All Forum Posts by: Jason Sandegren

Congrats @Jeff Boardman! Would you mind sharing about the experience of searching?

I would suggest Amy Smith at University of Iowa Community Credit Union. UICCU does some creative financing on their portfolio loans. At one time they were doing nothing down, no PMI (though really its baked into the interest rate), 90/10 loans.

@Harley Gorter Thank you for the response! After the walk through of the primary house, we decided to keep our eyes open and pass on this deal. It was one of those "Now I see why this has been on the market so long" moments as we went through the basement. 

It didn't pass the "would I live here?" test. 

My advice would he to find a local attorney that is also barred in IN (which should be prevalent because you're in Chicago) and a local accountant you trust. These sorts of bundling of services are almost always a bad deal that prey on investors that don't know better. $26k in fees almost certainly kills any profit on the two properties and any future properties.

@Andrew Jones It's University of Iowa Credit Union. As far as I know they only operate in Iowa. It's a pretty sweet deal, that's for sure! Thank you for the words of encouragement and words of advice. It is much appreciated! 

If both units were rented (after we move out) it could reasonably bring $2200-$2300 per month total income. After 50% rule (which seems to be a conservative estimate) it would cash flow between $100-$200 per month. 

Originally posted by @Andrew Jones:

The plan sounds solid, but I would be concerned about:

-What are your "all in" predictable monthly expenses? Mortgage, taxes, insurance, mortgage insurance (since you'd be at less than 80% ltv), landscaping, etc. Accounting for all of this what do you think your PL statement look like?

-I see a big liquidity risk here. It sounds like your savings will be wiped out in the purchase and closing costs if I'm reading this right. On a property this old major problems could pop up, but you could also have a financial emergency not related to the home...medical, accident, etc. No need to be proud here; if you have family that can, and would, bail you out should you need I'd count that.

Answering in order:

1. Local credit union has no PMI on their portfolio loans so no mortgage insurance cost. With where I think the purchase price ends up, I'm projecting $1,500 to cover mortgage, taxes and insurance. Accounting for vacancy/CapEx/repairs, I project it at $2,100/month outlay.

1150 - Rental income of Primary

(1500) - Mortgage,Taxes, Insurance

(400) - Vacancy, CapEx, Repairs

_______

(750) 

875 Saved from current rent cost

______

$125/mo

2. Our savings would be wiped by closing costs/down payment if we go the 5% down route. If we go 0% down, we'll have about $12,000 in our savings. I feel this would be a comfortable cushion from risk of emergency repair, vacancy, personal emergency.

@Deshawn Lewis Thank you! Trying to avoid the analysis paralysis. Sometimes I get stuck in my professional role. Part of my job is to counsel clients on EVERY possible contingency and that can lead to over-analysis in areas of my personal investments. 

Best of luck to you in your endeavors as well!

Hi all,

My wife and I are contemplating our first real estate investment and are trying to decide if this deal is a good fit.

About us: Late twenties, no children. Gross combined income around $105,000. Only debt is my law school loans of $210,000. I am a real estate attorney. We currently rent a 2 bed / 2 bath apartment for $875 + electric. We have $15,000 in cash savings.

About the property: The property is a 3/1 primary house with a 2/1 carriage house (guest house, ADU). Primary was built in 1888 with Carriage house built around 1900. Both were fully remodeled in 2012. Little to no immediate repairs needed. Both units are currently rented. Primary at $1150 and Carriage at $975. Tenants pay all utilities, except trash.

Property has been on the market for nearly 4 months at $235,000. Landlord lives over an hour away with no property management company. My agent believes we could negotiate down close to $215,000 or $220,000. I'd like to pay less than $210,000.

We walked through the Carriage last night and it appears in good shape. Tenant of the Primary claimed not to have received notice that we would be on site and asked us to re-schedule.

Property is located in oldest part of town in a growing suburb. There are other, newer rentals in the area and new construction being built around the city edges.

About our financing: Local credit union has given us a pre-approval letter upto the full $235,000. Loan options include a 5% down 30 year conventional at 3.75%. Total cash to close of $14,500. Monthly payment inclusive of taxes and insurance would be $1450. The other option is 0% down on a 30 year 90/10 loan. 90 at 4.625% and 10 at 5.375%. Total cash to close of $2600. Monthly payment inclusive of taxes and insurance would be $1570. I had the lender run the numbers of this option also at a $210,000 purchase price and monthly payment would be around $1450. 

Our plan: We would occupy the Carriage and rent the Primary to offset much of the mortgage payment. As life changes (cough, kids, cough) we'd consider moving to the Primary and renting the Carriage.

Concerns: Property age. Desirability with newer construction and other multifamily for both competition on rentals and ultimate exit strategy. Leverage. The 0% down option would leave a substantial emergency, repairs, vacancy, cushion, but 5% down would not.

Positives: We like that they are completely separate dwellings. A majority of other multifamily properties on the market need extensive work are are not in desirable neighborhoods.

I appreciate any and all feedback. What should we be looking at?

Thank you and it's great to be a part of this community.

Welcome from a few hours east on I80!

Hi all,

My wife and I are contemplating our first real estate investment and are trying to decide if this deal is a good fit.

About us: Late twenties, no children. Gross combined income around $105,000. Only debt my law school loans of $210,000. I am a real estate attorney. We currently rent a 2 bed / 2 bath apartment for $875 + electric. We have $15,000 in cash savings.

About the property: The property is a 3/1 primary house with a 2/1 carriage house (guest house, ADU). Primary was built in 1888 with Carriage house built around 1900. Both were fully remodeled in 2012. Little to no immediate repairs needed. Both units are currently rented. Primary at $1250 (plus $50 towards water. Appears units are not metered separately) and Carriage at $975.

Property has been on the market for nearly 4 months at $235,000. Landlord lives over an hour away with no property management company. My agent believes we could negotiate down close to $215,000 or $220,000.

We walked through the Carriage last night and it appears in good shape. Tenant of the Primary claimed not to have received notice that we would be on site and asked us to re-schedule. 

Property is located in oldest part of town in a growing suburb. There are other, newer rentals in the area and new construction being built around the city edges.

About our financing: Local credit union has given us a pre-approval letter upto the full $235,000. Loan options include a 5% down 30 year conventional at 3.75%. Total cash to close of $14,500. Monthly payment inclusive of taxes and insurance would be $1450. The other option is 0% down on a 30 year 90/10 loan. 90 at 4.625% and 10 at 5.375%. Total cash to close of $2600. Monthly payment inclusive of taxes and insurance would be $1570.

Our plan: We would occupy the Carriage and rent the Primary to offset much of the mortgage payment. As life changes (cough, kids, cough) we'd consider moving to the Primary and renting the Carriage.

Concerns: Property age. Desirability with newer construction and other multifamily for both competition on rentals and ultimate exit strategy. Leverage. The 0% down option would leave a substantial emergency, repairs, vacancy, cushion, but 5% down would not.

Positives: We like that they are completely separate dwellings. A majority of other multifamily properties on the market need extensive work are are not in desirable neighborhoods. 

I appreciate any and all feedback. What should we be looking at? 

Thank you and it's great to be a part of this community.