All Forum Posts by: Joe Henry

@Tom S., thanks for the solid advice. I feel that's especially apt considering I'm still learning this market. It seems like a good deal, but I don't have 100% market knowledge.

@Kenneth Hynes, it is move in ready. The comp my broker pulled for it used only other duplexes on the lot (it is a lot of several duplexes in a nice area of mostly SFHs). The comp said it was worth about 76k, and based on the level of finish i'd agree I think.

The thing that makes it appealing to me are the numbers. That's the only reason I'd go higher really.

@Michaela G., this is my first property so forgive me if I don't understand correctly, but you mean in the case the appraisal is less than the loan amount I'm trying to get? I would probably cover the difference out of pocket, or use private lending at 5% with a 5 year pay-off.

@Account Closed, ah thanks. I have that mis-labeled then. What do you call your net after operating expenses and debt services?

Here's an editable version of the spreadsheet if anyone would like to mess with the numbers.

https://docs.google.com/spreadsheets/d/1h6WjmhQ4SisKl6dhbKfinc44M1Vu-FiCpvgHgC1sy6A/edit?usp=sharing

@Jacob Sampson, Thanks for the reply. Yes I'm subtracting the full mortgage payment (P and I) to get Net Operating Income. The Gross operating income is without any debt service (P or I).

What's funny is the duplex numbers are better than the comparable SFH numbers I have in columns D and E, for which I'm using the 1% rule, which I've heard is a tough number to achieve. Do you usually hold out for something better than 1% rent?

When I plug in a 15 year loan I can still get a 15.6% CoC by self-managing the property, and without adjusting my interest rate which I would imagine would be slightly lower on a 15 year?

Thanks for the information @Bill Jacobsen. Wondering, are you getting more or less than 1% of the purchase price in rent? I'm wondering how common it is to get rent like this in Jacksonville. If it's very common, maybe it's best for me to keep looking. If not, they I'll likely end up very happy with the cash flow.

I'm looking at a duplex. 82k is the lowest the seller will go. The numbers make sense. The only thing I'm concerned with is that the property may not be worth 82k if you weren't looking at numbers - probably more around 65 - 76k (I'm still learning the market and RE in general, this is my first deal, so, it's hard to tell).

The property sold for ~115k during the 2006 high, and ~56k around '10. Beginning of '05 it was priced a few thousand above the 82k it's at now.

Here is a google spreadsheet with the numbers: https://docs.google.com/spreadsheets/d/1HIaLPDByQFzW8w-3Joa_sGPtOkbM1ghVIN387GBr-ZU/edit?usp=sharing

So as an investor, with a buy and hold strategy on this, would you buy knowing what the numbers are? What would be your reasoning for walking on this deal or closing?

Any other advice welcome.

Thanks

@Chris Mason, that's good advice. I'd rather have something fail in the pre-approve stage than after I've made an offer and all that. I'll be looking for someone locally who provides service like that. Thank you for the advice.

@Chris Mason, thanks for the input.

What do you suggest I do to find a better lender? Would smaller independent firms do better?

It seems you are recommending I state right up front my employment situation and work through it that way, correct?