All Forum Posts by: Heather M. L.

Hi,

I've been searching online for an FHA mortgage counselor for over a month now; I'm working towards buying my first home to househack.

I completed a form online and a couple of weeks later, received a call from an FHA mortgage originator in Cranston, Rhode Island. I've been communicating with the gentleman for several weeks now, he's emailed me information on what he needs to qualify me for an FHA loan, however, I'm a little nervous because I live in Wisconsin.

Has anyone ever worked with an FHA mortgage counselor/originator in another state?

He was the first to contact me and by the time I was contacted by an FHA mortgage counselor in my state, I had already been communicating with the Rhode Island counselor for several weeks.

I haven't given any personal information yet but I wanted to ask here on BP to see what you all think....is it best to work with a mortgage counselor in your state or does it really matter?

Any advice is appreciated.

Thanks,

Heather

@Josh Engelhart

  Thanks Josh,

  I appreciate your feedback.

@Corby Goade,

  My goal as a new investor is to househack my first home; then use it to buy & hold other properties; overall I'd like to create monthly cash flow that will allow me to quit my 9 to 5 and live a comfortable life on the beach!  I'm also considering wholesaling.....any advice you give is appreciated.

Thanks,

Heather 

@Dan H.,

  Thanks for responding, I'm extremely grateful for the information you've provided.

As you know, I'm a newbie and this is my first time analyzing a deal and using the BP calulators.  I know I have a lot more to learn, and that's why I'm practicing deals until I get it right!  

I didnt consider tenant class....thanks for the heads up, (I'll research more info on BP).

I used Rentometer to calculate the median rent for this property, at $895/month per unit....it's in a really nice neighborhood.....raising the rent amount is something I'll do when I re-analyze this property.

My goal is to learn how to analyze deals correctly w/in 3-months. Thank you for being honest and providing information on things that I need to consider when evaluating a property and obtaining below ARV. I got a little excited when the ROI showed over 12% and didn't realize the cost was too much.....I'm going to rework the numbers to get the cost below ARV.

See below for the monthly expenses I calculated, what do you think?.... and you're correct, I didnt include PM costs:

  I'll be watching more BP webinars/videos to learn how to properly estimate the future assumptions, capital expenditures, repairs/maintenance & vacancy.....I'm a little nervous about the capital expenditures.

Variable Landlord-Paid Expenses

Vacancy (%) ($107.40)

Repairs and Maintenance (%) ($107.40)

Capital Expenditures (%) ($107.40)

Management Fees (%) ($0.00)

Future Assumptions

Annual Income Growth (%)  2

Annual PV Growth (%)      2

Annual Expenses Growth (%)   2

Sales Expenses (%)        7

Fixed Landlord-Paid Expenses

Total Monthly Mortgage (P&I) Expense:
$805.54

Total Monthly Fixed Expense:
$396.00

Electricity$ 0...tenant responsibility

Water & Sewer$ 0....tenant responsibility

PMI $  65.00

Garbage$0.....tenant responsibility

HOAs$  N/A

Monthly Insurance$   70.00

Property Taxes $ 261.00

Other Monthly Expenses$

 Best Regards,

Heather

Hello BP friends,

I'm following the advice of Brandon Turner and starting to analyze deals; I want to analyze several "practice" deals before I begin any real deals.  I'm hoping to get advice from the pros on whether you think my "practice" deals are any good, need improvement or just bad.

Here's the first, what do you think:

$159,900 Asking Price 4Beds 2Baths

2,130 Sq. Ft.

$75 / Sq. Ft. Built: 1924   Lot Size: 5,227 Sq. Ft OLD WORLD CHARM.....PROPERTY FEATURES LEADED GLASS THROUGHOUT, NATURAL WOODWORK EVEN A 3-SEASON PORCH. LARGE 2 CAR GARAGE ALONG W PLENTY OF DRIVE FOR PARKING CARS OR TOYS. REAR YARD IS FENCED IN & IDEAL FOR BBQ'S, PETS OR EVEN GARDENING. BOTH UNITS HAVE 2BEDS 1BATH AND DINING RMS. UPPER UNIT HAS THE LARGE SUNROOM WITH WINDOWS ON 3 SIDES. LOTS OF POTENTIAL DEPENDING ON YOUR NEEDS.

