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All Forum Posts by: Daniel Jodrey

Daniel Jodrey has started 20 posts and replied 78 times.

Post: Help me analyze potential first deal please :) - Duplex / Portland OR

Daniel Jodrey
Posted
  • Vancouver, WA
  • Posts 79
  • Votes 22

@Katie Miller

Projected rents are $2100 -$2300

Monthly PITI if we put 10% down would be around $3,550

Post: Help me analyze potential first deal please :) - Duplex / Portland OR

Daniel Jodrey
Posted
  • Vancouver, WA
  • Posts 79
  • Votes 22
Quote from @Jay Hinrichs:
Quote from @Daniel Jodrey:
Quote from @Jaycee Greene:
Quote from @Daniel Jodrey:
Quote from @Jaycee Greene:
Quote from @Daniel Jodrey:
Quote from @Jaycee Greene:
Quote from @Daniel Jodrey:
Quote from @Jaycee Greene:

@Daniel Jodrey It's hard to tell without a specific breakdown of the operating expenses, but what are you estimating to be your monthly loan payment? FWIW, most real estate developers/investors I work with would target an IRR of 16%-18% on a duplex. I'm also not seeing what you think the property will be worth in 5 years.

Hey @Jaycee Greene


What I’m getting in the calculations is:

Mortgage: $2782

Taxes: $226 

Insurance: $165

Variable Expenses (15% Maintenance/CapX/Vacancy) : $630

Fixed Expense:$50 ( for water , although likely would build into rents)

I would guesstimate with repairs the property would be worth around $650k so a potential of year 5 value of $718k

@Daniel Jodrey I assume those operating expenses are for the entire duplex, not just the tenant's portion? If so, I think you're a little light, but since it's a house hack, it's probably in the ballpark.

But what's your loan amount, $468k? And what interest rate are you using, it must be below 6%? I'm having a hard time getting to a mortgage payment of $2,782 in the current rate environment.

Hey @Jaycee Greene

We are trying to negotiate a sellers credit and would plan to use that credit to buy down the rate to around 6% or possibly lower if we end up using all the credit and pay closing costs ourselves.

 I am calculating for full duplex. 

@Daniel Jodrey That makes more sense. With that, I'm actually getting fairly close to your numbers. However, I would comment about the return being relatively low (even for a house hack). My CRE clients that focus on SFRs generally look for a return (I used IRR) anywhere from 15%-18%. The reason being, anything less they might as well put their money into the market (via a 401K, IRA, etc.) since the market on average returns 8%-12% a year with little to no effort. Just my 3 cents.

@Jaycee Greene

I can respect that and appreciate that. My mindset and thinking is I’m looking to build long term generational wealth. I’m ok with short term returns , knowing that I’m building wealth/equity that in the long term will fund our life. I am planning to hold for long term and acquire 5-7+ more that in 10-15 years will provide great cash flow as well as equity and a portfolio that will help us achieve financial freedom. 

We have waited so long to buy and am getting to a point where I feel I need to take action to get to my long term goals. What are your thoughts?


@Daniel Jodrey I assume this duplex is in an area near where you currently live (or want to live long-term)? I wouldn't want you to jump into this specific property because you feel you need to take action or you're getting impatient but looking at it through the "long-term lens" you describe, this seems to be a good starting point for you to build your real estate portfolio. 

One word of advice is to think about your "maximum" price you'd be willing to pay if the seller gets multiple offers and/or gets other offers over asking or without the credit. 

Good luck!

@Jaycee Greene 

I agree with your advice and something I am and have been thinking hard about. 

Yes this is in my area and where my family/friends are located. My wife and I have moved all over the US with Hospitality jobs, however have now moved back to this area to be close to our family and set some roots.


how is it a house hack if your renting both sides out ?  

@Jay Hinrichs

In running the numbers for when we would plan to move out in roughly a year

Post: How best to utilize seller credit

Daniel Jodrey
Posted
  • Vancouver, WA
  • Posts 79
  • Votes 22
Quote from @Ying Tang:

Hi Daniel! Allocating credits to closing cost is pretty standard. Have you calculated the break even time length for rate buy down? I think there will be several rate cuts in the coming years and I would refinance a couple times during the next couple years instead of doing a rate buy down. 

 Hello @Ying Tang

Thank you for your time and responding!

