All Forum Posts by: Jennifer Fernéz

Um, WOW. This is amazing. Dang, all offers were due yesterday and I didn't make one. What kind of tool did you use to analyze all that? I mean, I could try to just memorize the math..

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Quote from @Kevin Sobilo:

Quote from @Jennifer Fernéz:

Quote from @Kevin Sobilo:

@Jennifer Fernéz, I'm not in your market. I'm further north in the Wilkes-Barre/Scranton area but here are a few general thoughts:

1. What is your goals? Are you investing to create wealth/equity? Are you looking for cash-flow? Are you wanting to grow a portfolio of rentals without coming out of pocket to acquire each? Are you investing for market appreciation?

2. What you describe sounds a little like a BRRRR (Buy Rehab Rent Refinance Repeat).

However, with a BRRRR one goal is to get back your out of pocket investment. A purchase of $209k, $15k rehab, and ARV of $240k doesn't get you any thing back after you factor in all of the closing costs to purchase and to refinance.

A $1700-2000/month rent doesn't get you cash-flow on a fully leverages (after refi) $240k property.

3. You mention DTI which is fine. That is important when considering a conventional conforming loan. However, you can get loans that are based on the performance of the rental and not your personal income and debt. Look for loans such as DSCR (Debt Service Coverage Ratio) loans.

4. If what you are aiming for is a BRRRR to acquire and rehab properties into cash-flowing rentals, you may with to try to feel less personally attached to the result.

5. Also for a BRRRR in general to create enough equity to refinance out your money and create a cash-flowing rental you usually need to start with a VERY distressed property and do a significant rehab.

For example if a single family home rents for $1700 in your area. You might buy a distressed property for $80k, invest $40k into a rehab with an ARV of $155k. A scenario like that would likely result in getting your entire investment back upon refi and also a nice cash-flowing rental to manage.

Thanks for your input, Kevin! I was going to offer $200K or $190K. Put $10-15K in to get a brand new kitchen, refinished hardwood, recessed lighting, and brand new bathroom. It's a single family home with minimal work that needs to be done. I don't need hard money because I have a lot of cash.

Purchase: $190k

Downpayment: $40k

Closing/Realtor: $10k

Loan Amount: $150k

Renovation: $15k

ARV: $250k

Refinance: $5k

Final Loan Amount: $190K

Cash Back: $40K

Cash Spent (Down & Renovation): $55K

Cost to buy (Closing/Realtor): $15K

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Total Monies Spent: $30K

Loan Amount: $190K

Mortgage: $1.8K

Rent: $2K

Those are rough numbers going through my head. So $30K spent to acquire renovated property with minimal cashflow. Worth it or no?

To me that is negative cash-flow, because I include hard and soft expenses.

You are looking at the rent of $2,000 and mortgage (Loan, Insurance, and Taxes) of $18000 and thinking you have $200 cash-flow.

You may have other hard expenses. In many places there are some utilities provided by the municipality. You typically want to include those utilities because if unpaid they become liens against your property. In my area sewer and garbage are the most municipal utilities.

Then you need to account for soft expenses like Vacancy/turnover, maintenance, and capital expenses. A 5% of incoming rent for each category is a pretty standard amount to budget.

So, your soft expenses alone would be 15% of the $2,000 rent which is $300 per month. That alone brings you to negative cash-flow and that is even without accounting for any municipal utilities.

Ah ok, thanks. This is what I needed!

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Quote from @Joe Villeneuve:

The least important this you mentioned, was the word "cute". I've never heard money/profit described as cute, so it's not important.

The most important thing you mentioned, was the rent potential and ARV. The problem is, none of it is based on actual comps, and again, the word "cute" doesn't have anything to do with setting those numners.

What you need to do is a full analysis of the comps for both rent and sold in your area. They should ONLY include properties of the same size (sq ftg), and within a short distance form this property.

Lastly, your profit comes after you recover your cash you put in. It's the cash you put in that's your cost for the property. If you plan renting out this property, that cost recovery comes from cash flow (equity doesn't count). Keep in mind, adding "cute", and upgrading things won't increase your rent or ARV past what the market in that area will tell you is the max. Adding and making better could sell or rent faster, but it won't get you more than what the market ARV and rent is set at from other similar comps in the area.

...and your Interior Design background will help, if you you it mostly as an understanding of cost. Don't use it strictly as a tool to turn the property into one you want to live in. That's one of the fastest ways to lose money.

I also have a degree in mathematics from an Ivy League college and I'm smarter than I sound or look, so I apologize if I threw you off with the word cute. Let me articulate better. I plan to turn a run-down house no one wants into a beautiful and desirable property that other women will fight over. For barely any cost.

The question at stake here is about value. Is it worth it? (see the numbers I wrote in my other response above this one).

I am using actual comps that my realtor sent me. The problem is that there isn't a lot out there, and when looked into each comp extensively, I saw the numbers were deflated because they were 'as-is' properties with extensive damage, or properties with a well, and other mis-matched differences.

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Quote from @Kevin Sobilo:

@Jennifer Fernéz, I'm not in your market. I'm further north in the Wilkes-Barre/Scranton area but here are a few general thoughts:

2. What you describe sounds a little like a BRRRR (Buy Rehab Rent Refinance Repeat).

A $1700-2000/month rent doesn't get you cash-flow on a fully leverages (after refi) $240k property.