See my analysis below, I dropped the asking price down to $ 155,500.

Monthly Income: $1,790.00

Monthly Expenses: $1,523.74

Monthly Cash Flow: $266.26

Pro Forma Cap Rate: 7.77% 

NOI $12,861.60

Total Cash Needed  $18,942.58

Cash on Cash ROI 16.87%

Purchase Cap Rate  8.27%

Purchase Price: $155,500.00 

Purchase Closing Costs: $2,000.00 

Estimated Repair Costs: $10,000.00...needs paint job, carpet & minor repairs

Total Cost of Project: $167,500.00 

After Repair Value $165,500.00

Down Payment: $5,442.50 

Loan Amount: $150,058.00 

Loan Points: $1,500.58 

Loan Fees: Amortized Over: 30 years 

Loan Interest Rate: 5.000% 

Monthly P&I: $805.54

Financial Projections 

Total Initial Equity: $15,442.00 

Gross Rent Multiplier: 7.24 

Income-Expense Ratio (2% Rule): 1.07% 

ARV based on Cap Rate: -

50% Rule Cash Flow Estimates 

Total Monthly Income: $1,790.00 

x50% for Expenses: $895.00 

Monthly Payment/Interest Payment: $805.54 

Total Monthly Cashflow using 50% Rule: $89.46 

          Any advice is greatly appreciated.

@Shaeida M.,  Congratulations & God Bless!

Thanks everyone, for all the great advice.

 After reading some of your responses, I believe it's best to leave the 401k money alone and just save more money towards my downpayment.

  As stated previously, I'm a newbie and I got a little excited when advised that I could use 401k money to get me into my first home purchase sooner.  However, I want it to be done correctly in order to have positive cashflow, so I'll slow down a bit, take my time, and learn a lot more about lending options and how to evaluate the properties properly.

@Doug Prahst, thanks for the closing tip, I learn something new everyday I'm on BP.

@Rebecca Knox, I mean up to a 4-unit family building; I figure I can stay in one unit and rent out the others.  

I plan to attend some of the meetups to network and learn more from the pros....thanks for the list of lenders!

@Vaughn Smith, I agree, I'm now thinking of staying in the property longer. 

@Cosmo Iannopollo and @Vaughn Smith, I've heard a little about the dreaded PMI, is there anyway to avoid PMI?

Best Regards,

Heather

Penn Tran and Scott Schultz,

  Thank you. 

I really don't feel comfortable with using my 401k but was advised that it was an option. 

I wanted to get opinions from fellow BP members and I'm happy I did. I will do more research on the FHA loan, its good to know they have a down payment option as low as 3%. I have decent credit & I'm paid very well through my job, so I believe I willbe able to make more than a 3% downpayment for a 1-4 unit multi-family.

I'm excited to buy my first property but I want to be sure its done properly,  so I'll leave my 401k funds & the wonderful compounding interest alone to continue to grow. 

Thanks again guys,  I really appreciate your feedback! 

Best Regards, 

Heather

Hi,

I'm a newbie to the industry, hoping to buy my first rental property this year. I'm considering using money from my 401k as a downpayment on an FHA loan. I want to househack a multi-family and live in it for a year or two, then move on to other properties.

Does anyone have any advice/experience with FHA loans, or other lenders in the Wisconsin area?

Has anyone ever used money from their 401k to jumpstart their real estate investment company, I'm a little nervous about using retirement money?

Any advice you provide is greatly appreciated?

Best Regards,

Heather

Beautiful! 

I love the dark cabinets & double vanity sink!