All Forum Posts by: David Arnold

70K unit

55k unit

45k unit

So, I have an off market deal that is in the works with a local REI. I traded some private coaching for his son in order to be able to purchase any multifamily unit of his that he has procured in a recent buyout from another aging investor. I've gone through the 7 units offered and believe I have decided on a 4-plex. I'm nervous as can be, but to me the deal makes more than sense. This will diminish my saving greatly, but will leave me with around 6k. I know this isn't a ton, but I've busted my *** for this money this past year, so it is still scary for me. haha.

It is a 4-plex, all 1 bed, 1 bath units. 3 units will rent for 450, and one will rent for 425. He is completely redoing 3 of the 4 units, and I may be able to talk him into redoing the fourth before closing. Remodeling will consist of painting 3 units, new flooring in all three units. Tile in bathroom, carpet in bedroom/living room, and laminate wood flooring in kitchens. He is also remodeling stairs/entry way with new flooring and paint. Rood and siding is in good condition, and the first major expense I see in the next five years would be replacing all windows. with a 15 year mortgage, at 5% (I'd rather budget high than low) cash flow would be 6056/year. Budgeting 2740 for taxes, 1000 for insurance, 1500 for annual maintenance, and 2560 for utilities.

Now on to the questions:

-the water in my area is billed on a flat rate of 180 every three months. So I'm thinking of offering 2 different prices for rent, one without utilities, and seeing if there's a way I can get the water company to meter each unit, and one with that I'll pay. Any advice on this?

-Financing. Basically, I have a couple of different options. The only local bank I can find with a fixed rate mortgage is state farm. 15 year @ 3.96 30 [email protected]. No origination fee, there is a 450 "appraisal" charge that goes into closing costs if I choose to use them. The other is a local bank offering a 5 year ARM at 2.2. 2% annual cap 10% lifetime cap. The local bank does not offer fixed rates for NOO. I don't have excellent credit, but do have good credit -- 680-690. I'm still in the process of checking with other banks. Should I go with the ARM and try and refinance in 4-5 years? Or would that be difficult? Should I just stick with the fixed rate?

-Am i missing anything in my budgeting that is obvious?

-I will be moving from this area in the very near future. Should I offer one tenant a reduced rate to "manage" the complex? This would include grass, tenant issues, possible handyman work, snow shoveling, etc. Or just pay a management company ten percent? I feel like I would be better off offering 200$ discount to a handyman type, as opposed to 170/month to a management company who will bill out everything that goes wrong. Am I wrong in this assumption? Do management companies usually take care of grass/snow/minor issues in the ten percent or do they bill it out extra?

-with the current owner redoing 3 of the 4 units before purchase, I feel like this deal is a no brainer. Am I wrong in that assumption? Is there anything I'm missing? Like I said, this will be my first deal, so I'm nervous as anyone would be. This is a huge step in my life, so I think I'm just fishing for support here. haha

Any other advice is greatly appreciated! Thanks for all the help. I will keep this updated, or start another forum to track the property when I get closer to closing.

I also have the option of some 2bed/2bath duplexes in good shape, as well. Lower price, but will not cash flow as much as this one. One of them would be 55k purchase price, rents for 1300/month. Cash flow of 4694/year. The other purchase price is 45k, rents for 1050/month cash flows 3388/year. The cash ROI would be highest on the 55k unit, and lowest on the 45k unit. I've pretty much thrown out the idea of the 45k unit. Will update this post after with my breakdown in excel.

Thanks for the advice! There are actually no credit unions in this town. My credit union is in Louisiana and will not finance out of state deals. I do have a steady job, but will be taking a sizable reduction of income in the near future. I have no other outstanding loans, and the bank I'm currently talking with will not use current leases to be used as income, which I find a little ridiculous, but I'm about to call a few other banks today and see what my options are. My credit is good, but not "excellent" because of lack of credit and new accounts open in the form of credit cards, which I did to build credit. haha I do have 3 bad mark on my credit from when I was 19, that will be going off of my report in a year, thank God. Ill keep looking, though!

Also, if I made an LLC, even though this is my first home, would I be able to take out a commercial loan, even though my LLC would have less credit than I personally would? I am not very educated in the commerical loan world.

Purchasing an off market 4-plex in Southeastern Iowa. Not under contract, not wholesale, so no super tight timeline. I'm just looking for suggestions as to getting a mortgage. The guy I'm buying from is completely remodeling 3 of the four units, and I may be able to talk him into kicking the last lady out, who will be gone before closing anyways, and remodeling all 4. The exterior of the house is sound, and the only big expense I foresee to come my way in the next 7 years is replacing all of the windows in the house. Will have house inspected none the less, because I'm no pro in that area. The apartment will draw right at 1775 a month. Purchase price of 70k, pending inspection and appraisal. I would say ARV will be somewhere around 90k with the cash flow it is producing.

