All Forum Posts by: John McCormack

What if our primary lender is only willing to loan 80% LTV for a duplex I'll be living in one side of, can I then come up with a bit more cash through a private lender such as Prosper or Lending Club or personal friend? I'm not sure if this counts as a gift, how/should I document it, will my primary lender frown upon this and throw a red flag up etc? Just trying to make sure we don't make any preventable mistakes.

The reasoning behind this is that we'd like to have some more cash on hand for repairs immediately after closing so that we could make one side of duplex rent ready in the least amount of time. 

Thanks much in advance to all the BP'ers who've taken time out to answer as we appreciate being pointed in the right direction from people who have been there and done that:-) 

Hi All,

I too am looking for the same. We've recently come under contract for a SFR and looking to get some work done. If anyone has any helpful info please let me know as I'd like to start speaking with some people soon. I live in Delray Beach currently and the home under contract is also located only about 2 miles away (very convenient) Hope to hear from someone and thanks much in advance BP'ers!

John

Again I am here to seek the advise of the forums! Much thanks in advance!

I've already made an offer on a triplex in my area that listed for $269K. It's a 3/2 main house with garage and two 1/1's under one roof in the back. All central air, a few improvements, overall the best I've seen condition wise. It appears that another group of investors bought in 12' for a great deal, made some improvements and are looking to move on. I offer $240K they countered with $262K.

During the walkthrough the sellers agent said a new roof on 1/1's, electric, PVC sewer pipe, some new windows & paint was done and seller's agent said it was permitted. A initial search through the local municipality only shows 1 permit open & closed for a 450 sqft. section of roof. My agent has already requested copies of these and we are as of now in a holding pattern waiting.

My question to BP is what are people's thoughts on this and permitting in general. Are my choices:

- no permits provided, then I walk?

- go through with my inspections and if nothing comes up or everything is up to code we continue?

- request seller to remedy any code violations? no permits pulled/opened means city inspector would have to inspect entire premises to determine if there are any violations (and if I do involve the city is that simply opening up a can of worms in that I may not be able to buy it any longer and now this information is public so all future buyers will be aware of these code violations) Also, I doubt the seller will agree to this as it's an AS IS contract

- when do you really involve a city inspection and is it even required? or only upon request?

- do I negotiate an even lower price based on my possible liability knowing there might have been work done without permits?

Obviously, I'm concerned about protecting myself but also trying to balance that with not killing a deal before it's had a chance to proceed.

John

Again I am here to seek the advise of the forums! Much thanks in advance!

I've already made an offer on a triplex in my area that listed for $269K. It's a 3/2 main house with garage and two 1/1's under one roof in the back. All central air, a few improvements, overall the best I've seen condition wise. It appears that another group of investors bought in 12' for a great deal, made some improvements and are looking to move on. I offer $240K they countered with $262K.

During the walkthrough the sellers agent said a new roof on 1/1's, electric, PVC sewer pipe, some new windows & paint was done and seller's agent said it was permitted. A initial search through the local municipality only shows 1 permit open & closed for a 450 sqft. section of roof. My agent has already requested copies of these and we are as of now in a holding pattern waiting.

My question to BP is what are people's thoughts on this and permitting in general. Are my choices:

- no permits provided, then I walk?

- go through with my inspections and if nothing comes up or everything is up to code we continue?

- request seller to remedy any code violations? no permits pulled/opened means city inspector would have to inspect entire premises to determine if there are any violations (and if I do involve the city is that simply opening up a can of worms in that I may not be able to buy it any longer and now this information is public so all future buyers will be aware of these code violations) Also, I doubt the seller will agree to this as it's an AS IS contract

- when do you really involve a city inspection and is it even required? or only upon request?

- do I negotiate an even lower price based on my possible liability knowing there might have been work done without permits?

Obviously, I'm concerned about protecting myself but also trying to balance that with not killing a deal before it's had a chance to proceed.

John

Ahhh, ok...that's what I thought. I had heard mentioned before that it was something to do with their income producing capacity but also heard that that's not a factor until you're looking at 5 units. Right now, I'm simply looking at a triplex that we'll owner occupy right now. Thanks much for all the feedback! Much appreciated and if you're every in South Florida, let's meetup!

Ok, newbie question I guess...when I'm looking at a duplex vs a SFR and I'm looking to sell is my research for it's value based on it's NOI or just with what other duplex's in the area sold for? I'm thinking about making an offer on a duplex and I'm getting a bit confused. But that could be because I have to wake up in about 4hrs...

