All Forum Posts by: Cody Davis

@Dave DeMarinis Thanks for the input, Dave. My struggles with finding multifamily homes come from not having much cash for a down payment. My solution is to use my remaining VA entitlements left over after using the IRRRL, to buy a property. In this scenario though, the VA will only back 100% of the loan if I buy a property at $144k or more. Of course, my lender wants the full VA guaranty. This puts my range at $144-$330k.

I have also looked at the FHA 203(K) as an option and I haven't found something that would cashflow after dumping 110% of its value back into it.

I might look into striking a deal with a builder as you mentioned. I could use a HELOC to finance the land I suppose but then I could just do that for a down payment on a standard loan too.

@Eric Mielke I may be able to put some money down with a HELOC if I structure the deal right as suggested. I'll do some more digging and see what options I might have.

@Michael P. I don't have access to much cash without taking out a HELOC on my current home. Lots of folks suggest I shouldn't be messing around with REI without lots of cash on hand. I understand that sentiment but I just read "The Book on Rental Property Investing" and Brandon Turner has me asking "How can I?"

I've been having a hard time finding a good deal on a quad in my area that fits my VA financing parameters. A co-worker asked if I'd considered just building a new one. I've read through the forums and it seems like a good estimate for a "Nicer" quadplex is $95/sqft.

There are a couple a plots in areas that I think would support the rent rates to cover the costs.

Does anyone know a reputable builder in the Dayton Ohio area that will build a multifamily home and can roll the land and construction in one bill?

Thanks for your input.

 

@Ozzy Smith I should not have assumed that a majority of homes under 100k are in high crime areas. That said, I haven't seen anything for sale east of 75 and south of 35 in past month at that price point. The areas I have seen lower priced properties for sale are west of 75 and north of 35. One of these properties at the 150k price point (2204 Rugby Rd, Dayton, OH 45406) is on the sixth street over from an area with a history of violent crime including a shooting last night.

https://www.whio.com/news/local/police-are-investigating-shooting-residence-dayton/a4C92sKS0XC7QgwfyeuTTK/

@Jeremy HackenbergAs long as you do some research on how much you can charge for rent in a given area and the rates can support your costs then it doesn't much matter. I am personally in a position where I will have to live at the property for 12 months so I'm a little picky.

@Ned J. Thanks Ned. This is going to be my first attempt at real estate investing. I'm just trying make sure it's a good one. I may need to just wait for more homes to hit the market.

@Calvin Ozanick I appreciate it. I'm required to live in the home to qualify for $0 Down and I work in Ohio. I'll have to keep my shopping local.

@Matthew Irish-Jones Thanks Matthew. I used the numbers from my mortgage company, insurance company, and property management estimates in the Biggerpockets calculator. It looks like this deal is going to be worse than I thought. The price on the duplex would have to drop to ~$180k to cashflow. I'm pretty sure the seller would be offended if I offered $180k.

The majority of homes currently on Zillow in the Dayton area below $100k are in need of ~$40k worth of work. The homes listed are in poorer areas that are prone to crime. The homes (particularly Duplexes) in less crime prone areas are overpriced right now. It’s going to be a challenge to find a place that will cashflow consistently. The 1% rule will hard to follow and you can forget about the 2% rule.

This is a long one. Bear with me.

I have been pre-approved for a VA loan which means I don't have to put any money down. What's the catch? I already own a home that I refinanced through the Interest Rate Reduction Refinance Loan (IRRRL) which counts toward the total usage of my VA entitlements. If I keep my current house and rent it out I will have to adhere to more stringent rules.

     1. New property must be no LESS than $144,001

     2. New property cannot be more than 4 units (Multifamily)

     3. The loan limits are established following a weird formula

     4. I must live in one of the units for at least 12 months

Between the results of the VA math and the trust of my Banks underwriters my purchase must be 1-4 units between $144,001 and $330,000.

I have an opportunity to buy a recently updated 2,148 sq ft duplex for $199,900 (around $800/mo mortgage per Zillow). The %1 Rule says I need to charge $1k per side of the Duplex. The area will likely only support $850-$900 for (1,074 sq ft). There is also a detached double garage I could rent for $25. By the %1 logic I'm going to be losing money even if I were to rent out both sides.

All that said, my current home (refinanced for 142,900) will rent for $1400-$1500. That's right in line with the %1 rule and my mortgage is $978 including tax and insurance. So, my house is going to earn a little and the Duplex will lose a little.

Is it financial suicide move forward with these numbers if I plan to move on after the VA's time requirements are met?

I'm pulling my hair out.