All Forum Posts by: David Longhini

Thanks for the advice everyone, I did find out that it looks like there's enough issues with the roof to need to get that replaced, and getting the HVAC checked out in the next hour or so.

I have a property I'm looking at, and if I win the bid I'll be under a 203K to either completely renovate the roof and furnaces, both of which are okay but probably have a 3-5 year lifespan. 

The property itself would be ~190,000 winning price plus up to $45,000 in repairs and would bring in roughly $2800 in rental income. I'm cash strapped and trying to begin early as an investor at 23 with roughly $20,000 for Buy and Hold. The question, in your personal opinion should I replace the big ticket items immediately or wait until further down the line and stable. The difference is a mortgage for roughly 200,000 vs. 236,000 with that rental income. 

Background: I'm looking to purchase a 2-4 unit using FHA (and with this specific deal 203k) to begin my process of becoming a real estate investor by at least living for free with a little extra.

The home in question is a 4-unit in my area currently listed at roughly $200,000. It is a foreclosure through Fannie Mae Homepath. I'm currently pre-approved with a 203k loan for up to 200,000+40,000 in repairs. The property itself could bring in a conservative estimate of $2800 a month once all units are fixed up, but I would be sacrificing $400 of that by living in it of course. 

I would like to offer $180,000 on the house with between $10,000 and $35,000 in repairs. These are my main questions:

1. Does this deal look good for the numbers right off the bat? I

2. The roof is in need of some repair (~$2000), but should probably be replaced entirely in the 3-5 year range for roughly $21000 (huge roof). Would you advise simply replacing the entire roof now while can finance under 203k, or just do the quick repair and build up the money for it over the next 3-5 years. 

3. The other major repairs are having 4 old forced air furnaces that since the house is winterized I can't verify are in working condition. Since I could replace them myself estimated cost for all four would be $8000 if needed. 

4. Then, finally I would have roughly $5000 of costs in painting and carpeting. 

So at max at base offer it would be $180,000+$35000 = $215,000 and bring in $2400 a month with me living in it? 

Other questions for advice is bargaining with Fannie Mae Homepath Foreclosures etc. 

Thanks @Tye Brooks! 

I originally wasn't completely sold on the idea of flipping houses mostly because I'm not very familiar with working with contractors or the requirements needed. The irony of that, however, is my father is a Plumbing Contractor, and my brother is a member of the Millwright's Union, so would be a good place to start with evaluating properties. 

Additionally, I was under the impression until a webinar yesterday that it would require more cash outlay, but I'll look into partnerships. 

@Tye Brooks

Thanks, I was also thinking that way for having a greater amount in savings available before taking the leap, but I was mostly thinking in terms of vacancy, because I can afford the mortgages even without tenants. But you're right that I should have a good cushion for any repairs needed.

I really hadn't looked into flipping houses at all, but it seems like the recommended approach to building up a bit more equity. Do you have any advice on beginning to look for more information on flipping and also partners to do so? 

@Phil Bottfeld 

Thanks for the advice! Some additional context I did have on the plan, for feedback is that my original plan is to slowly build by Buy and Hold in this context. 

1. Buy first investment property using FHA with a larger property due to 3.5% down.

2. I can save roughly $20,000 a year from my job plus looking at properties which would gain me $500+ profit (while keeping reserves etc.) while I live in it, for a total of $26,000 available next year. Once there, there are some good neighborhoods in Buffalo for Cash Flow where I can buy 2 properties in the $80,000 range at 10-20% down payment.  

So the rundown is I'm 23 Years Old and looking to be a Buy and Hold Investor until I have enough passive income to pursue Flipping Houses. I am in downtown Buffalo, NY with a 70k job, no debt of any kind, 720 Credit Score, and roughly $12,000 available for initial downpayment and closing costs and am pre-qualified for houses up to $350,000. 

I'm considering a couple of different options, some that could most likely be answered in general, while others pertain only to Buffalo is. 

1. Given that I plan this to be a live-in property in order to utilize an FHA Loan,

A. First of all is an FHA Loan a good idea to start off with for my situation.

B. Bouncing back and forth in between whether I should search for multi-family homes in the $200-350K range (where the rental income works out of course) while I have the opportunity to use only 3.5% down, or to search for homes in the 50-200k range and then move forward from there. My current plan was to use an FHA Loan for a larger property because I'd be able to build up a larger equity and income base and be able to purchase my next property more quickly.

C. In general as to only having roughly $12,000 available at the moment. I have the ability to save between $1500-$2200 a month would it make more sense to wait several months to have a certain amount of cushion available after a D+CL. My contrasting point here is that if I do manage to find a good deal, all but the most expensive homes (320-350k) I would be able to handle the mortgage without finding a single renter. 

Buffalo Specific: 

1. As it's Owner Live-In I'm partial to remain in the Elmwood/Allen/Chippewa neighborhoods, but since I work at Rich Products anyway looking for personal thoughts on areas around the West Side in terms of:

A. I know it's been a pretty high market for the Elmwood/Allen/Chippewa area and whether you would think that there will be any good deals, and any major risk of depreciation. I know can't predict the future etc. or bet on depreciation, but it seems like I'd be buying into a high point in the market which of course is never good. 

B. Anyone with experience owning/renting houses further West than Baynes St. or in the area around D'Youville how difficult is it to find good renters and any thoughts for how the neighborhoods are trending. 

C. Just any neighborhood specific advice for positioning in the area most likely to improve in the next 5 years. Balancing out potential rental income and growth vs. would I be able to live there right now. 

Hi Everyone! 

I'm newly looking to become a Real Estate Investor. I have been interested in getting involved for years, but had believed I would need to save a much larger sum of money. However, with the realization of an FHA Loan being used to purchase up to a 4-unit, I'm trying to learn as much as possible and gauge whether it would be the right choice for me here in Buffalo to get involved.

That seems to be more than enough confusion that I would ask for a home inspection and a contractor estimate. I don't think it's possible to accurately judge without having that.