All Forum Posts by: Jacob Northfield

Hi folks, 

I recently closed on a duplex in Rochester, NY which I was planning to househack. My plan was to move in June when the lease on my current apartment was up. Unfortunately, my sister died unexpectedly a couple of weeks ago and our family is in NH. She was previously living at my mother's house while my mother is living elsewhere. She left behind three children and I would like to either gain custody or help my mother raise them in our family home. I have a couple of questions on how to best make this happen. To preface this, my duplex assessed at 175k and I purchased it for 152k. My mother's house assessed at approx. 400k but she is willing to sell for 300k. I can only afford about 2,100 in rent, though, which doesn't seem to be enough for this property with today's interest rates. What is the best way for me to handle my duplex and finding a way to move into her house while putting it in my name? Basically: 

1. What do I do with my duplex? I just bought it last month and have not had an opportunity to rehab because it's currently rented out so I'm not optimistic about selling. I was thinking I could fix up the one apartment and keep the current tenant in the other apartment then manage it long distance, but that would deplete my cash flow and possibly cut into my cap ex at the moment. Initially I was going to focus on MTR which would compensate, but I'm not sure how difficult that would be from NH.

2. How do I buy my mother's house since I have just signed on a mortgage? She has only a HELOC, no primary mortgage, but the house needs a lot of work. My goal wouldn't be to flip it, but to add an in law apartment in the basement so both my mother and myself could live there in separate units, one of us with the kids. I don't know much about creative financing but I'm willing to do the research, I mostly need a point in the right direction for this one, I think.

Thank you in advance for your help.

 Thanks for your response. There was an inspection contingency that stated repairs would need to be made or I would be credited, but after I got the inspection report and conventional mortgage loan estimate, I signed that this was satisfied. 

The lack of communication from both the mortgage broker and the RE broker has been very troubling and I have been trying to stay on top of them to manage this, but I'm getting a different story depending on who I talk to and when. I majorly regret my choices of choosing both parties, and knowing what I know now about the process I would have stayed away. I did have a bank ready to give me a LE but I chose this broker instead. Big mistake.

Hi Galen, thanks so much for your response. They didn't tell me why they switched me to FHA. I just got a frantic call from my Broker's assistant saying there was a problem that they were fixing, I just needed to switch. I wasn't told anything else. This happened after I had a Loan Estimate.

A community org here is loaning the money for closing costs through a small second mortgage, and I was assuming that this was the reason, but when I spoke to the org this week I was told that they had nothing to do with this and they work with conventional loans all the time. 

I regret using this broker because the communication has been just as bad as that with the agent.

My realtor suggests paying for the repairs, but I wanted to ask here because after working with him for a few months I do not trust him. Specifically because he does not communicate anything to me without me hounding him.

Hi folks,

I am purchasing a duplex which is currently occupied, but since I am using an FHA loan I have asked the seller to have one of the apartments vacant so I can use it as my primary residence. By law I am required to give the tenant 3 months notice to vacate, but I close this month. If the tenant stays for the three months while I finish out the lease on my apartment will I be committing mortgage fraud? Do I need to let my mortgage company know about the situation and will that affect my loan? If there are resources out there explaining this process please let me know because I haven't been able to find too much out there about inheriting tenants and what to do after closing. Thanks!

Hi everyone,

I'm under contract and about to close on a duplex. The offer had an inspection contingency, the property was inspected, repairs were made, and the contingency was removed. We then had the house appraised with no issues. At the time I was pre approved for a conventional loan, but due to underwriting issues the bank switched me to an FHA loan. This is fine with me except that a new inspection needed to be done. This inspection came back citing issues with the paint, the garage door, and some problems in the basement, and now I can't close until these repairs are done. We are supposed to close the day after tomorrow. I have a 4k earnest deposit, then the costs of the inspections and appraisals, as well as about $800 remaining for the downpayment, so I don't have too much into the deal cash wise, but I would rather not lose my deposit. I am not in a position where I can make the necessary repairs this month.

My question is, am I responsible for these repairs or can I have the seller make the repairs and push back the closing? Any advice would be appreciated. Thanks in advance.

Hi @Paul De Luca, thank you for your response, it's very helpful. 

I will be using a conventional 30 year mortgage as well as a downpayment and closing costs loan through a neighborhood organization here, so at the moment I only have about $5k out of pocket. I wanted to house hack the first floor and slowly fix it up over time. I don't have a budget for a large renovation, though my W2 is good and I intend to be able to save aggressively for future repairs. 

