All Forum Posts by: Brandon Roof

I think your best avenue at this point would be to present your scenario to community banks and credit unions in your region to better gauge the likelihood of a refinance. Getting some responses from local lenders will help your decision-making process.

In regards to your financing, unless you've had a lender say so, I can't imagine you'll find anyplace that will allow you to put 3.5% down on a >$50k property and get a 30 year mortgage at 3%.  I would think chances of that are slim to none.

I can't speak specifically as to whether or not you'll be able to receive $950/month in rent without knowing more about the home/location/demand, but the ratios seem too favorable based on most other available properties.  This could also be impacted by whether or not the purchase price represents the current asking price or your target price.

For expenses, vacancy is likely too low, you could argue that repairs are a bit low as well, cap ex hasn't been included (you'll likely want it to mirror your repair expenses for projection purposes) nor have any additional expenses you may incur, particularly with snow removal and lawn care.

You're analysis may shape up a little more taking other variables into account.

You are likely running your numbers correctly.  Not every home is a candidate to be flipped and there could very well be a fair amount of competition in your area where more lucrative deals are getting scooped up quickly and others are cultivated from off-market properties.

As for fair ROI, you'll likely hear some typical CoC figures but that's something that could be different for every investor. Depending on who you are working with, some may be happy with anything higher than a savings account while other will want higher double digits. The deal itself can make a difference as well based on the acquisition price of the property, rehab, timeline to complete and ARV, as it isn't always paint by numbers (i.e. the 70% rule).

Calculating the gains may also be something that's better suited for a CPA in your area, because there are a number of factors that could influence the outcome.

Sorry for being vague about your inquiry, but unfortunately like many things within the forums the response is often, "it depends".  I would first determine how you value your time, as it seems that based on your calculations it's not worth it already.  If your heart isn't in it, I'd explore other avenues that may provide the return you want in an area you find more interesting.

You may want to obtain some additional quotes or find materials that are more comparable in quality.  I haven't run into a scenario where the cost of one is more than double the other.  You'll find plenty of posts on BP discussing the vinyl plank options at HD and Lowe's that are reasonable priced and very easy to install.  You may also have a handy friend or family member that could help with installation to defray some costs.

A few things to address here:

Don't get too caught up on the spread between the tax value and asking price.  There are plenty of resources available that cover this topic in greater detail so poke around BP if your looking to learn more.

You may also want to take a look at comps again.  I've never known a 4 bedroom home to rent for over 56% more a month than a 3 bedroom unless the quality and location are completely different.  I'd hate for you to proceed with a deal that "works" at $1,250/month when in actuality you may only bring in something like $950/month.

In regards to making it contingent that the seller get the 4th bedroom permitted, you won't know until you ask.  You could also submit multiple offers (i.e. if 4th bedroom is permitted my offer is $X and if not my offer is $X).  Base it around what works financially for both a 4 bedroom and a 3 bedroom.  Don't spend too much time wondering what they are going to do.  Simply put the ball in their court and be prepared to move on if they aren't interested in your proposals.

Lincoln, Jackson, Grant, Franklin, etc.

Anybody on money has a better ring to it than Leverage, Duplex or FIRE.

Inherited tenants are rarely a plus because they may never have been subjected to a screening or verification process, but that is another conversation altogether.  Your situation is simple.  Tell them any modifications must receive owner approval (this should be in any lease, hopefully even his existing one), so any plans he may have won't be pursued unless you sign-off on them.  If this isn't the kind of conversations you're comfortable handling, you'll have to bring on a good property manager, which would be rather moot as the tenant knows you're the owner, you live onsite and they are likely to approach you with any inquiries regardless of whether you have a property manager or not.

Unfortunately, I don't think I've ever seen an old bank turned into anything that actually utilized those features.  People may still use them but not for their intended purpose.  A drive thru often becomes additional parking and vaults are simply storage.  Banks only recycle preexisting buildings so often when testing the market.  They seem to be more likely to build in the area when really looking to establish a footprint.  I've seen salons, title agencies and veterinarians in old banks but none of them were creatively using it's features.  Never seen one split for multiple tenants either due to the preexisting configuration but hopefully the demand in your market will help you determine the best way forward.

Unfortunately, I don't think anybody is going to be able to provide you much guidance based on the information you've provided. The only thing I can determine from it is that $210-$300k is an awful wide spread and may need to reevaluated, and I don't know of many houses you could pick up at the price you stated and turn it into a quarter-million dollar home. Even if it was a rundown shell of a house it would likely be going for more than $27k with comps touching $300k, which is another reason I question the ARV.

@Josh Coup Even if your agent isn't the ultimate authority, they might defer to their broker who would hopefully be able to provide a relatively accurate ARV. The way I typically do it is to use one of the major listing sites. You can draw an outline around the neighborhood you are targeting, search properties that have been sold within the last 6-12 months, and continue to narrow from there. I'll usually search for properties that have +/- 1 bedroom from what I have, the same number of bathrooms, within a few hundred overall square feet, was built within two or three decades of my property and are on similarly sized parcels of land. Sometimes there are additional variables I'll include such as basement, garage, pool, etc. From there, I'll usually discard the outliers and whittle it down to those that hover near the average price per square foot. This should provide a reasonable estimate for ARV.