All Forum Posts by: Joel G.

@Ann Bellamy 

Sounds like a great event! I second @Account Closed comment on posting some highlights as a blog. 

@Joe Fairless 

Fantastic points - thanks for the insight. I've heard a lot about finding properties where you can add value, the only issue I'm coming up with is finding the additional cash needed to update/renovate.

As a first-time investor, do you know if it is possible/wise to try and find additional funds (I'm assuming hard money) to try and "touch-up" a house? For example, I've found a duplex here in Phoenix where one of the bathrooms is missing (I'm thinking $10k in renovations) - assuming I don't have this additional cash to put in the property, what other ways are there to finance these types of projects?

Awesome!

@Joe Fairless 

Great point on the debt service coverage ratio - I'll have to add that to my analysis. 

Could you elaborate on the "value add component" comment? 

@Arch Jeffery  Interesting point - I would have assumed it would have been more likely to see the 2% return on lower end markets vs higher end (given these are typically priced lower)

@Joe Fairless    Thanks for the insight! The main thing I'm trying to avoid is getting in over my head just because I failed to consider the right financial metrics. Just curious - what kind of metrics do you use when analyzing a property? Do you have different metrics for small multifamilies? 

I'm personally using the following financial metrics - I'm interested in knowing what other BP'ers think: 

1) Raw cash flow - i.e. rent minus cash flow. My thought is this would be the most aggressive way to analyze a property. 

2) 50% Rule - looking for $100/door.

3) Cap Rate - Not quite sure what would be my target with this, but I'm guessing somewhere in the ball park of +8%

4) Cash on Cash ROI. Since I've been earning an average of 12% in the stock market, I would therefore assume that the return should be equal to or greater than 12% (assuming 50% of the expected rent is my annual cash flow).

5) 2% Rent - looking for a minimum of 2% rent on the purchase price. 

Hey All,

It's been a long time since I last posted - I've been travelling for work and am back to the grind on trying to find my first property here in Phoenix. As a quick update, I've narrowed my search to finding a duplex-quad that I can buy and hold as an owner occupant. Ideally, I'd be near central Phoenix or Scottsdale; however, I'm open to checking out Mesa, Gilbert, and Chandler. I'm not looking for a huge rehab project, but am also not afraid to put some work in on a property.  

I've been working with an agent who has set me up on MLS searches for multifamily units in the valley; however, I keep finding that the hits are all grossly over priced. After using the 50% and 2% rules, I'm finding that I'd need to offer $50k - $100k (on the low end) below asking price to get any sort of return! I've also cruised around these neighborhoods for FSBO signs and see the same results where the owners want some astronomical dollar figure on their house.

I've got a couple of questions for you all: 

1 - I've been getting a bit frustrated and am wondering whether there are other Phoenix investors who are experiencing this? If so, any advice/thoughts? 

2 - Are there any instances where it'd be acceptable to go below the 50% or 2% rules? I've been aiming for $100/door since I'm getting a conventional loan. I'm assuming there has got to be some sort of premium you are willing to "pay" to live in an A class neighborhood vs a C class neighborhood - am I correct? If so, how wise is it to close in on this margin?

Thanks for the help! Looking forward to all of your replies. 

Thanks for the reply @Brandon Hughes I understand the typical down payments; however, I'm more concerned about the order in which I purchase these properties. Would buying an investment property first ruin my chances of getting FHA financing for a personal residence (presumably at 3% down) later down the road ? I'm thinking maybe 6 months out.

Hello All,

I'm new to investing and am hoping you all might be able to provide some insight. This question relates to the timing of purchasing a primary residence and investment property.

I've been thinking of buying a multi unit as a primary residence using a conventional FHA loan (with 3% down) and live in that until I can save enough cash to buy an investment property. However, I have come across an opportunity to buy an investment property out of town that I can't refuse.

I'm wondering if I were to first buy an investment property (assuming 20-25% down), would I be able to later buy a primary residence using an FHA conventional loan and only pay 3%? Or would I be forced to pay 20% for my primary residence since I would already have an investment property under my name?

Thanks in advance for the help!

@Brandon Turner I'm on it! I just received the "Investing In Duplexes, Triplexes & Quads" book by Larry Loftis - I will let you all know my thoughts.

@Steven Hamilton II I work in Public Accounting as an External Auditor (riveting stuff, I know). I'm hoping my analytic skills will be valuable in this process, but am cautions to not fall into the whole "analysis paralysis" issue :). Seems like you do some tax/accounting work - do you specialize in real estate?

Great advice all around! I think what this boils down to is whether or not I'm comfortable going at this alone. I believe that I'd definitely be able to push through this solo, but having an agent who is experienced may be a huge asset to my team.

Do any of you all have connections to real estate agents in the Phoenix community with multi-unit experience?

@Erin A. That is awesome that you are doing the same thing! I'd love to hear how it all goes - any words of advice for a first timer?