This is my first property, yes. There are tenants currently, both have been there for years, the first floor tenant has been there for 10 years. The reason I want to make it work is that houses don't come up often in this area of the city, it seems. It's exactly the type of neighborhood I want to live in and it has potential for both LTR and MTR. I want a project that I can work on for a couple of years, but I don't want a disaster that will ruin me financially. I like the idea of a contractor.

I appreciate the advice. I'll definitely be thinking this through.

Hi everyone, thank you all for your help so far. This forum is priceless and I am really enjoying soaking in as much information as I can. 

Monday was the inspection for a duplex I have under contract. The original asking price was $179,900 (this is in the South Wedge, in Rochester, NY), and my offer was accepted at $152,500, but after seeing the inspection summary I am having second thoughts. There are several issues which I'm concerned about, and since I'm not handy and this is my first house, I'm a little apprehensive. Here are some things that were found:

1. The driveway needs to be resealed.

2. Wicked overgrowth on the garage and garage roof, as well as moss on both the garage and house roof.

3. Gutters need cleaning and repair. 

4. Siding may contain asbestos and is chipped/broken in some areas.

5. Evidence of bees in the siding trim.

6. Hole in the garage roof about the size of a basketball.

7. Garage car door and side door needs to be repaired/replaced.

8. House roof has weathered ridge cap shingles.

9. No attic access so we don't know what's up there.

10. Wood rot and moisture damage found on outside of the house.

11. Plumbing leak in the basement actively leaking onto floor.

12. Basement ductwork has asbestos tape with corrosion and holes in the ducts.

13. Both kitchen sinks are leaking. Looks like someone tried to set up the plumbing themselves and it wasn't done properly.

14. Water heater shows corrosion and poor mortaring.

15. Two condensate leaks were noted on PVC vent pipe. Vent pipe should exit basement further than it
does now before terminating.

16. A double tapped breaker was noted in left service panel box. Several outlets showed open ground or reverse polarity when tested. There were several electric junction boxes missing covers in basement.

17. Not all windows are operational. Many are missing locks and some are painted shut.

18. Evidence of past leaking from the ceilings.

19. Bathroom floor not level (I think it feels rotten but the inspector disagrees).

20. Upstairs dryer improperly vented.

The real estate agent is saying I can fix all of this for myself with about $1,500... that doesn't track for me but I don't actually know anything, so I was wondering if anyone here has any thoughts to share or advice? I like the property, but I don't want to overpay then realize that the damage is worse than they are making it out to be.

Sorry for the long post and thank you for your help!

Hey folks, this is my first time even considering investing in real estate and while I am doing all I can to learn about the process and techniques, I still have some questions, so thank you for your patience as I work this out.

I am in Rochester, NY and am looking to buy a small multi family to house hack then hold. The Section 8 demand here is out of control - waitlists are closed and there just aren't enough rentals, so I am considering that as an option to keep open as I look at properties. Also, there are universities and hospitals to consider during my search. Working with a real estate agent I have been looking at houses, mostly in C neighborhoods (which might be all I can afford at the moment unless I find a C property in a B neighborhood). 

The problem I'm finding is that I don't know how to estimate SOW and ARV for a rehab. How do I learn how to do this? I'm willing to learn by doing, but I want to make sure I cover all my bases before I do, so if there is a good way to prepare for looking at homes that need work and estimating what that looks like, please include tips here. Thanks so much!

Thanks everyone for the feedback. 

After conducting some more research I may have a better understanding of why the property is priced so low. The duplex is literally on a neighborhood line (the street is the line) between an "up and coming" neighborhood (according to all of the real estate agents) and Rochester's neighborhood with the lowest income (the average being approximately $20k). Just one street north and it's a whole new atmosphere and the property values show it. 

I'm hesitant to waltz in and raise the rent, but the numbers don't work at the current rate. It seems like Section 8 might be a good solution here, where I can house hack to provide a good home to tenants I screen thoroughly, but who might not be able to afford a well kept property without assistance. The fair market rent is $1,400+ for this many bedrooms, so I am thinking that a $1,100 monthly rate might work if I can clean the property up well. I'm not particularly worried about crime, based on the city historical crime maps, but more about folks either not wanting to live in a low income neighborhood (even though it has good proximity to the city and other points of interest), or the property value never improving. 

Mortgage calculators suggest that even after all of my personal expenses and the housing expenses, I will still be within my housing budget should I not find tenants, which is reassuring. And I wouldn't feel uncomfortable living in the house, it doesn't seem like a bad spot other than being a little worn out. Still seems like it might be high risk, though. 

Is investing in a C house in a C neighborhood wise for a first investment or should I wait (a year or two) to build capital for a B property? How do I determine how much risk to take on? Thanks in advance!