All Forum Posts by: Jeff Arndt

Monthly utilities are what go under the category as fixed costs.  I found a good way to estimate the costs is to call the listing agent and just ask.  It will not be the most accurate so I would assume that the numbers they give you are low so add maybe a 50% buffer in there for insurance.  If you are looking at an off-market deal, call a similar property's agent.  When I bought my first place I was pleasantly surprised that trash pickup was covered by the city, so I didn't have to account for that expense!

Closing costs and ARV can be gained by working with a good buyers agent. A good one will close deals in your area on a regular basis and know how much as a percent of the purchase price closing costs will be. They will also be able to give you ARV's; however beware, its your money at the end of the day so you need to learn your target markets and be able to understand why the agents opinion of ARV is either correct or way off.

Repair costs can be the most difficult, but if you can find a good contractor, they may be willing to quote the work on the property before you purchase it.

These are just some quick tips and as is much more involved and takes time to learn, so stick around the site and read EVERYTHING  that you can.  Then jump in!

Good luck!

Welcome to the site!

I would start here:

http://www.biggerpockets.com/real-estate-investing

It's a great resource.

To adequately answer your first question you will need to provide us some numbers on your duplex.  Is there significant equity that you could tap into?  Otherwise, you will not be able to use the investment as collateral.

If you do not have much equity in the duplex and would like to consider flipping a house, I highly recommend J. Scotts book on flipping houses.  It's published by biggerpockets and its the best practical guide to flipping that I've found.

That being said, because you have little capital to work with, you will need to find an incredible flip deal.  You will need to borrow money from other investors or from a hard money lender which will cost you a lot in interest.  You will just need to factor this in as an expense when you run your calculations on the flip.  If you can still profit with the added expense of short term loan interest - make it happen!

If you acquired a loan for $75,000 at a 3.5% interest rate for a 30 year term, here are what your rough numbers would be.  Your principal and interest would be $336.78 per month.  And over the 30 year period, you would pay $46,242.07 in interest.  In the first month you will pay $218.75 in interest because you have still borrowed the full amount.  However, as time goes on and the principal balance drops, you be pay less in less in interest because you will have less and less borrowed in principal.

1 point is a premium you pay in the beginning to either get the loan or reduce your interest rate.  So in this example it would be $750 as you correctly stated.

Google amortization calculator and play with those.  You will learn a lot by trial and error.

Good luck!  Your youth is your greatest asset right now.  Learn everything you can and if you truly focus over the next year or two.  You have the potential to know more than many of your competitors!  Invest in your knowledge before you invest in real estate.

I am a proponent of starting smaller to mitigate your risk as you move forward.  You will learn a lot along the way and buying smaller properties more frequently will keep you on track.  I.e, it will be easier for you stay focused savings wise.  You can play with all the numbers you want.  Should I go with less return now or more return later?  Should I hold out and see if the market gets better? etc. etc.

I say buy a duplex as soon as you can.  The knowledge you get in time will be invaluable.

On the header of the website, go to Learn> Member Blogs> and then you can start your member blog from there towards the upper right.  I just started blogging myself and find it very rewarding!  

I think it really depends on where you are in your investing career.  For me, that is a screaming deal because I am looking for cash flow and want to leave my full time J.O.B. ASAP. But if you can pay your bills just fine without working and are looking to build long term wealth, you may just want to flip it and put the capital into better quality long term stuff as Joel put it.

I'm a currently searching for hard money.  I have completed 3 deals, 2 of them being complete gut rehabs.  I am still relatively inexperienced so how much skin in the game will a typical hard money lender require for a loan?

Great design and great numbers!  Congratulations!

Sounds like you should be able to move out into your own SFH as long as you have a good down payment etc. The only stipulation is most lenders will only count rental income towards your DTI ratio if you can show income on your last two years tax returns. Additionally, the feds (fannie mae & freddie mac) will cut you off at 4 conventional mortgages - which doesn't sound like a problem for you yet either.

If you have not used an FHA loan you can buy another small mutli-family, 1-4 units, and "house hack". Which you have alluded to already doing already by your post.

Your mortgage officer should be able to give you a better idea of where you stand and tell you what you can afford without actually pinging your credit with a hard inquiry.  If you don't qualify today, at least you can create a road map for a year down the road when you plan to actually buy.