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All Forum Posts by: Chris Luksha

Chris Luksha has started 26 posts and replied 95 times.

Post: Looking for feedback on a potential first buy and hold duplex

Chris LukshaPosted
  • Contractor
  • Jaffrey, NH
  • Posts 102
  • Votes 14

@Matt Lefebvre thank as well for getting back to me. I am glad you caught the increase in 'rent' for utilities.  I understand the problem with the utilities and upper rent numbers. My hopes were to see see what I could possibly do to make this work.  After looking back I don't believe the extra $650 is a reasonable cost either. I do believe however that I could leave the rent the same if I were to separate the utilities and have them pay their own.   But I could be way off.

As for the insurance.  That was a stab in the dark. I recently pulled insurance for a similar property NOT in the flood zone and was given a $64 estimate.  So I basically doubled it based on my conversation with a local realtor about another property owner recently insuring only a portion of the house for flood.  

Of course as I just a moment ago mentioned to Andre, I decided this property was a no go just a few hours after I posted it on BP.

Thank you for your input.  I am grateful.  Hey I don't come to Nashua but once a month or so but I would love to grab a cup o' Joe or something if you are available.\

Blessings,

Chris

Post: Looking for feedback on a potential first buy and hold duplex

Chris LukshaPosted
  • Contractor
  • Jaffrey, NH
  • Posts 102
  • Votes 14

@Andre P. thanks for your feedback. Sorry I didn't get back sooner as I did not see your response for some reason.  I will try to answer questions as I can.

Yes it is vacant, the rehab I was estimating about 6 months as I am the subcontractor :) The carrying costs I was going to take out of my pocket until needed. That would have been the only out of pocket on my end to start and my private funding of the $25k was ok with that.

I was putting in extra income to raise the rents to cover some utilities. However I was planning to break out the utilities if I could do so in the rehab budget.  Then the rent would not need upping. At the same time, the water and electric portion of the expenses would disappear as well and those two numbers would be a wash.  However raising the rent to cover a portion of the utilities may not be feasible.

This is a great catch - thank you - I put in the wrong refi number.  I was planning to put all cash back into the original primary loan in order to have less on their end then refi. I meant to put in 110 but even that is cutting it close.  This is the problem with banging out too many analysis sheets at one time when you are a complete noob.  stupid mistakes that cost tons of money.  Yet another reason to pass these things past other eyes.  Thank you.

AS for the equity on page 2, the BP calculator does not allow for a second 'loan' on initial purchase.  So my $25k downpayment being a private lender is seen only as cash out of pocket. That's why the initial equity comes in high.

Thank you for the points. I needed to see the mistakes from another's eyes.  It could still be a decent investment especially if I did get the utilities separated.

In the end I decided not to go with it about three hours after I posted because it was huge leap for my first property.  I can spend a little more and get less rehab.

Thanks again!

Chris

Post: Looking for feedback on a potential first buy and hold duplex

Chris LukshaPosted
  • Contractor
  • Jaffrey, NH
  • Posts 102
  • Votes 14

There is a duplex just up the road from me for sale from the NH Housing Finance Authority. It needs approx $40k in repairs - mostly external - and there are bids on it in the 50s and 60s. I can potentially get a commercial purchase and rehab loan at 75% of purchase/rahab cost and the other 25% from an investor willing to take 6% interest only for 18 mos.

I have linked to my BRRRR calc report and want some feedback from the group. Yes I realize that anyone could potentially say "I want that" and go grab it under my nose, but there in lies my faith in humanity - and the BP group.

I am looking for some thoughts on this potential buy.  It would be my first investment. 

Here is some other background:

  • It is in a flood zone. I have not asked directly yet, but I am told by my local agent that I could potentially insure only the basement portion for flooding and the rest normally, and at a fairly decent cost.  
  • The previous owner was getting $1200 / $900 for rents, but paying ALL utilities out of that - ICK.  I have tried to account for changing the systems to tenant paying, in the rehab budget.
  • I did not put the monthly interest only payment in the sheet.  It would be approx $125/month.

I have to say it looks like a halfway decent CoC and long term return. But of course it is my first and I am feeling a little gun shy spending $100k on it.

THANK YOU for all your feedback.  I will of course let you all know what happens should I take it or leave it, but I covet your feedback.

Blessings,

Chris

https://www.biggerpockets.com/calculators/shared/562688/7c8c330e-6004-435b-9a5e-a40c735c890e

Post: Hard times trying to wrap my head around payment schedule options

Chris LukshaPosted
  • Contractor
  • Jaffrey, NH
  • Posts 102
  • Votes 14

Thank you @Adrien C. and @Matt Turbitt!!!!  These are great responses.  I am going to approach my friend for interest only for for 18 months or early payoff.  

The help you gave me was invaluable :)

Blessings,

Chris

Post: Hard times trying to wrap my head around payment schedule options

Chris LukshaPosted
  • Contractor
  • Jaffrey, NH
  • Posts 102
  • Votes 14

Thank you @Adrien C.  That was all great info. The amortization tables I can get online pretty readily, but I am constantly trying to figure out that 12 month vs. 14 month vs. n months and what that percentage was based on and I THOUGHT you nailed it for me.    

