All Forum Posts by: Bryan Cerro

Thanks Evan and Whitney 

After some more math, it looks like if I cash-out refi I will be given $14-16K cash and $200/mo lower mortgage but in exchange for paying $30-40K more over 30 years. 

Am I correct in the thought that the increase cost is essentially irrelevant to me because the investment is the rental income and not the property being paid off, as long as I am cash flow positive.

If I am not sure when I will be able to find a property in the future does it make since to still go ahead with the cash-out?

I guess I'm looking for a little backbone to reassure myself.

This is my first/only property so I am very much a learner still, advise on everything welcomed. 

I've been house-hacking my duplex (other unit rents @ $1,000/mo) for a few years and believe that I should cash-out refi so I can purchase another property but I have a couple of questions. 

Here are my stats:

Purchase Info: $139,900, 30yr @ 3.125% and I put 5% down (looking to get rid of my PMI through the refi)

Current Loan amount: $126,365

Conservative guessessment value (2020): $200,000 

Refi loan amount (75% LTV): $150,000, 30yr @ 3.374%

The data provided by my friend/loan officer shows over the 30yrs I could save $48,059 in interest/PMI, my monthly payments would go from $1370 to $1135 and I would get $14,921 in cash after fees.

Could someone explain the numbers showing how the 20% would be paid to eliminate the PMI? My lender said the PMI is just gone - I guess I don't understand why the bank would waive free money, they were charging me before, if they didn't have to.

Does it work like:

$139,900 - $200,000 = $60,100 (difference in home value)

20% of $200,000 = $40,000 (buh bye PMI?)

$60,100 - $40,000 = $20,100 Cash return - $7639(fees + taxes) = $12,461 cash in hand (close to the estimate of $14,921)

I have been slowly working on improvements myself to learn the value of the work before I look at outsourcing, but that means it is a slow going. What improvements would you consider worth prioritizing before I cash-out refi? Or should I just go ahead as it? Furnace/Roof/Water heater are maxing on life expediencies (~15-20yr old) but I was going to ride them till they died. Exterior windows/doors are looking rough and were my priority to scrap/paint. As well as replacing fixtures/outlets/lighting inside.

Are the fees appropriate? $635 appraisal, $70.50 credit report, $455 processing, $60 recording, $795 underwriting, $840 hard insurance reserves, $4020 taxes reserves. I will get paid out from my current escrow and use that to reduce my fees, ya?

Let me know if I left any useful data out, Thanks! Bryan

Welcome to Milwaukee!

I was in your position three years ago, a neighborhood I didn't see mentioned here yet was Wauwatosa (which is where I am house hacking). There are affordable duplexes <$200K nestled between single family homes. Something I would advise for Milwaukee is to drive a couple blocks in all directions, the neighborhoods change rapidly, to make sure you feel comfortable in the area. 

Thanks for your opinion Steve Bracero

This is off the MLS, I thought that I may be asking too low. I was trying to be conservative because I'm nervous about not being able to find a tenant and having to cover extra costs because I assumed incorrectly that I could get more for the rent.

I was planning on occupying the upper, yes and it is already vacant. The tenant is in the lower paying $800/MTM and it would be nice to count on that initial money but I was hoping for $900/mo.

Built in 1926 which is normal for the area.

I didn't factor utilities in too heavily because I'm trying to compare it to what I currently pay. But I am aware of fluctuations in the utilities. Also I did recently add a PMI equation into my numbers just didn't include it for what ever reason.

Thanks! Bryan

What do you all think of this Duplex house hack? It does need some aesthetic changes but the roof is new, windows are aluminum wrapped, small yard.

Listed price: $139k

Asking price: $95k ???
Closing costs: $3515 (3.5% down on FHA)

Conventional 30 year @ 3.25%

Income:
Current rent: Lower 2BD $800 (rented MTM but I think I might be able to get $900)

                     Upper 1BD $500 (I would occupy upper)
Market Gross rents: $700-1200 2BD

Monthly liabilities:
Mortgage (P&I): $399
Utilities: $150
Vacancy: $65 (5%)
CapEx: $65 (5%)
Insurance: $90
Repairs: $65 (5%)
Property Management: Self managed
Property taxes: $408

Total expenses: $1241

Monthly cash flow~ $58.64/mo (Unless I can get $900 for rent then it would be ~$145/mo)

My current rent is ~$500/mo with utilities.

@Cipriani my current rent is $480. The location has a lot of single family's and probably a B or B- type of neighborhood. But it doubles my drive to work to 45 min. The unit is slightly smaller than my current.

@Andy Davies Thanks for the advise, unfortunately I don't have the cash on hand to offer $80k and my friend is my mortgage lender and the only reason I found this deal. I feel like I would be doing him a diservice if I went around him by seller financing.

What do you all think of this property? I'm planning to house hack for the first time and could use an opinion or two. I plan to manage myself and it does need a new kitchen in one of the 2 units along with a rearrangement of the bathroom (no shower, just tub) and possibly an appliance in the other unit which I haven't accounted for.

2x2 Duplex 

List price: $118,900

Rent for both: $1400

P&I: $515.23

Utility cost: $150

Property tax: $263.42

Maintenance/Repairs: $140

Insurance: $105

Total Expenses: $1,173.95

Cash flow with 5% vacancy: $156.05

It looks good to me but tell me what you think, do the repairs/changed I mentioned ruin my returns to a point where its not a good deal?

Thanks!

Bryan

Thanks Joshua, Will do.

Hello all-

I'm a brand new REI living in Milwaukee and looking to invest in my first multi-family to "house hack". Looking for a real estate agent who has experience in Milwaukee working with investors and preferably has REI of their own. The areas I'm looking into are the south side, bayview, east side, riverwest, and Milwaukee/Wauwatosa border with a price range of $100-$150. I'm also willing to do some rehabbing but nothing too drastic.

Any suggestions on an agent willing to work with a new investor would be greatly appreciated!

Bryan