100 year old house.
The house is in decent shape
New Furnace
New water heater
New carpet in main living area
New electric service panel and from the mast
There is some knob and tube but a lot of it has been re-done

guess I'm just a bit iffy on moving forward with this since the house is so old. Should I make a lowball offer or jsut walk now and not invest too much time.

OK so maybe I'm an idiot,
I was told by a few lenders that they would count the debt as debt and the income as income. Kinda F-ed me on an old deal but now should not be as much a problem.
So most lenders looking at say a $4,400 rent duplex with an $1,840 PITI would not be adding the debt to my DTI but adding $1,460 to my income.
4400*.75-1840=1460

I have had rental property for 4 years but only started really pushing to get more in the last year. Looking to get more but I am only a teacher and the last one took a ton of my cash on a down payment to get into.