All Forum Posts by: Gert Dervishaj

@Louis M Cocce Jr

That is something I'm still figuring out for myself. Do all of your analysis as if you would have a property manager. This is key! But, I've heard that there seem to be 2 magic numbers for property managers. One is around around the 10 unit mark. At 10 units hiring someone may be ideal and a load off your back. But getting to 10 also means you know what to look for in a property manager since you did it yourself. You should have enough income to offset the property manager at 10 units. At ~30 units you should be able to hire your own employee as a property manager if you or your son start an LLC.

@Louis M Cocce Jr

Sure, I'm happy to help dive into this. I bought a 4 family that needed a little bit of work that we negotiated for 360k. After all was said and done my PITI was $2238 after paying 3.5% down. All of my units are 2bd 1 ba. I had about 10k saved up at the time. The lender only required ~7k in reserves. My father let me borrow everything else which was a total of 28k which covered down payment, closing costs, and upfront mortgage premium. For FHA, you pay 1.75% upfront mortgage premium. I have to legally live in 1 unit and the other 3 are rented out currently. I raised rents so I only two units to be rented at any time to cover my PITI. I'm using the first year extra rent roll to repair things myself. Second year onward my parents will get their money back. As was said in other comments, you do need to sign a gift letter saying you do not expect the money to be paid back. Also the others are correct in saying your funds need to be seasoned (left in an account for 2-3 months) double check with your lender though. Our lender didn't care about the seasoning period since they were funds secured through my parents house. With a HELOC, you won't pay any interest until funds are withdrawn. Technically you can give your son his reserves too, but those will have to be seasoned for 2-3 months so the lender sees they've been his for a while.

My parents actually helped me with this recently. I borrowed the equity they had in their house through a HELOC (home equity line of credit). I found a house I could house hack with 3.5% down through FHA. Your son will need to have 3 months of mortgage payments saved on his own. You cannot gift this to him. I recommend 4/5 months saved because insurance can be expensive for multi unit buildings. I was looking at properties that would allow me to live free and I did all of my analysis as if I had a $0 down payment to make sure that the rents in a multi would pay the mortgage, maintenance, CapEx, and HELOC back while I lived rent free. It took a while to find the right property but I'm glad I took my time searching. I now own a 4 unit where all of my expenses are paid by the other 3 units. I'm planning on moving back in with my parents after I don't have to legally live there (1year and 1 day after move in date). My parents will make all of the money they let me borrow in the first 18 months I won't have to live there. We've also discussed repeating this process after I move back and my younger brother is also planning on doing this as well. For the record I am 26, and my brother is 23 :)

I use rental agreements written by lawyers through Masslandlords.net and legally you cannot impose a late in fee in MA until after 30 days. I would be super careful about collecting a late fee at 5 days in. You could be sued. The link below is a mass.gov link which shows it being a rule on page 5.

https://www.mass.gov/doc/consumer-guide-to-tenants-rights-and-responsibilities/download

Hi All,

Thank you for the advice on this. I will be asking my realtor for comps and make sure to keep the subject property as similar as the properties being compared to. 

-Gert

Thank you all for your input. I will be moving forward and looking at all areas in MA and just running the numbers. If a good deal comes along and the numbers support then I will go with ahead. I will take all of your advice on areas while I am in the search. Thanks again to you all for your advice!

-Gert

I'm looking at houses to BRRR in Massachusetts, but I am unsure how to estimate what a potential house would appraise for after. I assume the bank wouldn't appraise it for market value in a sellers market? Unless I'm wrong about that? To anyone who has BRRR'ed in the past, how did you estimate the appraisal value for a refinance?

@Bernard Chouinard What are the other 3 towns you would not buy in. I think what I am going to do is continue to play the numbers game and just make sure the properties I'll consider in the areas mentioned above have excellent potential cash flow. This way I should be able to hedge for the tenant population if I can't screen properly enough. 

@Zachary Tremblay Any streets in particular to stay away from in Southbridge?

Thanks to everyone for the input as well. I will start looking into the surrounding areas and see what I can do. How does everyone calculate the market rent in the areas they are looking in? If looking at the current asking prices a good indicator of market rent or does everyone other metrics/websites/data points? I'm still in the learning phase I would say so any info is appreciated!

@Bernard Chouinard I've looked into the surrounding areas and I'm weary about buying in Webster/Southbrigdge. They do seem to have decent rent/low acquisition costs, but I am worried about the associated crime rates. How are you determining safe areas vs cost of average rental costs for those areas?

I’m looking at multi family homes in the upcoming Worcester, Ma area and I’m finding a lot of seemingly slim margins looking at 3 unit properties. Unfortunately, Massachusetts is one of the priciest areas to buy houses in. Market rents seem to be 1500/unit (3bd, 1ba). Average price seems to be high 300’s low, 400’s. Does this seem worthwhile? After budgeting for capex, rehab, and other items. Is ~$1100/month worthwhile profit considering the high cost of initial investment? Does anyone else have experience dealing in areas near there where they see better returns?