All Forum Posts by: Garvin Yu

We are in contract to purchase a 3 family in a "class C" area and it's in need of total rehab. 

The current heating situation is separate forced hot air duct runs to 1st and 2nd floor units, the 3rd floor is ducted off the 2nd floor. The furnaces are stripped and need to be replaced, and the 3rd floor needs to be separated from the 2nd. 

We got a quote for replacing the 2 gas furnaces, capping off 3rd floor ducts, and installing a Mitsubishi mini split system in the 3rd. The quote is about $20k, and doesn't even include hot water or the other plumbing work we need. 

Another contractor said cheapest and best option is to do gas wall hung boilers (instant hot water) and baseboard radiators in all 3 units, all mechanicals located witin the units. Each unit has a small walk in pantry area in the kitchen that we'll put the boiler and also setup for laundry area. The quote was $18k materials and $12k labor which includes all the other plumbing work in the house. 

Our questions:

1. In your experience do you like boilers and baseboard radiators or forced hot air for your rental properties?  

2. What do you think is more appealing for tenants: small walk in kitchen pantry or turn it into a laundry room? The basement is pretty crummy. 

We're thinking the high efficiency and lower utility bill for tenants with the wall hung gas boilers is a huge plus. We're looking for reliability and less long term maintenance cost as the main priority. 

Thanks!

Thanks! You cleared it up for us, deductible items can only be deducted if it is an actual expense. 

We are meeting with a CPA next month to discuss tax strategies and planning, but we'd rather know a little now than to go there knowing nothing. 

Reading through a lot of posts, we know that mortgage interest, property taxes, insurance, and repairs/maintenance are all tax deductible. 

If we put money aside into a separate account for repairs/maintenance, potential vacancies, and capital expenditures, are these amounts tax deductible? Or does the money have to be spent in order to be tax deductible?

Thanks in advance!

CT uses a title company. So it would make sense to contact a lawyer who is familiar with wholesale deals, not a typical real estate lawyer. 

Thank you both for the advice!  Any other advice would be greatly appreciated!

We are about to jump on our first transaction via a wholesaler. It's a 3 family in a local city, $85k purchase and $60-$70k rehab, paying in cash then refinancing with a 30y mortgage. Should value somewhere around $240k or so after renovations. The wholesaler is a fellow firefighter (my full time job), so I do trust him in that he's not screwing me. I've done due diligence, the property is indeed a 3 family and the rent comps vs purchase is profitable. 

I recently got my realtor license, so I'm somewhat familiar with the procedure of purchasing properties through MLS, but this being a private transaction it makes me a little nervous.

What is the typical procedure of purchasing from a wholesaler, what should we watch out for, and what should we do to protect ourselves in the transaction? We are purchasing with an LLC and usng lawyers.

Thanks for any guidance you can provide!

@Brent Coombs, yes that is what I meant, mixed up my wording (which gave my thoughts completely different meaning). 

Find and buy properties at 70%, including renovations, of the projected appraised value. 

So far we're having a tough time finding deals like this, but we'll keep on going. I just finished my realtor's class, need to take the state test so hopefully futureaccess to the MLS will help.

I appreciate all the advice you all. I did a lot more reading and now I understand a lot more, find properties with at least 70% roi after renovations. 

Thanks you all!

Does anyone know of a bank, credit union, or other lending company that does 100% cash out refinances and does business in Connecticut?  The few local banks I've talk to only offer 70%. 

Thank you!

Thank you all for your expertise. A 30 year mortgage with no pre-payment penalties makes the most sense in our minds now. Especially since the lower monthly payments can make things easier during vacancies, etc.  

Another question for you all, instead of opening another thread (unless that's what I'm supposed to do): If we purchase a rehab single family house with cash from an open HELOC, after fixing it up decide to rent it out, how much % of the new home value do banks usually give as a refinance mortgage? Is the home value based on area comps only or do we need the city to do a new appraisal of the property (negative is higher taxes). Our credit scores are excellent and our debt to income is good.

Say we buy the house for $50k and put $50k into it for total $100k investment. New appraised value and/or area comps value is $175k. Do banks usually refinance up to a certain percent of the value or can they refinance to the full $175k amount and we can take the extra $75k to put into another investment? I believe this is the BRRRR method? We just want to make sure we're understanding the financing correctly.

Thanks for the help so far.  So to clear things up for us:

With a 30 year mortgage say our monthly payment is $1000.  In the beginning most of this is going towards interest.  If we write an additional check each month, can we specify that the check is 100% for paying the principal?  Or are we not able to do that and the same percentage goes towards the interest?