All Forum Posts by: Greg Baker

I contacted a recommended mortgage banker at Bank of America.  I shared with her that my goal was to purchase my first buy and hold property within a year using Conventional financing, and then within 2-3 years, my family would be moving into a new primary family residence using another conventional loan.  My question to her was how will the purchase of the buy and hold impact my ability to finance a "new" family residence?  She said it should be no problem BUT do not write off too many expenses on the investment property.  She claimed underwriters do not like to see a lot of expenses written off as it shows I may be short on funds to fix issues on the investment property myself.  

Has anyone experienced this? Thanks!

5 star rating with a brief review - done.  I'm 60ish pod casts in, and can't wait for the next 40.  I was able to have an educated conversation with the mortgage broker at the bank thanks to everything I've learned so far.  I think @Ben L.'s (can't link sorry) two podcasts have been two of the most inspiring so far.  

Welcome!

@Doug Shapiro  @Simon Campbell @Mark Updegraff 

Thank you for the additional points of view.  The house would be very easy to rent as 2 individual units, there is a "common entrance" side door, after which you can enter the basement to the right which provides access to the electric panel, go through a door to the first unit on the left, or walk up the stairs and through another door for the second unit. The good news is the mortgage is also only in my wife's name.  

Here's my only concern which I would love advice on a work around.  The home is not metered for two units.  Gas/Electric for my wife and I is $209 a month but would expect more for multiple families, garbage is $30 a month, water is $17 a month, so say $260 at least more per month in utilities if I cannot pass them on. If I was able to collect $1300 a month rather than $1100, I'm -$60 unless I can somehow pass those costs onto the tenants.

Additionally, I know I can tell a single family home renter to mow the lawn and shovel snow, but can you tell tenants who share a property this?  If not, that's me on the weekends for mowing, and $250 a winter for plowing.

Last, but not least, does it require any additional inspections or certifications from the town/village before it is approved as a multi rental as compared to a single family rental?

Thank you for your time and expertise!

Mark, as always, thank you for the feedback.  I created a little spreadsheet based on your formula, but I have two questions.  My CURRENT balance on the home is approximately $85,000.  Do you always use the original amount I financed because that's how amortization of interest is set, or can I use my CURRENT balance?  

Secondly, the loan has PMI ($457 a year), should that be an additional line item?

Quick background: We purchased our first home in 10/2010 as a newly married couple with a FHA loan and as little down as possible. We paid $93,000 and financed $91,764 for the home. The home is a 4/2 with two kitchens, in essence a 2/1 with a kitchen on each floor. However, we do not use it as an in law suite or a rental, it has never been an official rental, nor has it been metered for two units. Within a year or two, my wife and I are looking to move. Currently, we owe approximately $85,000 and if we sold right now, minus selling costs, I estimate we would be pretty close to breaking even with the potential to lose $1,000-$2,000.

I've considered keeping the home as my first rental property given the initial buying costs, guarantee of selling costs, and potential to lose money on the sale.  However, the numbers do not look very promising.  The only "give" I see within the numbers is I did included 10% for management and $500 for lawn care.  In truth, I would manage the property myself and mow the small lawn.  I also calculated the rent at $1,100 a month based on a quick comparison search on Craigslist.  If any Rochester folks care to comment on this estimate I'd appreciate it, the home is located at 115 Renouf Drive, Rochester, NY 14624 (In Gates).  Onto the ugly numbers!

Please note, this is my first time setting up a Property Cash Flow Analyzer, so if I'm off please tell me.

  What would you do?  Keep it with the negative cash flow or sell it off at a very slight loss just to be done with it?

Thanks

Hi everyone, looking to begin in the buying and holding world in either single family units or duplexes.  I'm about 48 podcasts deep, here are a few questions I'm hoping someone can clarify for me.  If location matters, I'm considering towns/villages outside of the Rochester, NY area.  Thank you in advance:

1. When roughly calculating the 50% rule, specifically, principal and interest, do you always assume a 20% down payment?I'm curious how a conventional loan with a 5% down payment skews this rule?
2. Is there a rough percentage to use to calculate closing costs whether you are buying or selling?Does this include the cost of inspection(s)?
3. Is there a rough percentage to use to calculate insurance on say a $100,000 single family or duplex?
4. Can I purchase from a wholesaler if I plan to use conventional financing or do wholesalers only want to work with cash buyers?
5. Let's say I can save $20,000 per year and use this towards purchases.  Do you recommend I purchase one unit per year for 4 years with conventional financing using it as a 20% down payment, or save up the $80,000 and start the train of buy in cash>re-fi out, repeat with the same $80,000...
6. How will purchasing a buy and hold property or two this year, affect my families ability to finance a move in the next 2-3 years for a new primary family residence?(not looking to "house hack": standard move from starter home, to "forever" home)

Thank you again!

Thanks for the additional detail.  Have you paid all cash up to this point, and looking ahead, do you plan to continue to pay cash, or explore other options?