All Forum Posts by: Desiny Smith

Carol Conlin thank you for the advice. I didn’t know that that could be separated. How exactly does the common area utilities work? Is that a separate charge from in-unit utilities? How is it measured? I’m going to call national grid but they’ve been so unhelpful with providing any numbers.

Such great advice! Cara Lonsdale the capex was accounted for (10%) which came out to 300 dollars. Let me know if that number needs tweaking. For maintenance and repairs I referred to this article >>>>>> https://www.zillow.com/blog/investing-101-estimating-rental-property-expenses-94824/ , which came out to $180 but I do agree that $180 is low for a 4 unit. I accounted for vacancy rate in the calculator, but I overlooked when writing this post. Thank you for catching that. Overall, I’d say I have my homework cut out. I’m going to do some more research and be back to post another analysis!

John Leavelle I understand what you’re saying now. Initially the 3.5 percent was throwing me off and I was approaching it incorrectly. I dug through some of the other biggerpockets forums and I came across another member who wanted to use the 203k product as a BRRRR method and you helped explain as well. >>>>> https://www.biggerpockets.com/forums/311/topics/483714-brrrr-refinance-from-203k-loan-ltv-90-cash-out-refi-inquiry Since we’re working backwards, it really is crucial that the ARV is dead on. As a newbie that could be a potential threat as well. I would need to make sure that I’m working with a professional who knows the market extremely well. Thank you for breaking it down for me. I will continue to study the method before pulling any triggers. Are there any books or resources you would recommend? What helped you at becoming adept in the BRRRR strategy?

Garrett Hogan Thank you– I tried calling national grid to get an estimate of what an electric bill would cost for the neighborhood that I was looking in but they said I needed to be a customer in order to give me that information. Any suggestions? The hazard insurance was included on the worksheet that the bank gave me that laid out some of my expenses. I’ll inquire what exactly that is for and will call an insurance agent to get a better idea of what type of insurance I’ll need plus the going rate while living in the home. $3500 sure is a lot!

John Leavelle I found a 4 unit just outside of Albany but it’s in a very depreciating market, Schenectady, NY. The agent that I was working with at the time suggested I check it out but as I explained to her, it’s crucial that not only the numbers on the house work, but that the market is appreciating and has a high rental demand. If I have to explain this to an agent, as a first time investor, there’s something wrong. Needless to say, I am no longer working with her. (Btw if anyone can recommend an agent for the Albany, NY capital district with experience in FHA loans, that’d be great.) Just to make sure I understand John, say I bought a property for 80k, put 20k in repairs and the loan amount is 100k total. It would need to appraise at $121,500 at least if I chose to refinance to cover the 20% down payment plus closing costs (20 percent + 5 percent buffer = 25 percent total ..... MINUS 3.5 percent that I initially put down = 21.5 percent.) So anything over approximately 121,500 would be what I get back. Correct?

Hey I know this an old thread but I'm running into the same problem that I may not have enough equity in the property after repairs with the 203k product to refinance into a conventional loan. My question is wouldn't you still have a PMI payment with the physician loan or any loan that does not require 20% down for that matter? Are you able to at least get some money back by refinancing into another low down payment mortgage?

John Leavelle First and foremost, thank you so much for your detailed explanation and breakdown of numbers. This is exactly why I value biggerpockets so much. To answer your questions, yes, there are common area utilities. I called the city and was able to obtain specific numbers for the property. Max loan amount would be just around 100k, they did not provide me with a max rehab amount. The lender ran it as a regular fha for now and said that she could change it later on for a 203k product. With the 203k, the lender requires that I get three different bids from licensed contractors, so no I will not be doing the work myself. Yes, I will be putting 3.5% down. Actually when I posted this I was at work and in a rush so I forgot to include PMI but it’s just around $92 per month, so not bad. The grant that I spoke of is the rehabilitation grant the Mayor of Albany put in place that grants up to $50,000 for rehabilitation costs for vacant homes. The HMLs that I’ve spoken to require 10% of the purchase price plus the rehab costs. Which is why I turned to the 203k product, not that there’s anything wrong with it. In fact I think it is an excellent option for beginning investors such as myself, but if it will not allow me to use the BRRRR strategy, what are my options? Should I just collect the money I get from rent to save up for my next property? That would take forever. The purpose of that strategy was to be able to pull money out so that I could move on to my next project.

@Cody Evans I'm a first time homebuyer as well, so I wouldn't say that I am qualified to answer your question. However, depending on the condition of the house a minimum of 15% is sometimes required.

@Cody Evans thanks for the advice! The numbers are based on a specific property that I was interested in but got bought out. I ran the numbers just for practice just to get use to analyzing deals. The garbage amount came directly from the city and confirmed by other biggerpockets members; the insurance estimates were derived from the bank spreadsheet, which I know I could get even more specific just by calling the insurance company. The property taxes are general, but I called and inquired what the current tax rate is from the Assessment office and can now easily determine what the property taxes are for a particular property.  The meters are a great point and something worth looking into as well as the particular laws associated with some of the expenses.

Very good point regarding the 203k. I know that many lenders, especially for first-time homebuyers, will purposefully have the homebuyer set aside money for unexpected repairs so that they're not running into that issue.  It's called a contingency reserve and is usually a minimum of 10% of the cost of rehabilitation. Still, other precautions must be taken.

As of late, I have been extreeemely obsessive over accounting for everything properly. When I come across a deal I will for sure post it (without the address). Thanks, again!

@Saeryon Park Yes, I use the Rental Property Calculator to run the numbers as a rental first and then use the BRRRR calculator just to double check. I am unaware of an annual permit fee but that is definitely something to look into, thank you! I agree, albeit small, I would rather account for everything.

Unlike Albany, I am not familiar with Trenton. Are your investments performing well there?