This is what I thought from reading your post.. Basically, to do an interest only payment loan - you decide on the longest hold time - say 18 mos - then run an amortization calculation on the amount, interest, and time frame, then the first month's interest is what you are paying each month for 17 months, then the balloon is full amount plus one more monthly interest payment.  

However - when I just run an interest only payment calculator, It does not matter how many months I put the payments at, it comes up with $166.  WHERE OH WHERE do they get that number?  Eight percent of $25000 is $2000, not $166.  How is that calculated?  (I will do some googling while tonight as well to try and figure it out.

As for the friendship / partnership - I am not afraid of asking as we have had this relationship prior, in smaller amounts and always interest free for shorter terms.  He knows the risk of investing in this property and I think I can convince him of the benefit of 2nd lien position. He knows he can foreclose if he wants :)  

In the end I have calculated approx. 66% for vacancies, capex, insurance, taxes, repairs, etc. then subtracted mortgage. I am hoping to fill rent the units by the bed, to graduate students as it is very close to a local university.  If I cannot, and I have to rent to two family units, then I have to buy this property and/or fix it for considerably less :)  I will try that anyway, but my marketing will be to the university students first.

Thank you again for the great response.

Blessings,

Chris

Post: Student of real estate investing, flipping primarily, in TN

Chris LukshaPosted
  • Contractor
  • Jaffrey, NH
  • Posts 102
  • Votes 14

Welcome @Alysia Newsom. I have not been a member for too long but the wealth of knowledge and help here seems immeasurable.  I can't answer your question but wanted to say welcome :) - Chris

Post: Hard times trying to wrap my head around payment schedule options

Chris LukshaPosted
  • Contractor
  • Jaffrey, NH
  • Posts 102
  • Votes 14

Hi All,

Thanks again to all the great contributors here on BP.  I am still sucking in info but really need to jump in with action.  To that end I am looking at a potential duplex purchase using private money to fund the downpayment while using a 75% purchase and rehab loan from my local credit union.

I would like to ask a friend to fund $25k for the downpayment combined with a $75k, 25 year purchase & rehab loan at 5.5%. (Total purchase $100k Including $55 purchase and $35 rehab on a potential ARV of $160k)

The options I was thinking of that could benefit both my friend and me in the deal are:

  1. Loan the $25k based solely on an 8% balloon payoff in 12-14 months after refinancing. This of course depends solely on the bank or credit union agreeing to refinance once the property has been rehabbed and lived in for 6 months.
  2. Loan $27k interest only payments for 14 months at 8% interest. Again - same success or failure based on banks refinance.
  3. Loan $25k at 6% for 10 year term, monthly P&I plus 25% of the cash flow for same term.

I have four questions

The first question I have is:  Does anyone think these are outrageous in one direction or another? e.g. Am I stiffing my friend or stiffing myself? Or does one or the other seem reasonable.

The second question I have is: How in the world do I calculate the balloon payment on number 1?  I have looked around for an online calculator but could not find what I was looking for.

The third question is:  What do you base amortization on an interest only or balloon payment short term loan? I keep hearing people on BP refer to taking an interest only loan for 14 months or a balloon payment loan for 12 or 14 months at n%.  What is the n% based on?  Is it on 12 months? 30 years? etc. If you are basing it on 12 months but the lender is amicable to going an extra six months because you need to, how did that extra six months get calculated into the initial 12 month amortization? Maybe this one should be a post in and of itself ;)

The forth question is: What would be the best way to calculate the third option? To date I have created two rental reports on the BP Rental Property Calculator, one for $25k and one for $75k, then I simply took all the expenses from one report, and manually added the P&I from the other report in order to come up with the true monthly expenses.  Is there a BP calc that I am missing that will allow me to put in two mortgages?

Thanks all!

God Bless,

Chris

Post: Hubzu buying !!!!

Chris LukshaPosted
  • Contractor
  • Jaffrey, NH
  • Posts 102
  • Votes 14

I would just call the town tax office to see if they have anything - at least as a first defense.  Of course I haven't bought anything yet.  That would be my green advice for a starting point.  I wish you well on this one. certainly keep us up to date.

Chris

Post: New investor from Rochester NY

Chris LukshaPosted
  • Contractor
  • Jaffrey, NH
  • Posts 102
  • Votes 14

Welcome Garth! This a great community here on BP. You may find it so addictive you have to limit your intake else you get drunk on REI. I did ;)

Ask lots, read lots, listen lots, analyze lots. You will love it!

Post: BRRRR Calc is slightly confusing...

Chris LukshaPosted
  • Contractor
  • Jaffrey, NH
  • Posts 102
  • Votes 14

Here is the link - only up for a week...

https://www.biggerpockets.com/calculators/shared/562688/e2744606-1cce-4583-9d44-ecfc6566de9e