All Forum Posts by: Justin C.

Hi all - New RE investor looking to get started in BRRRR. Considering investing in Montana from out of state. I would love to connect with anyone who has succeeded with BRRRR in the area.

I was looking in Bozeman recently as I have some contacts there & spend time there sometimes. But the market seems extremely hot - difficult to find a good deal, and mostly cash flow breakeven. Also there don't seem to be many opportunities to drive appreciation through renovation, because most of the town is fairly new and even places that need work are seeing a lot of competition /multiple offers. Curious if people think it's possible to succeed with BRRRR in Bozeman in today's market.

Of the geographies within a few hours of Bozeman, I am wondering if people would suggest looking at any in particular for best results in BRRRR. (Including Livingston, Billings, Helena, Missoula, Great Falls, or others).

I appreciate your thoughts or relevant contacts. I am also happy to discuss if there are ways I can add value to your process.  Thanks in advance.  

Getting back on the forum after a while & looking at purchasing a rental this year.  

Interest rates have gone up quickly so far in 2021 and it seems this could continue, driving up mortgage rates. I am wondering what impact people expect this to have on the rental market (particularly SFH/Condo/2 family).

My first thought was, lock in low borrowing rate & inflation hedge by owning rental real estate -- double win. However there might be an argument that as rates go up, people's ability to afford a home goes down, which could well reduce selling prices & increase cap rates. After all it seems the market has been very hot recently due to low rates & covid.

For someone who thinks mortgage rates are going up, and is looking to buy a rental -- would you act quickly to lock in a low rate, or wait to see if increasing rates / slowdown of covid cause the market to cool off and give a better overall entry point?

I am eager to get started in multi family investing and am hoping to do so by buying and living in a multi family home (probably using an FHA loan). The challenge which has held me back for the past 2 years is that I live and work in manhattan and am recently out of college (24 years old).

Buying in manhattan isn't realistic for me nor does it provide me with a good enough cash on cash return for someone starting out (even if I did have the money to buy a multifamily here, I'd want to invest elsewhere). However, I am willing to move and make a commute to work each day in order to get started in real estate investing now.

I would like to be able to get to grand central terminal within ~45-60 minutes, and would be looking to purchase a 2-4 unit (hopefully 4) multifamily where I could live in one unit. I want it to be a safe and reasonably desirable place to live. It would be ideal to get 4 units for 500k or less (of course, I would be looking to maximize rent relative to purchase price) but I am really just looking to learn about what's out there.

I don't know the surrounding area very well and am wondering where you all would suggest looking. Much appreciate the help. Thanks,

Justin

Appreciate the replies and contacts! Anyone interested in having a phone or Skype chat about MA rental real estate at some point this weekend? (Saturday?)

Hey @Nik Parks I am in a very similar situation to you. Same investment objectives/scenario, cash flow is a priority, considered FHA, would already be doing it if it didn't cost $2-3 mil for a four family around here. I am also in my 20s, I'm renting and working in Manhattan right now. Wondering if you have made any progress with this. I have pretty much written off the idea of buying in Manhattan but am considering the 20% down route for lower stakes properties in other cities

I purchased a tax lien on a piece of property located in my state (MA). It is my understanding that I need to contact this person to inform them they should pay the back taxes and interest owed to me. Is that correct? Does anyone have a sample letter I could send? Hopefully without using an attorney?

The person's address is a P.O. box located halfway across the country. What do I do if the person never responds- how would I take her to court to claim my interest owed or foreclose on the property?

Yeah I revisited this and would opt for 30 year. Fairly in line with comps. Mostly wondering though, is a 10.7% cash on cash return using a 30 year mortgage respectable for a duplex in MA? Worth buying it?

What should I expect to pay in closing costs on a duplex-4plex costing around 130-150k, financed 25% down and 75% 30 year fixed? I've seen estimates ranging from 3k to 7k which is a huge range.. I've never closed on a Multi family so I don't know what to expect.

Btw if you care to get into it, what are the components of the closing costs? My area is MA. Thank you

And what mortgage term would you use on this- is it just up to personal preference of cash flow vs equity, or is there more of a science to it? If you go into the model and switch the mortgage term from 20 to 30 years, you are looking at a 10.7% cash ROI in the first year and $4750 of cash flow, instead of 7.1% cash ROI and $3,140 cash flow in a 20 year mortgage.

I'm analyzing a potential first deal- spreadsheet below. It is a 2-family located in MA. I'm assuming I would need to put 25% down on the purchase price. To get the rents, I used rentometer.com and then scaled down a little (average rent in the area given the bedrooms is $1960, I assume rents of $1850). I don't know exact insurance rates but allocated about 0.7% per year of the purchase price which seems to be in line with estimates I found online. Are closing costs of $6500 and $3000 of misc. improvements a good guess? There is nothing glaring from the listing/photos, but I haven't actually been to the property yet- this is just a preliminary analysis.

The thing I'm really unsure about is maintenance and repair. I allocated $3000 per year- which seems high compared with what I've some people use here. The building is about 100 years old.

How are my assumptions? I tried to keep everything very conservative. Would you buy this deal? How do the returns compare with other deals? I appreciate your advice, constructive criticism, etc.

You guys who have been successful with this- what do you look for in making these decisions?

http://www.mediafire.com/?et91331w6x6gp6a

P.S. Credit for the spreadsheet goes to 123flip.com