All Forum Posts by: Dru Steeby

@Jeff Brower can you expand on what records you scraped and what data you were looking for with the county records?

Thanks!

Tim,

Southeast michigan. Those are just estimates, but I'd say they're fairly good. One of the 2/1's is a basement unit, the other 2/1 is much bigger. 

Since the formatting didn't work on that first post, here it is again:

Expenses

Vacancy (5%)     -$105.00
Cap Ex (8%)     -$168.00
Water (Based on living in the area)     -$50.00
Management (Will self manage, but still included)     -$168.00
Property Taxes (estimated from 2015)     -$250.00
Repairs (8%)     -$168.00
Electricity (Based on living in the area)     -$200.00
Insurance (Overestimated based on first duplex)     -$150.00
Principal and Interest (4% on 114k)     -$544.25
Total-$1,803.25

Income (Based on area)Unit #1: 2 bed 1 bath$800
Unit #2: 2 bed 1 bath$550.00
Unit #3: 1 bed 1 bath$450.00
Unit #4: 1 bed 1 bath$450.00
Garage (2 spaces)$100.00
Total$2,400.00

Again, the only thing I'm not sure about is the P&I number because I want to go with a hard money lender to buy cash initially. 

Just wanted to do a sanity check on my numbers here. There is a 4-plex down the street from the duplex I live in right now. Here are the numbers:

My plan is to offer a low-ball cash amount and then refinance after some repairs are done. ARV is anywhere from 170k to 190k. I think this is a no-brainer, but I wanted to get a second opinion.

Thanks!

Hello BP!

I just wanted to give a referral and shout-out to Joel Decker at the Home Buyers Agency of Ann Arbor. He helped me through a really difficult closing (which you can read about here). If you're in the Ann Arbor/Ypsilanti area I would recommend giving Joel a call. You can check out his website here: http://www.buyersagentannarbor.com/

 Tags: Ann Arbor, Ypsilanti, Dexter, Metro Detroit, Belleville, Saline, Washtenaw County. 

I can comment on the tax implications:

Hopefully, you will be able to rent out the side you were living in. This means a higher income from the rental property. If you have a regular W-2 job, this will effect your tax return because you now have more rental income that you'll have to report. 

There are certain tax deductions you get for rental properties, like depreciation, that are based on the percentage of the house you have rented out. This will obviously jump from whatever it was before to 100%, hopefully offsetting the cost of the raised rental income.

On your property taxes in most states you get a "personal residence exemption", which is also based on the percentage of the property you live in. I live in a duplex, so I get 50% of this tax reduction. When you move out, you have to report that you are no longer living there, the percentage will go down to 0% and your property taxes will go up. You should be able to look up all of this information on the county or cities tax assessment website or local office. 

Other comments:
I'm not sure about VA loans, but with FHA loans you are only allowed to have one at a time. This means you'd have to refinance before you buy another property with an FHA loan.

If you get an FHA loan you have to occupy the house. That's why most people get 2-4 units if they decided to go FHA. With a single family on FHA you'd have to live in the house for at least a year.

When I bought my Owner Occupied Duplex they told me the same thing, for conventional loan they'd want 15% down. I ended up going with an FHA loan for 3.5% down like @Charlotte H. mentioned.

Here are some things that you have to think of:

• You will have to live there for at least a year, and move in within 60 days of closing.
• You say the place is livable and manageable, but if it needs too much work then in might not pass an FHA appraisal.
• Assuming appreciation is never a good thing. Personally, I would not want to rely on my whole plan to fall apart if the bank says my property is worth less than I thought it would be.
• To refinance to conventional AND drop the PMI, you will need at least 20% equity. That could be from cash reserves or appreciation.
• You are only allowed to have one FHA loan at any given time, this means that if you don't refinance you will not be allowed to take out another FHA mortgage.

Don't get me wrong, this is a FANTASTIC method of acquiring rental properties and is typically called "House Hacking". I've done it myself and I couldn't be happier, you just need to find the right deal.  

I completely agree, and I feel bad for the people that own these types of properties. I'm just a beginner, but my strategy going forward for finding small multi-families will be to compare the market rents to the home values and search for properties in hot spots.