All Forum Posts by: James O'Connor

@Dennis M. I completely agree, the only reason I was interested was because a small business wants to rent that spot and will give me 20k to use as a down payment. So that plus my cash seemed like I could make something work. Also I have debt free credit cards for emergency.

@Austin Cottrell Well, I came here to help but @John Mocker knocked it out of the park lol. In a short answer: in my state of Connecticut if you're living in the house you only need home owners insurance.

@Kevin Zhang This is my knowledge from working in banking which I left in 2016. Most competitors all have roughly the same rate offered the difference being some may have a promo rate for 6 months or so before changing back to the average. In most scenarios I see, going with a bank you already have a relationship with (checking, savings, credit card, mortgage) can offer better perks or rate. Most all offer variable rates with the ability to lock in a portion of the loan at a higher rate. What to look out for is fees. Some will pay for all the closing cost and appraisal some will not. A yearly fee to keep the line open. Is it interest only for x amount of years? How long the draw period is?

@Ted Davis I think I'm agreeing with @Cherie Orellana on the fha 203k if the property is acceptable. The streamlined version of the loan offers 30k in repairs I believe. Only downside is some contractors won't work with a 203k payment because it's a little more paperwork. I'm also an advocate of opening a heloc on priorities with lots of equity. Its nice to have emergency money sitting there for when you need it. In my experience most banks will pay for closing costs and appraisal. Might pay $50 a year to keep the line open.

@Alina Trigub thank you for the ideas. Looks like I'm on the right track just need to keep pushing.

@Michele B. Thank you for the ideas. Is seller financing literally as simple as coming to an agreement and drafting s paper to sign? Then just have an attorney do the closing?

Hi hopefully this is the correct area to post this but I have a scenario I'd like suggestions on how I can acquire it as non owner occupied. I currently house hack a duplex and need to live in it for 5 more months per FHA rules. House for sale listed at $109,000. They have verbally agreed to either $105,000 or $107,000 and 3% closing costs. As it sits house should appraise around $140,000 - $150,000 and seller is looking to sell quick and at a loss. The property is two units. Upstairs 3 bedroom single family. Downstairs commercial office/ store front. The town has it listed as multifamily and zoned upstairs residential downstairs commercial retail store. About 1400 square feet. Maybe 400-500 is the commercial. I have an interested business that will give me $20k to use as down payment if I rent to them after closing at a discount. I've talked to about 12 lenders, conventional, hard money, private lender's. All said no so far. Reasons varied from they can't because its mixed use. To much retail square foot compared to residential. They don't lend under 100k. The last one I talked to would do it for 35% down but I can't use funds from someone I'm renting to. I was thinking maybe seller financing for 1 year with 20-25k down and I could refinance after 6 months? I'd like to hold and rent the property long term. If I'm missing any information let me know thank you Personal funds I have about 9k cash. I've talked to about 12 lenders, both conventional ,

Originally posted by @William Crutcher:

Thanks for posting your situation James! I haven’t jumped on my first property yet and admire your courage to seek feedback. 

 It took me three years of thinking about it before making a move! Finding the right lender and real estate agent really helped making this come to reality. 

Originally posted by @Nathan Gesner:

A couple things to consider:

You said, "...seller said it is roughly $500 a month" for heat. Roughly? Seller said? You need to contact the utility company directly and get the real answer rather than relying on seller information.

Income is $1650 and expenses (mortgage and heat) are $1950. That's a $300 deficit which doesn't sound bad since you will be living in one of the units and saving approximately $500 in rent. But what about all the other expenses like on-going maintenance, capital expenditures, vacancies, etc?

Most people will tell you to plan for 10% in repairs, 10% capital expenditures, and 10% vacancy. That's 30% of your annual income. Let's do the math:

Income:   $19,800

Expenses:

     Mortgage:  $17,400

     Heat:           $  6,000

     Vacancy:     $  1,980

     Repairs:      $  1,980

CapEx: $ 1,980

     TOTAL:       $29,340

Using these more complete numbers, the unit you are living in will actually cost you $9,540 annually or $795 monthly.

Will it work? Maybe. But can you handle losing 50% of your income when a tenant fails to pay for two months? Do you have reserves to handle replacing a $3,000 furnace or $7,000 roof?

If it's not too late, I would crunch the numbers harder and see if this is the right deal. If you've already committed, I would seriously consider saving up and preparing for the worst-case scenario.

Nathan Thank you for taking the time to answer some questions and break down the math. I will be contacting the utility company as you suggested, great idea! On the math part I don't think I explained myself correctly. I'm mostly concerned with it cash flowing after i move out and unit C is rented. So instead of $19,800yr it would be $33,000 - $35,000 depending on what I can rent unit C for. Even then tho I can see it's still cutting it close to break even or loss for the year depending on major fixes. $33,000 minus $29,000 = is only $4000  and that's not considering garbage or water which I will pay until their lease is up. Luckily I can still back out if i decide to.

John, PMI should be included in the mortgage payment I stated according to my lender. Water sewer and garbage are on me until I can change the leases I'm acquiring through the purchase. Thank you for the pointers!

Hi bigger pockets family,

I have been searching for a property for a long long time. I finally found one where I've made an offer and the seller accepted (a few days ago) I just want to double check that you guys think this will have positive cash flow. If more info is needed just let me know. Thanks

Multi family that is move in ready. I'm acquiring two tenants and I'm living in unit C. Plan to move out and rent unit C in 1-2 years.

Mortgage: $183,000

down payment: $6,405

Mortgage payment with insurance, and taxes: $1450

property taxes: $3,060yr

home owners insurance:  $1,740yr

Unit A singe bedroom: $850 leased until 9/2018

Unit B single bedroom: $800 leased until 6/2018

Unit C three bedroom: currently leased at $1100 until 1/2018 but I will be moving into that unit.

Landlord pays for heat in all units - seller said it is roughly $500 a month.

tenants pay electric.

Using the bigger pockets calculator I see that while I'm living there it should cover the mortgage / I may have to pay small amount. Once i rent out unit C it looks like it should cash flow roughly $200 per unit.

I am just starting inspections on the house this week.