All Forum Posts by: Ciprian L.

@Chris Le Welcome to BP!

@Andrew Brewer Welcome to BP!

I purchased a duplex in Burbank 2 years ago with an FHA loan and live in one unit. Now I'm looking into buying another 2-4 plex in the area and do the same thing.

If you want to live in the unit, it doesn't  matter what is going to happen in the next few years, you have to live somewhere, and if the numbers make sens when you buy what happen short term is not that important. 

Do you plan to live in the area long term?

If you have some specific questions you can send me a pm.

@Gildardo M. When you sell, you will have to pay 6% in commissions to RE agents and in the first 2-3 years of your loan, most of the payments are interest.

Nobody knows what is going to happen in the future, but if you have to sell at 10-20% below your purchasing price in 2 years you might loose money.

If you can live there long term (7-10 years or more) then your chances of loosing money on the deal are much lower.

Sounds good.

The only downside would be if you have to sell in 3 years and by that time the value will be much lower. 

@Gildardo M. How long are you going to live in the area? The numbers don't look too good for an investment property but for house hack they might look ok.

If you decide to buy it and you have to move in 2 years and the rents don't go up you might have to sell it. What if the value goes down? 

How is this unit if you compare it with the one that you currently rent? How much do you pay in rent? 

Take all of this in consideration before you decide what to do.

What do you estimate the value to be after you renovate it?

The numbers don't look bad, but you will be moving from a $480/month rent to $700/month rent to a smaller unit and double the drive to work. Why not just buy it as an investment property and rent both units to tenants?

Can you find something closer to your current location to house hack?

If you are going to rent all 3 bedroom, where are you going to live? How much is your current rent?

House hacking has a lot to do with your current rent but it seams that people don't get it in consideration when trying to analyze the deal.

What is your current monthly rent? Do you like to live in that area? Is the unit similar or better than the one that you currently rent?

@Bob E.

I’ll try to explain it to you.

Let's assume that you have a mortgage at 4%. 

I don’t know the exact numbers, but let’s assume 15 year payment is 2,000/month and 30 years is 1,500/month.

You choose the 30 year loan with a lower monthly payment and you have the option to pay the extra $500 to pay your loan faster and you save the interest of 4%.

If you can invest the $500 in something that can return 6 or 7% for the next 30 years what do you do? Give more money to the lender each month to pay down your house earlier or invest for the extra 2 or 3%?

500/month invested at 4% over 30 years = 349,970

500/month invested at 6% over 30 years = 502,810

500/month invested at 7% over 30 years = 606,438

It’s a very big difference over a long period of time.

If you have to choose between paying more to the lender each month or spending the money, then the 4% return is much better than 0%.

The fluctuation in the value of the property has nothing to do with paying your loan earlier.

If you keep the money and don’t give it to the bank (lender), you can get over bad times much easier.

I don't know if the property will appreciate or not in the next few years, but most likely in 30 years it will be higher in price than today. Do you plan to keep it long term?

$2,800 for 1bd/1 ba seams high. Did you find the tenant or the seller? Can you find another tenant to pay the same amount if this tenant moves out?

I would do my calculation with a $2,000 rent from the 1/1+den unit, just to be safe.