All Forum Posts by: Jon Dang

That's what I figured. With R22 getting phased out the prices will be insane for any replacement. 

@Caleb Heimsoth   Cash flow is close to $800 if I don't include PM. I was going off the $100/unit rule. Any idea what is a good baseline?

I am not buying long distance. ARV is $220,000 based on MLS, the home is particularly distressed per my inspection report.

I got baseline quoted an HVAC replacement of $4000 (inside and outside) per unit, this isn't including ductwork and not knowing the interior. If you don't mind me asking old was your hvac and did you have a homewarranty? 

Hello BP Family,

I have found this quadplex that looks like a great deal. This will be my first deal that I plan to house hack and acquire via FHA. Numbers work out at ~$600/month in cash flow after all expenses. Saving 5% Repair, 5% Capital, 10% Property management, and 8% Vacancy. This is in Baton Rouge, Louisiana so there are hot summers. Also, tenants pay electric so I wont imagine they blast the AC like crazy.

3/4 units have very old HVAC, 12 year old. One unit has a new HVAC replaced in 2017. So the old units still use R-22 as well.  My concern is that if the HVAC goes bad i'm looking at $15,000 - $20,000 in replacement. Seller is offering 1st year of home warranty. Has anyone dealt with a similar situation. I.E buying a home that they know would need a large capital expenditure within 2-3 years. Also, any advice on homewarrarnty.  I talked to america home shield and they replace if they cannot repair and pay 10/lb freon. However, I always hear that 9/10 times they repair items that need to be replaced! I read conflicting things. 

Just looking for advice from anyone who has been in a similar simulation. Thank you!

@Michael Cleary I had direct messaged you Michael. The property is under contract, but we have not closed yet. Just completed the inspection, I am in the process of renegotiation. That is a great deal for HVAC replacement!

Matt,

Thank you for reading through my extensive post.

The building has never flooded, even during the 2016 Baton Rouge (100 yr flood). However, the complex down the street did flood. I am pretty conservative and just opted for flood insurance for peace of mind.

I have not got quote for HVAC yet, just done the inspection last week. 4K for a new HVAC sounds great, i'll shop around and check out some quotes.

If you don't mind me asking did your unit also have an outdated HVAC and what did you do? Do you have a homewarrant on any of your property? I have some homewarrant that I plan to follow up on this week.

 A local bank in Baton Rouge. I got quoted last year at 4.25%, but since than they went down like crazy!. My credit score is good too 760+. I just locked on to this score last week.

The one I will be renting is $750,  I intent to continue to pay that rent and count it towards cash flow. Event though its my own money, lol. I hope that clears it up.

Hi Bigger Pockets Family,

I am a long time listener, fresh graduate, and a renter for ~2 years now. I am ready to finally become a homeowner; living rent free via house hack. I am very excited this has been a long time coming. But, I won’t want my excitement to cloud my judgment. I am a numbers man, engineer by trade.

The deal is a quadplex in Baton Rouge, LA. The neighborhood is a C class. Not the best but itsa quit community with good people. All units are currently rented out and 2 tenants ($650) have been there for 5 years. Local comps are ~208k-225k from within the last year. My plan is to acquire this property via a FHA loan. Please let me know what yall think about this deal. Thank you!

Quadplex:

Age: 1981, 4510 sqft.

4 units (2b/1 bath)

Asking: $211,000 (Including closing cost).

Interest Rate: 3.375%

Rent: 2 ($650) and 2 ($750) , $2800 in Rent

Mortgage: $915.93/Month (with PMI)

Utilities: 0 (tenant pay electric/water).

Flood insurance: $75/month (not in a flood zone)

Taxes: $160/month

Insurance: $144.23/ month

Monthly payment (Sum): 1,333.16/ month

Capex (5%): 140/month

Repair (5%): 140/month)

Vacancy (8%): 224/month

Property Management (10%): 280/month (I may management myself.)

Sum: 784

Cash flow = Rent – Expense = 2800 – 1333.16 – 784

Cash Flow = $683/month

What do yall think about these numbers?

Now I got an inspection last week. There was some rooting wood around doors to each unit, some mold in one unit near the water heater, missing insulation, missing cover on light switches.

(The seller will take care of these.)

Roof is relatively new 4 years old, in good condition

Rehab cost: ~$5,000 (not including Hvac below)

Now what was found is that 3 of the 4 units HVAC system is very old. They’re around 12 years old (near end of life). They also run on R-22 freon. When R-22 gets banned next year what will happen?  Will I be unable to replace the freon therefore home warrant will have no choice but to replace it? I am concerned that if they go bad I may have to spend $10,000 – $20,000 for a new HVAC system.  They are in working order now.

What my lender and agent recommend is a Home Warrant on the HVAC. I always hear negative things about them putting on band aide and not replacing parts. Does anyone have experience? Will they actually replace the HVAC. $500/year to replace in case sounds too good to be true.

I am also going to ask the seller for $5,000 in credit (over 3 years) in insurance for HVAC. I have the reserves to replace the HVAC if needed but it’s worth asking. I would rather use the property cash.

How are home warrants? Is it too good to be true?

What are your options on the deals? I would appreciate and advice.

Thank you BP Family!

Bigger pockets family!

I am looking for single family rentals and I am going through the pre-approval process. 

How far in advance do yall recommend  one gets pre-approved for a morgage? I understand that all hard pulls dones within a 30 day window or so counts are a single hard pull.

I am concerned that If I get pre-approved now and my approvals expires by the time I "close" would I have get another pre-approval i.e another hard inquiry that may affect my credit score?