We would plan to pay down closing costs which we estimate to be about $12,000. That would leave a remaining $24,000. I believe this should be roughly 3-4 years to break even. I have read that refinancing also costs money and of course rate growth/decrease is unknown. 


The deal we are looking at would cash flow at a rate of 6% or lower- however does not cash flow at current 6.85% rates. This is why I am thinking to use remaining $15k of the remaining $24,000 to buy rate down to 5.99%, and then still have roughly $7k left over for repairs etc.

Post: How best to utilize seller credit

Daniel Jodrey
Posted
  • Vancouver, WA
  • Posts 79
  • Votes 22

Hello BP!

Im looking into a deal and if all goes well am hoping to get a sellers credit of 6% which would be roughly $36000. If all this were to pan out, we would plan to pay off closing costs which we estimate to be roughly $12,000 - then were thinking to use remaining $22,000 to buy down the rate to around 5.75%. I have floated the idea of buying down rate to around 6% which would leave about $5,000 that we could use towards repairs or any other prepaid expenses. I would love to hear opinions on all of this and if my thinking is sound. Any other ideas on how best to utilize the credit if were to be accepted. 

Thank you!

Post: Help me analyze potential first deal please :) - Duplex / Portland OR

Daniel Jodrey
Posted
  • Vancouver, WA
  • Posts 79
  • Votes 22
Quote from @Jaycee Greene:
Quote from @Daniel Jodrey:
Quote from @Jaycee Greene:
Quote from @Daniel Jodrey:
Quote from @Jaycee Greene:
Quote from @Daniel Jodrey:
Quote from @Jaycee Greene:

@Daniel Jodrey It's hard to tell without a specific breakdown of the operating expenses, but what are you estimating to be your monthly loan payment? FWIW, most real estate developers/investors I work with would target an IRR of 16%-18% on a duplex. I'm also not seeing what you think the property will be worth in 5 years.

Hey @Jaycee Greene


What I’m getting in the calculations is:

Mortgage: $2782

Taxes: $226 

Insurance: $165

Variable Expenses (15% Maintenance/CapX/Vacancy) : $630

Fixed Expense:$50 ( for water , although likely would build into rents)

I would guesstimate with repairs the property would be worth around $650k so a potential of year 5 value of $718k

@Daniel Jodrey I assume those operating expenses are for the entire duplex, not just the tenant's portion? If so, I think you're a little light, but since it's a house hack, it's probably in the ballpark.

But what's your loan amount, $468k? And what interest rate are you using, it must be below 6%? I'm having a hard time getting to a mortgage payment of $2,782 in the current rate environment.

Hey @Jaycee Greene

We are trying to negotiate a sellers credit and would plan to use that credit to buy down the rate to around 6% or possibly lower if we end up using all the credit and pay closing costs ourselves.

 I am calculating for full duplex. 

@Daniel Jodrey That makes more sense. With that, I'm actually getting fairly close to your numbers. However, I would comment about the return being relatively low (even for a house hack). My CRE clients that focus on SFRs generally look for a return (I used IRR) anywhere from 15%-18%. The reason being, anything less they might as well put their money into the market (via a 401K, IRA, etc.) since the market on average returns 8%-12% a year with little to no effort. Just my 3 cents.

@Jaycee Greene

I can respect that and appreciate that. My mindset and thinking is I’m looking to build long term generational wealth. I’m ok with short term returns , knowing that I’m building wealth/equity that in the long term will fund our life. I am planning to hold for long term and acquire 5-7+ more that in 10-15 years will provide great cash flow as well as equity and a portfolio that will help us achieve financial freedom. 

We have waited so long to buy and am getting to a point where I feel I need to take action to get to my long term goals. What are your thoughts?


@Daniel Jodrey I assume this duplex is in an area near where you currently live (or want to live long-term)? I wouldn't want you to jump into this specific property because you feel you need to take action or you're getting impatient but looking at it through the "long-term lens" you describe, this seems to be a good starting point for you to build your real estate portfolio. 

One word of advice is to think about your "maximum" price you'd be willing to pay if the seller gets multiple offers and/or gets other offers over asking or without the credit. 

Good luck!

@Jaycee Greene 

I agree with your advice and something I am and have been thinking hard about. 

Yes this is in my area and where my family/friends are located. My wife and I have moved all over the US with Hospitality jobs, however have now moved back to this area to be close to our family and set some roots.

