All Forum Posts by: Joe Malucci

Figured I would update this post. Ended up offering 50k for the property, as I knew some of my rehab cost was inflated anyway.
couple days later my realtor got back to me and someone offered 79k for the property, which is the listed asking price. Either they are going to leave it a dump and try to rent it out, or put way too much in it. They can have it for that either way.

Just happy I crossed into the action zone, and actually made my first offer. Learned a bit, and made a good contact of a local attorney for future deals.

On to the next one.

Joe

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First of all, thanks for the response you guys are great. I think I agree with increasing the vacancy.. And Yes, tenants in our area typically pay for everything but water.

I replied to John within the quote below, not sure how well it shows up for everyone.

Originally posted by @John Leavelle:

Howdy @Joe Malucci

Is your dad financing the whole deal? I.e. $113,500 cash needed at closing. Will he charge any interest? Does he expect the entire amount to eventually be repaid? I say this because you show $7,000 cash remaining in the deal after the Refinance. I believe that amount will be much more depending on what Holding costs you have accounted for.

He is financing most of the deal. I have $20k I am putting into the deal, and the plan is to put a mortgage on the property when it's complete and pull our money out. He does not want any interest for the first deal but will get interest on the next future deal. He's happy just to see me succeed with this.

Is that the current rent rates? Or what you expect them to be? If they are current is there room to increase after the Rehab is complete?

$55,000 is more than I would offer. If that is your Maximum Allowable Offer you need to start lower. You need room to negotiate to the MAO.

I have a co-worker coaching me along with this. He has 34 units in the area, and thinks I can get slightly more for rent than what I calculate. I'm trying to keep everything conservative. Building is vacant at the moment so these are all estimates. Agree on the offer price.

The Refinance loan assumptions are misleading the analysis. This is an investment property. Most lenders will require at least a 25% Down payment. That makes the amount $105,000. Unless you have already been quoted these terms you will need to double check the dp and Interest Rate. Now you have $12,000 Cash remaining in the deal.

So If I own the building outright, and want to get a mortgage on it you are saying they want money down as well? I was thinking I could get a mortgage for up to 70% of the appraised value?

Why are you showing PMI as an expense? As long as you put a minimum of 20% Down payment there should be no PMI.

Correct, this is my mistake. I have been doing so many calcs I missed this one here.

I agree with increasing the amount for Vacancy reserves (for analysis and budgeting purposes). I always use at least 8.34% (one month rent). If it ends up being less for the year, great, you made more money that year. If keep it at 4% and have a vacancy for a full month, then, you lose.

Solid advice and I agree.

All this being said. This still can be a decent deal.

I am also budgeting all the repairs to be completed by others. I'm a project manager / estimator for a large construction company, so I'm pretty decent with those values. That being said I will likely do a lot of the repairs myself, as I'm more hands on than I probably should be. The rehab cost may be more, but like I said I'm trying to be ultra conservative with everything.

Thanks again,

Joe

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View report

*This link comes directly from our calculators, based on information input by the member who posted.

This property has been on the market for almost a year. People keep backing out because a bank won't loan on it, and the house has a foundation wall that is in need of major repair / replacement. I can do this work cheap because of my employer, and access to equipment. I have looked myself and brought our guys to confirm budget on the wall repair.

I have been looking and analyzing deals for a few months, and the numbers seem to work pretty well on this even though it needs a ton of updating. I have a unique situation as my dad has money he wants to loan for me to invest, and wants to help me get the ball rolling on my path to FI.

This is in a decent, well kept area and is located 5 min from where I work, and 10 min from my current home. I plan to self manage, but ran the numbers as I were hiring out the management. It's currently on the market for 79k, but no one wants to touch it due to the foundation, so I think I have some opportunity to send a lowball offer (55k).

Any thoughts are appreciated.

Thanks!

Joe

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Thanks everyone. @Matthew Irish-Jones I read your profile, very impressive for only starting 7 years ago! Motivating for sure.

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Hello Everyone, New to the site and eager to learn.

I'm Joe, from the Buffalo / Lancaster area of NY, and have been lurking a bit. I'm 30, single, no kids, and currently working as an Estimator / Project Manager for a commercial site construction company for the past 10 years. I am debt free outside of my primary home, and am very much of a DIY person, and can pretty much build a house from the ground up.

Goals:

I want to get into rentals using the Brrrr strategy, or even flip homes at first to build some capital. It would be great if it could turn into a business that I will be able to run and leave my current daytime office job (target is within 10 years). I am actively looking for my first deal at the moment, and have saved some money, and have my dad as a private lender if I do find something. I plan to do most all of the labor, updating, and property management myself for the first few deals, although eventually I hope to have the means to hire the labor part out. I feel I am late to the real estate endeavor, but hopefully my skill set puts me at an advantage in that I can take care of most issues myself.

Thank you to all the information thrown on this site, it is a huge resource for me!

Joe

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All Forum Posts by: Joe Malucci

Joe Malucci has started 2 posts and replied 5 times.

Post: [Calc Review] Help me analyze this deal (my first one)

Post: [Calc Review] Help me analyze this deal (my first one)

Post: [Calc Review] Help me analyze this deal (my first one)

Post: New Member from Western NY

Post: New Member from Western NY