Im looking for a conventional mortgage 15 or 30 year, will pay off in ten easily. What are my best options here? Im willing to use my car as extra collateral on the home, and have 20% to put down. The local bank I've called thus far, of which Im a member, has all only offered me a 5 year ARM 2% cap each year, 6% cap on the life of the loan, starting at 4.5%. I think this is ludicrous. I don't see mortgage rates falling much in the foreseeable future, so I'd like to have a fixed rate 15 or 30 year. Am I not going to be able to secure something like this? I've also got calls into state farm, and US bank for a quote because they both have local branches, and I'm a client of both. Can anyone point me in the right direction for this?

I'm located in Southeast Iowa. I coach a local swim team, and one of my swimmers parents basically came to me with a deal where he would offer me any of his multi family properties at cost for some private lessons for his son. He recently bought out a retiring investor in the area and now that he has closed on that he has offered me these off-market properties, and basically wanted some input in helping to decide which one to take.

Offer one: Up and down duplex, generating ~1300/month. Has many new fixtures. 4bd/4ba, 2 X @bd/2ba duplex. 2 stories. Built in 1900. 2072 Sq Feet, lot size 6482 Sq Feet. Online estimates range from 60-75k. Last sold in 2013 for 80,000, then again that same year for 20,000 (im assuming lots was done to it after this), then again in a lump sum sale of over 50 houses this past month. Has basement, but have not seen inside yet to know if finished. Street Parking only. Price: 55,000

Offer two: Duplex. Generating 1050/month. Listed in 2015 for 69,900, never sold. 2 X 2bd/2br duplex. 2174 Sq ft. Lot size 6952 sq ft. detached garage ~350 sqft. Online estimates range from 42k-75k. Has full basement, condition unknown of basement. Built in 1893. Price: 45,000

Offer three: Duplex. 2 X 2bd/1ba. Built in 1900. Detached garage 376 Sq. Feet. Seller has told me this unit will need work. 2077 Sq feet. Lot size 4000 sq feet. Price: 23,000

Offer 4:  4 Plex. Built in 1950. 2800 Sq Feet. Lot size 5162 sq ft. Do not currently have break downs of BR/BA is each unit. Seller is currently renovating 2 of the units, and that will be completed before sale. Each rehabbed unit will bring 450/month, one is bringing 425/month, and the last is bringing 450/month. Total of 1775/month. Price: 70,000

I know these details are vague, and I will update with photos and other details on Wednesday after viewing each home. I almost want to eliminate the fixer upper, only because I dont know how I would finance the rehab, other than with credit cards. Seller will not finance, although I may be able to get him to finance the fixer upper, but that's a big maybe. Pretty positive all financing, as of now, will be done with a conventional mortgage. The homes seem old, but that is average for all of the homes in this area. Exterior of the first two deals will most likely need new siding in the next ten years, it appears, however offer 4 has relatively new siding, but I also like the idea of it because of the two newly redone units. Can I get some feedback on what little info I have thus far, and will be back to update in the next two days.

Thanks everyone!

My plan would be to rent out all but one of the multi family units, whether it be du, tri, or 4-plex, and have the remaining one my "residence"

So I kind of have a special situation here, and after reading the occupancy req's for VA loans am still a little confused. Basically I work for a company at corporate headquarters, which I consider my "home town", but I get sent out for extended assignments ranging from a few months up to a year. If I were to purchase a MFH with this loan, live in it while I'm in the home office, but have an apartment for when I'm on assignments, would this satisfy the requirement for living there for at least one year after financing?

Good job @Stephen Beaudoin !! 

Way to follow up and show that you are truly interested.

In my opinion, even if you had not followed up and got the counter offer, it's still a win. Just like all risk-management, it's a game of patience in an impatient world. Hard to pass up those offers you "think" you could make up. Not a fail, just a win in good decision making.

Forgive me if this is the wrong category, or if there is already a discussion comparable to this.

I would like to get a running list of some sort of everyone's very first deal.

Include specifics such as:

What type of venture was it? Rental purchase, fix and flip, buy and hold, etc.

How did you finance?

What type of residence was it?

What were your biggest headaches?

If you could possibly narrow it down to one or two things, what is the most important thing you learned from your first deal?

Was it successful? And if not, what could you have done to change that, if anything?

How did you find the property? Local agent, MLS, craigslist, word of mouth, connections, drive-by, foreclosure, etc.

Any other details you would like to add.

I think this would help a lot of new investors, like myself, in hearing about what different people went through when they were in the process of doing something like this for the first time themselves.