All Forum Posts by: Josh Nabors

I have done extensive research about the requirements of a property undergoing a FHA loan. I feel like I have a good handle on what is to be expected, however, it is clearly up the inspector that comes.

With that said, I have been looking at multiple properties where the seller is " unsure" if the property will pass FHA or not. Is there a way to know if it will pass FHA? It really hinders the negotiating process because the inspector might uncover more repairs. However, I don't want to pay X amount of dollars to see if the property will pass.

There is a four plex that I am currently looking at. I believe all that it needs is paint throughout. The seller asked his real estate buddy if the property would sell fha and his realtor friend told him " I don't think so". Is the only way to be 100% sure if it would pass is to hire an outside FHA inspection before my lender requires one? As a first time home buyer, I am lost. Please help.

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Originally posted by @Bill Larsen:

Hey Josh,

Seems like a great move to me. Ya sure maybe you could get a better return somewhere else or could get in with more equity if you really dug around, but talking big picture I think this makes a lotta sense. Your tenants probably come close to paying all your expenses, so you're living for free, no more paying rent to mr landord. that will allow you to save up money for your next purchase a lot faster. You'll also save on your taxes because of your property, and after you bump rents a bit you might be able to refi out of your mortgage insurance (i'm assuming you'll have MI as most FHA loans do) and you'll cash flow even better. Then, like you said, down the road you'll move out and make $150/door.

I may not be in the majority on this strategy, I tend to be a bit conservative, but i'd do it

I ran the numbers as top heavy as possible to hopefully make the decision a little harder. Thanks for taking your time to look at it. I feel the same as you.

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Originally posted by @Scott Weaner:

In my area this would be a good deal. I think that it will work, especially with you living there. Move into the worst unit and fix it up yourself while you are there. Then rent it and do the same with the next unit needing rehab.

Thanks for the idea Scott. I am creating a plan for this property, and I make post like this for the exact reason you just pointed out.

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Originally posted by @Jeremy Pace:

You have to live there for at least a year (maybe two) to satisfy the FHA residency requirement. It will likely take you that long to rehab the units if they are occupied, so it's not a terrible thing. To be honest, the numbers aren't bad ... but you're probably not really going to make any money on this one in the long term once you account for maintenance and the rehabs. Truth be told, even a light rehab in an apartment could cost $5k, and that's more than an entire years worth of your rental income after PITI.

The price is a little high for what I would usually want to pay, but that could just be the market where you are. Honestly, if the list price is $210k, and you countered with $200k, and he didn't even blink, you could have cut a LOT deeper.

My suggestion to you: buy it, live there as long as you can, plan carefully and improve the apartments as you can ... and cycle the tenants. If there are people there now paying $600, it doesn't matter what you do to their apartment, they aren't going to want to pay the $700-$800 that they should. Take any and all extra money that you can from the rental income and pay down your mortgage, so that you can leverage this property again in the future to buy another propery with a way better spread.

Thanks for the insight. I understand that this property isn't a gold mine by any means, but at very least I can live for free or close to it. When I move out , It would cash flow 150-200 a unit. I feel that it is a good start. I have been looking at a lot of 80+ year old homes that have been converted to triplexes...but I just feel so much better about this place.

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Originally posted by @Jeremy Pace:

@Josh Nabors

OKOK sorry for the confusion,

So you're going to evict one of the tenants, and get $1800 a month in rent, and then pay the mortgage and the utilities with the rent money and live there for free. THIS makes this deal a lot more coherent to me. If I were you, I'd pay rent to yourself every month ... either to pad your maintenance fund, or to pay down principle faster.

I'm sorry if I wasn't clear. Ideally, once I do a light rehab, I will get 2100/month. Does this change your evaluation of this scenario?

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Originally posted by @Jeremy Pace:

@Josh Nabors they are giving you a 3.5% loan on a property you're not going to owner occupy? How on earth did you manage that?

I am owner-occupying.

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Turn Key at 11.2% cap rate in 2014. If I were able to increase the rents to 800 and keep expenses where they were in 2014 I'd have a 15.6% cap.

Cash on cash return 7000 (down payment)/22,288 (noi) = 31%

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Originally posted by @Scott Weaner:

What are the annual taxes?

2500

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All Forum Posts by: Josh Nabors

Josh Nabors has started 9 posts and replied 42 times.

Post: FHA & Inspection Requirements

Post: FHA & Inspection Requirements

Post: FHA & Inspection Requirements

Post: Help Evaluate 4-plex Deal- First Deal!

Post: Help Evaluate 4-plex Deal- First Deal!

Post: Help Evaluate 4-plex Deal- First Deal!

Post: Help Evaluate 4-plex Deal- First Deal!

Post: Help Evaluate 4-plex Deal- First Deal!

Post: Help Evaluate 4-plex Deal- First Deal!

Post: Help Evaluate 4-plex Deal- First Deal!