All Forum Posts by: Jonathan Hagan

Thank you all so much! You may have just saved me from a big mistake! Ill check the zoning and public records next and see what it actually is. If I plug the numbers in as income only from the two 2/2 units at an average of $525 each and use the cap rate as the valuation method it matches what is on the tax information. It comes out valued at about $60k and the tax info says it was valued at $59k for the last few years. That is leaning me more towards thinking it isnt legally a triplex and the owner may have just been trying to squeeze some extra cash out of it. Ill still check into it, but I think you all may have just saved me from a mistake!

Ok. Thank you. That clarifies the situation a little. In order to find the information about the 3rd unit it is the public records down at the county clerk's office that I need to look at, correct? Is there somewhere else that I should be checking to make sure I am getting all the information I need on a property? I will definitely veryify the legality of the 3rd unit. It would definitely be negatively cashflowing if the 3rd unit wasnt there. Sorry for the very debutante questions.

Is rezoning a property in that situation something that is typically very expensive or a thing that would be worth the effort to try to rectify? I will do some searches in the public records to see what I can find on it.

Hey everyone,

I have been reading BP for a while now and I am finally in a position to potentially make a first deal. An agent informed me of a potential multifamily deal in the area here, and it looks like it could be a good deal to me. I just need a little help with the analysis to see if it will really work. This will be the first deal I have tried, so I want to make sure my analysis is correct. Here is what I know so far.

The deal is for a 3-plex located in a good area outside a military base. The seller is asking $95k for the property. The units are a 2/2 which goes for $550, a 2/2 which goes for $500, and a 1/1 which goes for $495 (all according to sellers agent). Checking it out, these are very comparable rates to what is around the area. They are saying that one of the 2/2s is rented out right now and tenants just left the other ones. Of those, the two 2/2 units have been updated, but the 1/1 didnt get updated at the same time since it was occupied at the time. I havent been in the house yet, but will be checking it out either tomorrow or the next day.

The problem I am running into is that I am not sure of what the house should actually be valued at. It is the only 3-plex that I know of in the area so it is hard to find comps. On top of that, the tax information lists it as a duplex that is valued at $59k. However, if I value it using the cap rate method assuming a cap rate of 10% it comes out to be valued at about $92k ( $9,190 NOI / .1 Cap rate = ~$92k)

The property seems like it will cash-flow about $400/mo (without PM) under these conditions according to my spreadsheet analysis. I estimated the maintenance, advertising, and other expenses using the 50% rule along with the tax information and estimated insurance for the area.

My concern is that I have read a lot saying that I should make money on the buy, and that I should make sure I have multiple exit strategies. I am intending this as a buy and hold, but want to be able to get out and sell the house without a loss if I need to as another exit strategy. However, I am not sure how to value the house since it lacks comps in the area and the tax information seems way different than the asking price or cap rate valuation.

All that being said, does this seem like it is something worth pursuing? Sorry for the long post, I just want to make sure I dont mess something up.

@Jon Claus

I hadnt seen that post yet! Thanks for showing that to me. I am so excited to hear about it! I was actually kind of worried about it for this area but that gives me a lot more confidence.

@Elizabeth Colegrove
Do you mind if I send you a PM to ask a few questions about the VA loan?

Awesome! Thanks for the advice! I am actually almost through reading the beginners guide. A lot of good info in it! The advice on the local REIA clubs is going to be the next step. I just started looking around online today to see if I could find one around me to go to. Its looking like the nearest option to me is in the Dallas-Ft Worth area. Im sorting through all of the info around to figure out which one is what I want to go to.

Awesome! Thanks! I listened to that one and he has definitely given me a good impression about it being possible to balance these! Now I just need to work what he says into what I am doing.

Hi everyone,

My name is Jonathan Hagan and I am new to the BP forum. I have been lurking around the site and listening to the podcast for a few weeks now so I figured now was time for me to jump into the discussion. I am a newly commissioned Air Force officer who is just starting to look into the world of real estate investment. I'm 22 y.o. and wet behind the ears as far as active investing goes, so I am here to learn as much as possible, specifically as it relates to balancing investing with a full time military career and constantly moving around.

As far as areas of investment are concerned I am still sorting through and learning about all the different kinds of investing and their benefits and weaknesses, but I seem to be most interested in the residential multi-family buy and hold idea. I'm currently stationed in Wichita Falls, TX and will be here for at least another year and a half while I go through pilot training.

I am really looking forward to all your posts and stories and the opportunity to learn from people who are really in this business. I just want to say thanks in advance for everything. Already, BP has been an outstanding resource to me and I am really excited to learn from everyone's experience!