All Forum Posts by: Brendan Miller

@Nicole Harrington, for the most part it does, below is my input:

-Taxes: heavily dependent on the location, and you need to make sure this value is based on the new sales price, and not the current taxes. Most county websites offer a tax calculator that allows you to calculate the new tax value based on the sales price

-Insurance: value seems OK, this is in the range that I use. If you have an insurance agent, then you could call and ask them for an actual quote

-Maintenance: $100 per year is very low. This depends on the age of the house, but I typically always use at least 5% for maintenance and 5% for CapEx expenses (so 10% total of gross rents). This is a pretty common item that gets missed when analyzing deals

-Vacancy: 8.6% is typically higher than I use, but it depends on your market. Right now, you have $2,200 annually, so you're expecting the rental to be empty for a full month each year, so you'd just need to know your market to understand if that's accurate or not

-Property management: it's normally advised to include PM in underwriting, in case you don't want to self manage in the future. PM can be up to 10% of gross rents depending on your area, and this could take your deal from a good deal to a bad deal. If you're planning to self manage it for the foreseeable future then no worries, but if you had to get a PM, would this expense cause issues for you holding the property

Hope this helps, let me know if you have questions

Hi @Nicole Harrington, it'd be helpful if you itemized the expenses to show exactly what you're accounting for. Just looking at the numbers you provided, the ratio of expenses to gross rent seem a bit lower than what I'd typically expect, so better understanding the detailed expenses will help you get a better response of whether it's a good deal or not. I use gross rent multiplier as one of my quick initial metrics, and I aim for a GRM less than 10 typically. The GRM on this deal is 12.2 ($310,000/25,400 = 12.2) so it wouldn't pass my quick check, but that doesn't mean I wouldn't evaluate it further.

Hi @Jesse Acosta, welcome to BP! I'm also investing in the Albuquerque market and have been looking the past year or so. I'd be happy to connect and answer any questions you have if you're interested. Congrats on getting started, and good luck on the RE license.

Congrats on your first property and for getting started!

@Misa Romeo I don't believe there is a minimum ownership requirement for a HELOC, the limiting factor is normally people don't have the instant equity to tap into when they first purchase the property. I recently used PenFed Credit Union to apply for a NOO HELOC @ 75% LTV, which is likely the maximum you'll find for a NOO property. Most companies will use an automated program to base their appraisal value on, which will likely be lower than what you think your home is worth, or what nearby comps are. If you're good with the automated value, then sometimes no appraisal will be required. The other option is to have an official appraisal done at your cost which might increase the appraisal value thereby increasing your HELOC limit.

@Diane G. normally it's just shown as a general expense within the HOA yearly budget. I haven't seen expenses charged to specific units (i.e. only the upper floors and not the bottom floors). The HOAs that I've been apart of have all had even HOA due splits, rather than trying to calculate HOAs based on square footage, but that's governed by the by-laws. They also shouldn't be doing special assessments for elevator repairs unless it's a big unforeseen cost. If this happened, then that would tell me that they didn't do a very good job with the initial budget and the HOA doesn't have a very healthy reserve fund

@Michael H., a couple options come to mind: 1) you could see if the seller would consider a short-term seller financing note until you're able to finance with owner occupant loan. 2) discuss with your lender, but you may be able to put a longer close period on your offer (i.e. several months) to get it under contract but close after your expiration period. Technically, most lender docs indicate that you'll intend to occupy for 12months, but I have heard of as low as 6 months, so make sure to check your specific lender requirements. Also, most new owner occupant loans give you a period to occupy, such as you'll move in within 1-3 months after close. I would just talk through it with your lender, and they'll let you know if they have any flexibility since your lender will be equally motivated to make it work and will understand the underwriting requirements better. 3) other option, I do know of some companies doing 10% down NOO loans, but they usually come with 2pts upfront; it's a lot less capital upfront than the 25% but you might be able to come up with the difference if you already have the 10% down

@Greg Smith I personally stopped using the BP rent estimator since it wasn't accurate but it's been about a year since I've used it. I think Rentometer is well worth the money ($199 a year I believe). I believe BP has updated the rent estimator so it may be more accurate now.

@Dylan Rozza, I'd recommend getting started by picking up a primary residence, which you can get with a low down payment (3.5% with FHA or 5% with conventional). Either that, or you could buy a quadplex to live in and rent out the other units. Nice work getting started so young.

@Connie Wang I wouldn't personally. Some of those items I wouldn't have fixed at all, such as the weather stained balcony floor, peeling laminate, etc. Those are cosmetic items, so I'd document them in the move-in inspection to give the tenant peace of mind that they won't be charged for them, but they aren't an inconvenience to them if they aren't fixed. I think this situation will be a good indicator of what to expect from this tenant for the duration of the lease. If you do reduce rent, then you're going to set a precedent with them and they'll ask for it everything something minor happens moving forward.