I'd like to start off by thanking everyone who took the time to take a look at what I've listed below and offer advice, thoughts or even flat out discouragement! We appreciate it all. If it wasn't for the BP community we wouldn't have even come this far. First, a brief background on myself and wife (it was her idea to move further along with RE investing). My wife and I own 1 single family 3 states away from my primary that is cash-flowing approx. $300 p/month. We reside in our primary here is South Florida which our goal is to move out of and turn into a vacation rental with backup plan of long-term rental if that doesn't work out. We decided on a plan of buy & holds and looking at multi-familes to be owner/occupants. So those are our brief requirements. We've had much difficulty finding a multi-family that we ourselves would considering living in until now.

I know I'll be missing things for you to more accurately analyze the deal but I'm going to include the most amount of information I currently have and I look forward to you constructively picking it apart;)

The property has 2 structures. The main house is divided into two. One side is a 2/1 with loft. The other side is a 1/1. Then there is a separate studio attached to garage out back. The age of home is from 1935. Shared backyard courtyard. Wood frame/siding, asphalt shingle roof, central air in main 2/1. Window A/C in 2 other units. Lot's of character. Hardwood floors. Mix of electric and natural gas for water heater/stoves. Current owner pays water with 1 meter. Renters pay own electric. Property is 1 mile to beach, 2 blocks to gold course, 2 blocks from active main downtown area. However, it's in quiet residential neighborhood. Shared laundry (for now). Evidence of termites. No current yearly leases in effect with 2 tenants.

ASKING PRICE: $290K

RENT 1/1: $750

RENT STUDIO: $650

RENT 2/1 (we will be occupying for now) $1300

Willing to pay $280K. Running #'s below based upon that figure.

$280K

$56K down

P&I: $1200.00

$2700 Total Rents - 50% rule = $1350.00 - $1200P&I = $150

We've also broken the 50% rule down further with what we believe to be more accurate numbers:

TAXES: $279

INSURANCE: $279 (This is estimate as I wait to hear back from ins. agent)

VACANCY 10%: $270

REPAIRS/CAP EXP: $162

PROP MANAGEMENT 10%: $270 (We'd be managing but have this built in for the future in case we didn't want to manage)

Total: $1260.00

$1260 + $1200 P&I = $2460.00

Total Rent: $2700-$2460 = $240 cash flow.

CAP RATE 6%

GRM 12

CASH on CASH 5%

We realize that this isn't a great performer overall. The properties that have more desirable cash flow are not really in the more desirable neighborhoods. With this property we feel that we have more options/exit strategies. We see a lot of houses being rehabbed and sold in close vicinity. The main house 2/1 and 1/1 under the same roof could be joined to form a 3/2 again and sold or turned into a vacation rental. We don't seem to even have those options for the other multi-families we've looked out. They're multi's and that's it. With this we feel we can safely live here in the beginning and have renters pay most of mortgage while we look to our next property. Look forward to your thoughts.

Welcome @Mary Hart

I was just up in your neck of the woods taking care of my wife's and I rental in preparation for new tenants. We enjoy anytime we can get up there, even it's for just that. You seem to have all the right experience as well. We were actually interested in meeting with an attorney to ask a few questions. Maybe we'll get in touch next time we're up there!

Hello All!

Well, I think I accidentally deleted my last request before I had a chance to post so here we go again.

My wife and I will be back in Asheville NC soon to prep our rental property for new tenants and thought we might also take the time out to meet with a few realtors. If you are interested or know of someone you would refer who is please feel free to contact me. Currently, we call home South Florida/Delray Beach. While we are also actively looking down here for another property we are keeping our options open and Asheville is also one of our favorite places.

We are looking for SFR or multi-family and look forward to hearing back from you.

John

@Ben Reese

@Ben R.

Thanks you both Bens! This is just the sort of information/ideas I was thinking about. I've never heard of Butler Building but upon further research I'm definitely interested in exploring our options. All of this is obviously dependent upon the zoning which we're in the process of determining.

From what I've briefly learned, Butler Buildings are just more economical ways of constructing certain stuctures, whether it be for agriculture or manufacturing/industrial. Some ideas that have just popped up in my head might be horse stabling or garage/covered storage/workshop space possibly?

The property is easily accessible via paved road:

http://goo.gl/maps/sEJ3A

We're in the process of determining utilities at location. The area is residential but 2 parcels away is a business structure on a corner lot. Again, we in the process of determining if this can be zoned business as well. We are also going to find out if it will perk as well. Many years ago this test was done with unsuccessful results but I've learned this can change over time.

Thanks Ben and Ben for the suggestions.

John