All Forum Posts by: Dustin Lee Cotliar

Hey BP community-

Below I’ve outlined a deal I’ve found in Florida. I love the location, appreciation potential, the property needs work but already as lots of character. And most importantly the numbers just make sense. Its going to be short term renal, e.g. airbnb for 6-8 months/year (peak season) and month-month more traditional rental for 4-6 months a year. I have a broker/investor who would manage it for me. I have a high income regular job so I have access to funds to pay off high interest debt but don’t want to raid my personal funds for the project. I will put down the 10% needed for the loan (~40K).

This is my main question:

1. The house needs 50-80K rehab and will need about 10K for furnishings thereafter— I need to get financing for this. Here is what I considered doing:
1. A) Getting a high interest loan (hard money, signature loan, from a family member) and refinancing at 6 months/or a HELOC. The lender said he would do this. Based on comps I think the house would would be worth at least 600-650K and im buying it for 400-425K. The house needs pretty light rehab (pain, cabinets, landscaping etc)

Is this a bad idea? Any other smart ways I can do this??

Here are the details:

Purchase Price: 400,000-425,000

Single family home with a mother in Law suite in back; as configured now its a 3bed/1bath and a 1bed/bath; Will configure turn the garage into studio w/ bathroom, so essentially will a total of 5 bedrooms and 3 baths (as 3 separate units) after renovation.

Cash needed:

+Down payment: 40 (10%)

+Closing costs: 5000

+Renovation: $50-80K

+Furnishings: $10-20K

**Numbers below are for a price of $415,000, if put 10% DP+ PMI and Using 3.2% interest, 30 year Fixed**

———

Short term rental- 8 months per year

70% of night occupancy typical for area

450-500/night total predicted (3 “units”)

(0.7*30=21 nights full) x 450= $9500.00 revenue per month

(?Maybe even more?- airDNA forecast increasing, >$550/night by 2021)

Short term Rental Fees:

-Property Mgmt (20% of revenue)= $1900.00

-Local tax (13% of revenue) = $1235.00

General fees:

-Mortgage Principal+Int: $1578

-Insurance(monthly): $160

-Property tax(monthly): $317

-PMI: $200

-HOA: $0

-Maintenance: $500/month

-Utilities/electric: $250

-Utilities/grass: $150

-Utilities/water: $100

-Utilities/Internet: $70

-Cap Ex (saving 5% of revenue): $475

-Vacancy (Saving 5% of revenue): $475

——————
Total: $7410

$9500-7410$ = $2090 cash flow/month on average

——

More traditional rental, eg month-to-month: 4 months per year

Rental Income

Unit 1-(3 bd/1ba): $2500/mo

Unit 2- (1 bd/1ba): $1100/mo

Unit 3- (1bd/1ba): $1000/mo

Total: $4600/month

General fees:

-Mortgage Principal: $1578

-Insurance(monthly): $160

-Property Mgmt (10% of revenue)= $460

-Property tax(monthly): $317

-PMI: $200

-HOA: $0

-Maintenance: $500/month

-Cap Ex (saving 2.5% of revenue): $ 122.5

-Vacancy (Saving 2.5% of revenue): $ 122.5

Total: $3460/month

$4600-3460= $1140/month in cashflow on average

Hey BP community —

I am a neophyte investor who is trying to figure out how to plan my tax strategy, Implement a good bookkeeping system etc. In the hopes of finding an accountant, I asked a local real estate professional (who also happened to finance my first loan) who he recommended; he set me up with a person who does all of his taxes. He also invests in real estate.

This tax professional thus far has made a fantastic impression on me, sounds super knowledgeable, is very real estate focused, is available to help me plan and strategize and so forth. They have 25 years of experience doing peoples taxes and investing in real estate. They also help clients with bookkeeping.

Only ‘hiccup’ is that this person not an official CPA, though I believe they are a ‘certified tax professional or preparer’. I was under the impression that they couldn’t represent people in an audit but they said that they definitely have represented clients in the past during audits.

I trust them but I am hung up on them not being a CPA. Is this a deal breaker?? Anyone out there work with non CPAs who are fantastic and who meet all of their accounting needs? Looking for advice and thoughts on both sides of the coin. Thank you!

Hello BP community-

I am financing a SFR in Denham Springs Louisiana which will be used as a rental property. My interest rate is 4.875. 20% down, 30 year fixed conventional loan.

Is this inline with standard rates in the area? Closing costs are about 6K; house is being purchased for 182K. Closing costs reasonable? Think I could have done better? 

Thank you! 

Hello smart investors of BP! Long time listener/reader, first time poster. 

My spouse and I are buying my parents house to help them out (long story but needs to happen). The house will likely appraise for 170-180K. Will need around 30K worth of repairs and upgrades. Plan is to buy from them and then have them live in the house for the rest of their lives and pay us a VERY discounted rent and we could cover repairs etc. It seems as though they would be willing to sell us the house for 130K. They owe about 90K on the mortgage, and would get a nice chunk of funds from the sale. I was thinking of getting a 'construction loan' to cover the purchase and construction; from what I understand its unlikely that I will need to put anything down because of the discounted purchase price. Then once complete, use a HELOC loan to pull out the equity and invest it into another property. Will likely try and get a 30yr loan, say 5% interest. We have perfect credit and have never purchased a house before/taken out a mortgage loan. I want to then pull out the equity and buy a duplex or something similar and eventually want to either get into multifam or commercial. This is near Baton Rouge, LA

*If you had to be in this scenario, is this the strategy you would use? Anything you would do instead?

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