Post: Help me analyze potential first deal please :) - Duplex / Portland OR

Daniel Jodrey
Posted
  • Vancouver, WA
  • Posts 79
  • Votes 22
Quote from @Jaycee Greene:
Quote from @Daniel Jodrey:
Quote from @Jaycee Greene:
Quote from @Daniel Jodrey:
Quote from @Jaycee Greene:

@Daniel Jodrey It's hard to tell without a specific breakdown of the operating expenses, but what are you estimating to be your monthly loan payment? FWIW, most real estate developers/investors I work with would target an IRR of 16%-18% on a duplex. I'm also not seeing what you think the property will be worth in 5 years.

Hey @Jaycee Greene


What I’m getting in the calculations is:

Mortgage: $2782

Taxes: $226 

Insurance: $165

Variable Expenses (15% Maintenance/CapX/Vacancy) : $630

Fixed Expense:$50 ( for water , although likely would build into rents)

I would guesstimate with repairs the property would be worth around $650k so a potential of year 5 value of $718k

@Daniel Jodrey I assume those operating expenses are for the entire duplex, not just the tenant's portion? If so, I think you're a little light, but since it's a house hack, it's probably in the ballpark.

But what's your loan amount, $468k? And what interest rate are you using, it must be below 6%? I'm having a hard time getting to a mortgage payment of $2,782 in the current rate environment.

Hey @Jaycee Greene

We are trying to negotiate a sellers credit and would plan to use that credit to buy down the rate to around 6% or possibly lower if we end up using all the credit and pay closing costs ourselves.

 I am calculating for full duplex. 

@Daniel Jodrey That makes more sense. With that, I'm actually getting fairly close to your numbers. However, I would comment about the return being relatively low (even for a house hack). My CRE clients that focus on SFRs generally look for a return (I used IRR) anywhere from 15%-18%. The reason being, anything less they might as well put their money into the market (via a 401K, IRA, etc.) since the market on average returns 8%-12% a year with little to no effort. Just my 3 cents.

@Jaycee Greene

I can respect that and appreciate that. My mindset and thinking is I’m looking to build long term generational wealth. I’m ok with short term returns , knowing that I’m building wealth/equity that in the long term will fund our life. I am planning to hold for long term and acquire 5-7+ more that in 10-15 years will provide great cash flow as well as equity and a portfolio that will help us achieve financial freedom. 

We have waited so long to buy and am getting to a point where I feel I need to take action to get to my long term goals. What are your thoughts?


Post: Help me analyze potential first deal please :) - Duplex / Portland OR

Daniel Jodrey
Posted
  • Vancouver, WA
  • Posts 79
  • Votes 22
Quote from @Jaycee Greene:
Quote from @Daniel Jodrey:
Quote from @Jaycee Greene:

@Daniel Jodrey It's hard to tell without a specific breakdown of the operating expenses, but what are you estimating to be your monthly loan payment? FWIW, most real estate developers/investors I work with would target an IRR of 16%-18% on a duplex. I'm also not seeing what you think the property will be worth in 5 years.

Hey @Jaycee Greene


What I’m getting in the calculations is:

Mortgage: $2782

Taxes: $226 

Insurance: $165

Variable Expenses (15% Maintenance/CapX/Vacancy) : $630

Fixed Expense:$50 ( for water , although likely would build into rents)

I would guesstimate with repairs the property would be worth around $650k so a potential of year 5 value of $718k

@Daniel Jodrey I assume those operating expenses are for the entire duplex, not just the tenant's portion? If so, I think you're a little light, but since it's a house hack, it's probably in the ballpark.

But what's your loan amount, $468k? And what interest rate are you using, it must be below 6%? I'm having a hard time getting to a mortgage payment of $2,782 in the current rate environment.

Hey @Jaycee Greene

We are trying to negotiate a sellers credit and would plan to use that credit to buy down the rate to around 6% or possibly lower if we end up using all the credit and pay closing costs ourselves.

 I am calculating for full duplex. 

Post: Help me analyze potential first deal please :) - Duplex / Portland OR

Daniel Jodrey
Posted
  • Vancouver, WA
  • Posts 79
  • Votes 22
Quote from @Jaycee Greene:

@Daniel Jodrey It's hard to tell without a specific breakdown of the operating expenses, but what are you estimating to be your monthly loan payment? FWIW, most real estate developers/investors I work with would target an IRR of 16%-18% on a duplex. I'm also not seeing what you think the property will be worth in 5 years.

