All Forum Posts by: James Africano

@Wade Conner - Thanks for looking over my numbers! Thankfully all the units are sub-metered so the tenants would be paying for electricity on their own. I guessed I would still have some sort of electricity cost though overall for the house. The tenants would come through the front door into a main area which has lights before walking into their units. There's also lighting outside so I figured $60 sounded reasonable. I've never been a homeowner though so to be honest I have no idea what typical costs would be. With the tenants paying electricity do you think $60 would be in the right ballpark?

@Daria B. - Thank you! Yes, rents are based off what the tenants are currently paying. There's actually room to raise rents as a majority of average rents for that area that I've researched are  $650+

@Logan Hassinger - I had a feeling I was being super conservative, but I figured that if I could still come out green after what I currently have, I might have a decent deal on my hands. That's awesome! If my actuals end up being that I would be extremely happy. Thanks for the tip. As this would be my first property I don't quite trust my estimating skills yet. I figured I would use the % estimation to start off with until I could really see what those fixed costs typically are. I'll definitely keep that in mind for the future though.

@Daniel O. - Thanks for taking a look! I am currently active duty and was planning on using the VA Loan. I called around shopping for rates and was able to find a lender willing to do 3.45% and from what I have been told VA Loans are exempt from PMI. Thanks for pointing out the closing cost numbers though. This would be my first property so I'm not quite sure what closing costs typically are. I simply took the recommended amount off of the bigger pockets calculator and plugged that in. I'll make sure to dig a little deeper and see what amount it would be. If you don't mind me asking, what dollar range do you typically see closing costs?

Hi all!

I've been searching around and finally found a 4-plex that caught my eye around me. I went and was shown the property by a realtor and it looked like a decent property to own as a rental. Great location next to a local university, medical center, and downtown as well. I used the BiggerPockets rental calculator and I think I used decently conservative numbers when doing my analysis. This would be my first property and I was wondering if someone could double-check my calculations to see if it's realistic and to see what people's thoughts were on the return itself.

After all Expenses are factored in, I'm looking at approximately $130 in excess cash flow. Is that something worth pursuing in general? If not, would it be worth pursuing because I used conservative numbers? Currently I don't plan on using property management. However, I know that I eventually will so I went ahead and factored it in. 

Thanks for looking at this and helping out a newbie!

Hi guys! I'm new to this site but have been soaking up what I can for the last few weeks. I'm looking to purchase a single family home but am looking into some advice as to possibly approaching seller financing to purchase a home. The reason I'm looking into seller financing is because although I qualify for both VA and FHA loans, I don't want to get stuck with occupancy loan regulations as I am wanting to make it a rental immediately instead of having to wait. Additionally, I would not have enough capital to make a down payment to use a traditional loan.

Here's the scenario:

The seller has not advertised seller financing, but is currently trying to sell or rent out the property which makes me curious as to the possibility of soliciting owner financing.

Here's what I'm thinking about presenting:

- $162,000 loan amount, 30 year amortization,  Balloon payment at the 5 year mark. This will be shown as a lease with an option to purchase.

- $1,000 down payment (consideration)

- Buyer would assume property taxes and rental upkeep.

- Interest rate of 4.5% (Not sure if this is realistic. Bank is offering me 3.75% if I obtained it through VA)

- No PM as I only live 10 minutes away from the house

This comes to about $816 a month to be paid to the seller. Rent goes for about $1350 in that area. I could use the excess $534 a month to pay for any repairs and let it accumulate.  With this accumulation, I could have 20% for a downpayment for a traditional loan sometime between year two and year three. Once I can get the rest of the downpayment for the loan, I can pay off the seller and start receiving full rent with a lower monthly payment than what I was paying with the seller.

Vacancy - I've considered a scenario in which I could not find renters. Here are my thoughts:

- I receive $1300 in BAH which I currently only use approximately $500 for a place I'm living currently (currently renting with 2 other friends)

- I have no qualms about moving into the place and living there until I can find renters. Plus a promotion that's going to net me an extra $1000 a month (Guaranteed pay grade promotion) is set to happen in May.

Risk - I believe both the seller and buyer receive low risk with this arrangement

- The Seller maintains low risk with their mortgage and taxes being covered with added extra income. Were the buyer to pull out, the buyer would get to keep the added equity and the possible acquisition of renters. Worst case scenario the buyer puts the house up for sale or to rent on the market again.

- The buyer maintains low-medium risk as if some situation were to arise, I could pull out and keep the saved up excess rent.

Of course this is all contingent on if the owner is open to this idea, if it could be worked out legally, and if both parties could mutually benefit from this arrangement. I'm just trying to see if there's any blatant flaws that would make this a bad idea.