All Forum Posts by: James T.

@Sebastian Marroquin How much do you reckon does it cost to add a 1000sf 2nd story addition in Pasadena?

Thanks for the info Jaysen. I got a few more quotes back today and the rates do indeed vary between 2,3, & 4 units. I also found the 25% down requirement for 3&4-plexes to be consistent. I'm told this is very new info from Fannie & Freddie. 

Hi BP,

I'm in the LA area looking for my first property and plan to house hack a small multifamily. I'm curious to hear what others have seen as far as financing for 2-4 units? When I got pre-qualified for a loan, when rates on places like bankrate.com were showing ~4.5%, we were quoted the higher end of 5.25 because rates are a little higher than SFR's. I know rates dropped recently and the number I'm quoted now is ~4.75%. I was also told that triplex and quadplexes may require a 25% down. I will be owner occupying this unit, so I thought that financing would be a little more favorable. I looked into an FHA loan but with MIP and a higher mortgage, there's no way anything will cashflow in the LA market with such a small down payment. Thanks in advance for your input!

Thanks @Jonathan Soto. Now that we're looking more seriously, I'm definitely planning on attending some RE events

Thanks for sharing your info @bruce cassidy. 1.6% sounds amazing! I plan on living in it because I'm looking to slowly get into real estate with my fiancee (which means getting her comfortable with the idea as well). Out of state is where I may eventually end up but I want to get my feet under me going through my first deal locally before venturing out.  

@Tchaka Owen i honestly don't have a clue yet when it comes to rehabs. I chose what i thought would be a conservative number for 2 main reasons: there are only a few exterior pictures in the listing, which led me to be believe the inside may need work and that the landlord is not on good terms with his/her tenants. Additionally, the comp i mentioned above--i forgot to say that it was located on the same block right across the street. It was renovated very nicely and listing for $450k more than the building I'm looking at. I wanted to increase the value to about the same specs to command higher rents on that range of $1900-$2400 for the area. I chose $2200 for my analysis.

Hi @Heath Ryans, thanks for taking the time for your detailed response. I think because this was a house hack in an area we wanted to live in, I let emotions cloud the numbers. You bring up great points about the repairs and capex. I also forgot to add property management expenses in there with the expectation that I would move out after 1-2 years and need someone to take care of it. The property needs to stand on its own with decent numbers. I reran the numbers with a 5% for vacancy, repairs, capex, and 10% for property management, which ended up with a negative $500 cashflow and negative 5% COC ROI. Not looking so good after all

Hi everyone,

My name is Jimmy and I'm a recently new member and Pro member! I've been listening to the BP podcast and BP Money podcast for months and reading many of the books recommended on the show. I love learning and can't get enough! I've been lurking on the forums for a little while absorbing as much info as I can. This community is great! My fiancée and I are just starting out with REI and have been looking to house hack a 2-4 unit multifamily. We found a 4 unit recently and are hoping to get some feedback from the BP community on this analysis. We both have strong W-2 jobs, have pre-qualified for strong financing, and will live in one of these units.

Here’s how I’m looking at this, Open to any and all feedback!

• 4 unit x 2bd/2ba. 950 sq/ft each. Listing price: $1,150,000
  • Renovated comps go for $1900-$2400 in the area. The higher ends are full houses or apts with amenities
  • Property is located within blocks of a Cal State University so rental demand may be consistent
• COC ROI is fairly low, but I'm comfortable getting a ~5% return on my first deal if it means that this is a learning experience. Also, through normal economic cycles—I would think a stock market correction may be naturally occurring in 12-18 months so I can accept a modest return
• I only have exterior pictures of the property which shows it as "fine/livable". The reason I estimate $120k in repairs is because I want to increase the ARV and increase rents, which brings me to my next point:
  • A 4-unit renovated comp with the exact same specs showed up on the MLS today for ~$1,600,000! It was very nicely renovated inside with laminate hardwood and tile with nice new paint.
• Even if the COC ROI is low, it still cash flows okay and most importantly, I can use the BRRR method to pull money out after the forced appreciation and move onto my next deal.
• 20% down + cost for a renovation would tap us out completely. I know we want to leave room for an emergency budget, which is why I'm looking into leveraging an FHA/203k loan to assist with the renovations.
• Also, we're a bit lost when it comes to estimating ARV for these small multifamily units. Any insight or resources would be fantastic!

Vacancy: 4%

Repairs and Capex are low because I plan to put $120k into it