All Forum Posts by: Clark Kahawaii

Thank you guys for the input! It may be a C class neighborhood, but I thought it would be a B class. It’s a neighborhood of only fourplexes and they’re all brick and seem to be well taken care of. I agree though that rent makes it seem like it’s a lower class though. Rent comps show that I could raise rents some but not by a lot.

Hey guys, hope everyone is getting a great start to the new year by reaping all of the tax benefits of our industry!

I am in the DFW market and if you're not from the area, the real estate market is BOOMING. Everything that's listed on the MLS is being bought above list price within 48 hours. I am considering a deal that is somewhat higher than the price range I was originally looking in, but if the numbers work, I don't see why I should pass on it. My agent found an off market deal that is asking $380,000 for a 4plex in Garland, TX. Now the area is an older part of Dallas, but it's a safe area and the neighborhood is full of similar 4plexes and all seem to be in B class shape from the outside. I am looking to owner occupy this property with a FHA loan. Here are the numbers I have.

Asking: 380,000

Closing Costs: 5,000

Down Payment: 13,300 (3.5%)

Interest rate: 5%

All 4 units are 2/1.5, with 1,020 sq/ft.

Unit A: 895/month

Unit B: 880/month

Unit C: 950/month

Unit D: 950/month

Cap Rate: 7.0

If I include all 4 units, then after 5% vacancy, 5% repairs, 5% capex, and 10% property management, the property should cash flow about $75 per month. I will be managing the property myself but the goal is not to, so I made sure to include it. But since I am going to be occupying it, should I analyze it without the 4th unit rent($880)? Because then it shows I would probably be paying out of pocket about $400 a month, which I still think is a win at this point in the market. 

All of the units have their own private backyards, private parking, and tenants pay all utilities. As far as I can tell, the interiors are in good condition. (Seller says that kitchen is updated, bathrooms are updated, and tile floors throughout.) Will confirm once I find out the actual condition.

My plan is to move into the unit bringing in the lowest rent for a year and then move on hopefully to another similar property and filling my unit with a new tenant.

I wanted to post this on BP because I know there's a lot of people that know more than me and I've met people that are really genuinely trying to help everyone they can in the forums. I was hoping one, you all could tell me your opinions on the deal, two, are their other numbers that I forgot to include that would help you all, and third, do any of yall have any creative ways to make this an even better deal, I'm all ears.

Thank you guys!

Thank you everyone for all of your help and insight! Sounds like it’s a pretty unanimous choice that I should add the appraisal contingency. This is why I ask the BP community!

@Shawn Q. I thought about the appraisal contingency and asked why we don't just include one. Basically what my realtor was told by the seller's agent was that they're firm on the price that was offered(my offer was implied to be the strongest) and if I put a contingency, we think that it may weaken the offer if they are worried about a low appraisal. 

@Andy Webb I ran the numbers using the rental calculator here on BP and just outside information from other investors in the area. 285,000 was higher than what I would ideally want to pay, but as I'm trying to get into the market, paying $500 a month for my mortgage sounds better to me than renting an apartment for another year at $1000 a month while building zero equity.

Unfortunately I don't have any appraiser contacts but am open to finding some if anyone has any referrals!

Nah, earnest money will be $3500. The $1500 I got for the "option money" is:

$350-450 inspection

$500 appraisal

$200-400 option fee

I know I can get the earnest money back but it would still be annoying to lose my above investment.

@Russell Brazil That's a good idea, I'll try that. Thanks!

Hey everyone,

I am a new REI and I am on the verge of being under contract for a duplex here in the Dallas/Fort Worth Area. I offered $285,000 with a 3.5% FHA as I will be house hacking it. The only issue I have is that there are no comps in the area and I'm worried about the appraisal coming in too low. The seller at the moment seems to be pretty firm on the price, however we will still try and negotiate if the appraisal comes in low.

BUT, if they will not lower the price to help make the deal happen, I will have to make up the difference in cash, which would be a big problem for me at the moment. If it were about $10,000 low, I would figure out a way to make it happen. But if it were say $30,000 low, I would have to back out and lose my $1,500 in option money.

Has anyone had a similar issue? If so, what were the ways you remedied the situation? Is there a way to push an appraisal the way you want it to go?

Are there any different angles I can come in at? I thought maybe I could lower my option money to $500 because it would be easier to walk away were a bad appraisal to come in. But the inspection and appraisal cost about $500 each on their own.

Thanks in advance for your insight, and wish you all luck in finding deals!

Hey everyone,

I am a new REI and I am on the verge of being under contract for a duplex here in the Dallas/Fort Worth Area. I offered $285,000 with a 3.5% FHA as I will be house hacking it. The only issue I have is that there are no comps in the area and I'm worried about the appraisal coming in too low. The seller at the moment seems to be pretty firm on the price, however we will still try and negotiate if the appraisal comes in low.

BUT, if they will not lower the price to help make the deal happen, I will have to make up the difference in cash, which would be a big problem for me at the moment. If it were about $10,000 low, I would figure out a way to make it happen. But if it were say $30,000 low, I would have to back out and lose my $1,500 in option money.

Has anyone had a similar issue? If so, what were the ways you remedied the situation? Is there a way to push an appraisal the way you want it to go?

Are there any different angles I can come in at? I thought maybe I could lower my option money to $500 because it would be easier to walk away were a bad appraisal to come in. But the inspection and appraisal cost about $500 each on their own.

Thanks in advance for your insight, and wish you all luck in finding deals!

Hope every one is having a Happy Holiday Season! I am a new REI in the North Dallas area. I've been researching and learning for the past few months but it's finally time for me to make the leap and buy my first property. I'm currently working with a realtor looking for specifically MFR's to house hack with. I will most likely use a conventional loan, but may also use an FHA loan. After doing my research, it seems that the most popular opinion for lenders for a first time REI is a local bank, smaller credit union, or a mortgage lender. (If I'm wrong on this, please tell me why) I've learned that it's most fortuitous to develop a strong relationship with a lender that you can rely on for future business rather than focusing on the lowest rate every time.

Hopefully these questions don't give away my lack of experience too much but I'm sure the BP community can answer these. 

When calling a bank to talk to a potential lender, what title should be asked for? Loan officer? Loan originator? What abilities do I look for in a lender? How should I realistically expect him/her to help me compared to the competition? 

What is the best way to negotiate terms with a lender? I feel like the strongest asset I have to offer them is future business. Is there more I can emphasize?

What terms should I actually negotiate other than interest rate and down payment?

Can different lenders close in shorter times?

Lastly,

What other questions have you all asked that you thought were imperative in finding a reliable lender?

Thank you everyone!

If you are in the DFW area and have a strong relationship with a lender that you would like to recommend, I would love to know about them too. Feel free to send me a PM!

Hope everyone is having a happy and stress-free holiday season! I'm a new REI in the north Dallas area as well and I would love to meet you all if there is a time that everyone gets together this coming new year. Please don't hesitate to send me a PM whenever a meet up is set up. I will be checking back on this thread as well. Hope to meet everyone soon!