All Forum Posts by: Jonathan Bombaci

I had this happen at one of my properties. The result was one of the sinks was leaking and sewer gas was getting past the S trap. Just like others mentioned have tenants run water in all drains and check for leaks. If that’s not it then have someone check the basement to see if the smells coming from there. 

Is it 0% cashflow including 10% for property management? If you skipped it since you’re planning to manage it your self then your basically signing up as the property manager for 20 years in exchange for 100% of the property. Might not be a bad deal if it only takes a few hours of your time each month but just something to be cognizant of. 

@Aaron Xie I bought 3 commercial properties in NH and represented myself in all of them so there was no "buyer brokerage" on the deal. One was a private deal with the seller (no agent involved at all). The other 2 I let the listing agents take it all and told them to bring me anything else they have before putting it on the market. I'm a real estate agent in MA and this is one of the incentives I have out to the brokers in my target area. If you bring me a great off market deal I won't ask them to split their commission. This incentive has had agents in the area sending me lots of stuff which allows me to cherry pick the best ones. I could bring my own agent in and request half the commission go to them but I'll happily give up nothing out of my pocket to get in on the action before the property hits the MLS. The last off market deal I got under contract for $320 and it appraised at $400 and I think if it hit mls it would have easily gone for $380+. So I gave up 3% commission to save up to $60k on the price and it was a very smooth transaction for all parties. Seller was pleased they didn't need to do an open house, I got a good deal, and the agent/broker was very happy with their cut.

I know I’m not the only person buying commercial that does this. At the end of the day the listing agent knows the most about the property and while you have to be careful (the represent the seller) if they’re a good ethical agent they’ll answer your questions honestly and be the best person to tour the complexes with. 

What city/state are you buying in? The Numbers look pretty good buy you might want to hold more $ in reserve each month to start saving for the roof. 

Does tenant pay all utilities including sewer and water? 

8% cap is good, what have you been seeing in the area? 

The $200 per month cashflow looks good. Is there any room for a rent increase?  

Looks pretty solid to me but Make sure to do a the inspection to ensure there is nothing else lurking. Even something small but unexpected could bring the numbers down and cause the deal to not be so great. I invest based on cashflow and while the CAP rate doesnt excite me, assuming your numbers are all right, I'd jump in for $200 a month on 1 door. Good luck!

What would the 4 houses be worth on the mls? 

What type of rental were you looking for before? SF or Multi-family? Based on the description your basically buying 4 SF homes. Can you sell them separately or are they all on one deed? 

Don’t buy them without doing a full inspection that may confirm some of the things you suspect about the older home. Ideally you’d buy the 4 for less than $200k and then sell off the one that worries you to get some of your money back. If you can’t sell them individually then ask yourself at what price is the deal too good to pass up, and see if the contractor would go for it. 

@Kejin Wang What market are you in? Are you planning to do the work yourself or are you going to hire a contractor to run the show? Are you doing SF homes, condos, or Multi-family apartments? Every area differs and it also is heavily dependent on if you're renovating it to be a Luxury Listing, a Starter Home, or a Rental. When doing a flips clients tend to focus on the big value add things, Kitchen, Bathroom, Floors, so thats what you're going to need prices on. Try to avoid houses that need electrical or major plumbing work since it is expensive, always runs over budget, and doesn't add a whole lot of value.  

The problem is that a small kitchen costs alot less than an large kitchen, same with the bathroom. The best way to get estimates is to well go get estimates, talk to some local contractors to build a network. When you find a house you like with a healthy budget to make a profit then get it under contract but make it contingent on an Inspection. Then bring the contractor(s) in and get real quotes, in writing, for the work you want done. Once you do this a few times and have your go to contractor lined up you'll have an idea of what things are going to cost but it never hurts to get the written quotes before closing just in case you underestimate a job. 

I know this wasn't super helpful so i'll tell you what I figure for Rental grad rehab in Northern NH. 

Kitchen - $2500 - $5000 (they're small apartments) 

Bathroom - $1500 - $3000

Floors $2- $5 per sqft 

I have a client that does SF homes for starter houses in Norther MA and these are his ballpark numbers

Kitchen - $5000 - $10000

Bathroom - $3000 - $6000

Floors - $4 - $7 sqft

Roof - $7500 - $12000 depending on size

Furnace - $3000 - $5000

Water heater - $1000

You'll also want to estimate how long the rehab is going to take then add on 3-6 months of carrying costs and a 10% acquisition costs (commission, lawyer, closing costs).  

No existing loan. ARV would probably be $500-$550 with a little TLC.

Does anyone know if a hard money lender would lend money as a personal loan using someone’s personal residence as collateral?

I have a family friend going through a bankruptcy (so horrible credit) but his personal residence is in a family trust, so it's protected from the bankruptcy. The house is in rough shape but it's a nice lot in an expensive town so it's worth about $400k. He needs $100k to fix the roof, do some work on the interior, pay off some personal debt, and get a used car. He wants to sell the house in 2 years, can't emotionally do it sooner, and would pay off the debt + interest then. I think a HELOC is out of the question due to credit score, same for a lump sum reverse mortgage.. is this something a Hard Money lender would consider? Are there other options?

I say the closer the better. Typically I recommend trying to keep it withing an hours drive that way you can get out there if you need to without too much trouble. Investing out of state or in an area that you're unfamiliar with adds and extra wrinkle to the investment. For your first deal you want to invest in an area that you're very familiar with to reduce your risk of buying the wrong property in the wrong part of town. 

Now if you used to live in Pittsburg or have family in Pittsburg then that's different but you should try to find an area you know well or can learn quickly for your first deal. 

You don't need much for a down payment as a first time home buyer. You could do FHA for 3.5% down and try to get the seller to pay your closing costs. Ideally you'll find a house where your monthly payment will be less than what your rent is.

But I agree with @Craig Jeppesen you seem to have a spending problem. I recommend tracking your spending for a few months. You’ll be surprised to find out where all your money is going. Use Mint or personal capital to easily add all your accounts and track your spending all on one app.