4. If what you are aiming for is a BRRRR to acquire and rehab properties into cash-flowing rentals, you may with to try to feel less personally attached to the result.

Purchase: $190k

Downpayment: $40k

Closing/Realtor: $10k

Loan Amount: $150k

Renovation: $15k

ARV: $250k

Refinance: $5k

Final Loan Amount: $190K

Cash Back: $40K

Cash Spent (Down & Renovation): $55K

Cost to buy (Closing/Realtor): $15K

---------------------------------------------------------------------------------------

Total Monies Spent: $30K

Loan Amount: $190K

Mortgage: $1.8K

Rent: $2K

Those are rough numbers going through my head. So $30K spent (includes closing costs, etc) to acquire renovated property with minimal cashflow. Worth it or no?

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I need help analyzing this property.

Address:

2542 Glenn Terrace, Mount Penn, PA 19606

Asking Price: $209,000

Taxes: $5087 (they are really high in my county)

Renovations: $10K-$15K

Mortgage: Conventional

Credit Rating: 712 median

1. I have an interior design background and can make this property really cute, but is it worth it? I have to front a ton of capital.

2. I was thinking about getting the property, renovating it, and then cashing out 80% of the ARV to get some of the money back. Good idea or no?

3. What do you estimate the ARV? There is a 'comp' listed for $200,000, but it was sold as-is and needed great repair. I think if I make this house really cute, I could potentially get $240K ARV. But I don't know. What do you think?

4. What do you think you could rent this for? I have no idea. I think I could get at least $1700. Maybe $1800? $1900? $2000?

I don't want to spend all my capital, but I think I could potentially refinance and get some back. But then my cash flow won't be high, and when trying to get another property my DTI won't be great because 75% of the rent won't meet the mortgage. However, I like that there isn't a lot of work to do and I could still make the property really cute with not much risk.

Inventory is so low. Any help appreciated!

1 Vote

Hi all! I’m looking for a lender to help me start a portfolio. I have about $100K in cash. 709 median credit score. I don’t qualify for conventional loans because my debt to income is to high with a pending new construction primary residence loan. Can anyone help? I don’t have a particular property yet, however, I do have a neighborhood in mind so when something comes up I have to be ready to pounce. The homes are usually in the $200K-$250K range with rent $1900-$2200/mo. I can explore other neighborhoods that would produce more rent with a lower mortgage, but I prefer this specific neighborhood because of the proximity to the hospital (lots of traveling nurses and it’s a high demand area) and the school district is the best one in the county, with the highest appreciation rate in the county. Thanks in advance!! Jennifer

2 Votes

Philadelphia, Pennsylvania

1 Vote

Quote from @Paul Cijunelis:

So i built my home about 8 years ago. I had one kid at the time, she's now in HS and the new one is turning 5 soon LOL. Big 10 yr spread there. So I would say that once she moves out we will probably sell our "forever home" and it will mean 10 years-ish is "forever" for us. Because once the oldest moves out, I know the wife won't want to have a large home anymore.

Sorry to hear about your divorce. Sounds like you have your act together with passive income and a savings, as well as motivation to build wealth from there. Congrats, you're a rare find, enjoy your unicorn status!

lol thanks. Appreciate it:)

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Allentown, Pennsylvania

Quote from @Travis Timmons:

Live in flip.

It sucks but you'll have a pile of tax free cash in two years. I'm 42 with a family, financially independent, and doing it right now. 4 of us are sharing 1 bathroom while we slowly fix up this house. It is not for everyone. It is exhausting to live in a job site and feel like you are bleeding cash, but we've done a couple of times and still think it's a good idea. It's low risk and tax free on the gain. You're just going to hate it sometimes. Like many things, on the other side of sacrifice, discomfort, and hard work is a large financial reward.

Hi Again! Ah, apologies! I missed your original post and just saw this now. I sadly went through a brutal divorce, so I want to provide stability for my kids. I had to move twice already in the last 3 years, so when I move again, I want it to be in their forever home.

I actually am already financially free. I have about a $5k stream of passive cashflow, and a large sum of money. I just don't know how to allocate it. I was trying to house hack thinking I could do it one time before I move into a forever home, but I wasn't able to secure a property (getting outbid) in the past 6 months, so I'm wondering if I should think of a different strategy now. I'm willing to sacrifice the money if it means stability for my kids.

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Allentown, Pennsylvania

Quote from @Jonathan Klemm:

Love the question @Jennifer Fernéz! If you and your family are willing to house hack and use either an FHA 203k or homestyle renovation loan, the path of least resistance with the lowest risk, in my opinion.

If you didn't want to house hack you could try a live-in-flip with those same loan programs! Then you wouldn't have to have other tenants around if that was an issue.

Here is Chicao, we have a plethera of 2-4 properties that need to be renovated and do you happen to have a similar market in Allentown?

Hey Jonathan! Appreciate the response.

No, sadly I live in a small town 45 minutes from Allentown where multi-units come up every other month or so, and go quick. I keep getting outbid!

1 Vote

Allentown, Pennsylvania

All Forum Posts by: Jennifer Fernéz

Jennifer Fernéz has started 51 posts and replied 134 times.

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