All Forum Posts by: Joseph Weisenbloom

Steven you are both right and wrong at the same time. For example say you have 20k saved up and you have the option of one property that you invest 20k and you get a 1k return and another property you invest 10k and get a 1k return. You are right that both properties are equal in the amount of "actual money" made. The difference is that in the latter scenario you have another 10k to invest into other opportunities which can bring in an even higher total return.

So if you opt to use a lower down payment in an FHA loan the money saved can be invested in another property for an even higher return than if you just invested everything into one property. Plus keep in mind that cashflow is not the only measure of return you still have equity buildup, tax write offs and appreciation.

With all this financial mumbo jumbo being said I totally agree that cash on cash return is the only important return because all those other measures of return are delayed and wont be realized until you sell the house or do your taxes. Equity build up and tax write offs wont pay your bills every month in a practical manner only cash on cash will.

The main reason I'm pursuing a lower down payment isn't for ROI but for a cash cushion because this is my first property and the chance of me messing something up is pretty high. Hopefully I did a good job of explaining this. Frank Gallinelli does a much better job of explaining in his book "What every real estate investor needs to know about cashflow and 36 other key financial measures" I woud reccomend you listen to him and ignore my ramblings :)

2300 * .4 = 920 NOI

920 NOI - 575 P&I = $345

4140/36250 DP = 11.4% CoC

Is 11.4% CoC good for a C- neighborhood in your market?

Are there any other repairs needed?

Never done an FHA multifamily? Wow. Yea its funny when talking with lenders because they are so focused on selling to the typical retail buyer that they don't realize the potential for investors.

I should have enough for a regular 25% down payment but that would burn through my entire reserve. I would rather pay a smaller down payment and have a cushion for repairs, emergencies or unexpected costs. Plus a smaller down payment means a higher ROI.

I will be in attendance. Alex I'm not sure what happened but I don't think I'm on the distribution list for the meetup group. I will PM you my email address.

Good discussion guys I appreciate the response. @Jerardo Linares Yes I plan to live in one of the units and rent the others out. from the lenders I have spoken to before none of them have offered me 5% for multi-units.
@Sam Craven

@Sam Craven I have considered using a mortgage broker but I'm not sure if that would be a better approach rather than building a relationship with a local bank/credit union. I see that you are a fellow Texan would you have a recommendation of a Mortgage Broker or a way of finding one? What do you think of online brokers like lendingtree?

I was reading a post about the new FHA regulations and wanted to ask the forum's opinion.

From my understanding PMI is now required throughout the life of the FHA loan. Even if you build enough equity to break the standard 25%? Can you wipe out the PMI if you re-fi into Conventional?

I'm looking to buy my first property and I'm looking for multis between 2-4 units. I'm in a situation where I have enough money to afford a conventional loan but I would like to supercharge my ROI with an FHA. Plus going conventional would take a large bite out of my cash reserve. From my understanding 5% conventional loans are only for SFH right?. I'm worried that when it comes time to re-fi that rates will have risen so much that it wont even matter.

The question to the forum is with the new regulations being put into place and rising interest rates is FHA even worth it?

If the numbers you are giving are accurate yes it looks like a deal. Make sure you do your due dilligence with finding rental comps and ARV comps.

Did you get approved for financing at that amount? Sometimes banks wont approve a deal because the amount is too small. In my neck of the woods it is the minimum is around 50k. Other than that looks like a solid one.

Here are my quick and dirty numbers:

The Wilma Duplex:

750 Gross Rent

45 6% Vacancy

705 GOI

50% expenses

350 NOI

750 Debt service

-400/mo Cashflow

The Yellow Duplex (Quadplex right?)

1950 Gross Rent

117 6% Vacancy

1833 GOI

50% expenses

916 NOI

541 Debt Service

375/mo cashflow

Monster Quad

1860 Gross Rent

111 6% Vacancy

1749 GOI

50% expenses

874 NOI

1351 debt service

-477/mo cashflow

Conclusion: Assuming that you are actually referring to a quadplex in the "yellow duplex" scenario that is the only option that makes any sense numbers wise. If that is really a duplex than I would say all three are not very good because of negative cashflow. With that being said this all depends on your goals. If your goal is to not put anything down by using a VA loan and live in one of these properties at a reduced rate than fire away. I persoanlly would not invest in these properties.

Heres my at a glance analysis without the nitty gritty details.

Current rents 450*4 =1800

1800 - 60% expenses =720 NOI

Without any idea on financing this may be difficult

Standard financing scenario $97650 *.75 = $73237 or $439/mo @ 30 years 6%

So without raising rents and getting standard financing you will be at $281/mo cashflow.

At the new rents you proposed of $550 your cashflow/mo goes to $441/mo. Not bad.

Just curious I'm a local guy what part of Fort Worth is this in? I love Fort Worth but the southeast quadrant of the city scares the hell out of me and there are other parts of the city with hit or miss neighborhoods with hordes of zombie crackheads.