Hey @Jaycee Greene


What I’m getting in the calculations is:

Mortgage: $2782

Taxes: $226 

Insurance: $165

Variable Expenses (15% Maintenance/CapX/Vacancy) : $630

Fixed Expense:$50 ( for water , although likely would build into rents)

I would guesstimate with repairs the property would be worth around $650k so a potential of year 5 value of $718k

Post: Help me analyze potential first deal please :) - Duplex / Portland OR

Daniel Jodrey
Posted
  • Vancouver, WA
  • Posts 79
  • Votes 22
Quote from @Jaycee Greene:

Hey @Daniel Jodrey Couple of initial questions: 1) If you're going to house hack, why are you making such a large down payment (20%)? 2) In your monthly expenses, have you included taxes and insurance?

Hey Jayce,

Appreciate your response and time.

I am planning to partner with family on this deal therefore we have some leeway to put more down on the property. My thoughts are to pay 20% down which will help cash flow as well as not paying PMI. We still would have a good amount of cash on hand after putting in this amount for down payment. We also are considering putting the additional 5% down and then having the option to rent out both sides more quickly.

I did include taxes and insurance, as well as 15% for the other various expenses. 

Post: Help me analyze potential first deal please :) - Duplex / Portland OR

Daniel Jodrey
Posted
  • Vancouver, WA
  • Posts 79
  • Votes 22

Hello BP,

Currently looking at a Duplex and curious thoughts/opinions and any advice or things that I am not thinking of. Have been looking for a long time for our first deal and trying not to have analysis paralysis and at same time being cautious and not getting into a bad situation.

The property was built in the 70's. One side has not been updated much since the 70's and the other side has been updated somewhat. Overall the property seems in good shape and no major issues that is known or seen. Our plan would be to get the most updated side rent ready first and rent out quickly (estimate roughly $10k to get it fully rent ready). We would plan to House Hack and live in flip the other side that is very outdated. It is in a great area that has seen a lot of growth through recent years. It is walking distance to lots of shopping/restaurants etc.

We spoke with realtor today and she believes we have a competitive offer with price that is close to asking, as well as a 6% sellers credit. We would plan to use the credit for rate buy down and getting us a interest rate 6%, as things stand today. The owner is a single man that is old age and needed to move into a retirement home. He is motivated to sell and already expressed he would be open to the credit.

I ran the numbers on the calculators and got the below. This is of course dependent on if we can rent for the proposed amounts and there are not major issues with the property that would require more money. Overall it seems to be in good shape and no glaring damage/issues.

Details: Full Duplex
- 6 Bed / 3 bath

-2,400 sq ft

-Asking Price: $600k 

-Offer Price: $585k with 6% seller credit. 

-Down Payment: 20% ($117,000)

-Potential Rents: $2,000-$2,300 (Most 3 Bed 1 1/2 Bath rentals within 5 mile radius we found on Rentometer are around $2,100)

-Monthly Income Estimate: $4,200

-Total Expenses (Incl. 15% for Maintenance/ Vacancy/Cap Ex) : $3,876

-Monthly Cash Flow: $324

-CoC ROI: 3.31

-5 Year Annualized Return: 10.52%

-NOI $37,548

-Pro Forma Cap: 6.42%

What I like:

     - Great location in a growing area and walking distance to many shopping and restaurants.

     -Property seems to be in overall good shape with overall good curb appeal. It needs mostly cosmetic work (paint, new flooring, few doors and windows). I feel good value add opportunity as well as we would live in flip the other side and earn some sweat equity.

     -I like each side has garage as well as large fenced backyard.

     -If i can get rents for ~$2200 and also get the sellers credit to buy down the rate , we should cash flow from beginning.

What I'm concerned with:

     -Being built in the 70's, there is hidden issues that could bring big costs. Roof was done in 2005 but appears to be in good shape. Water heaters installed in 2018

     -It only has 1 full bath upstairs and a half bath downstairs. The 3rd bedroom is very small. Would only work for a office/small child/nursery.

     -The market is so volatile and are we buying at potentially a very bad time (I know we cant know this, but its still scary)

Please let me know overall thoughts and things I'm missing. Overall we are trying to find anything that would break even or cash flow so we can get started on our investing journey. Plan is to long term rent and hold for a long time. Wanting to acquire 5-6+ long term hold properties to build out our portfolio and be financially free in 12 years or so. Thank you!