All Forum Posts by: Josh Engelhart

1.5% tax rate doesn't seem out of the norm. From Google, "The state's average effective property tax rate is 0.99%, somewhat lower than the national average of 1.19%. Rates in Missouri vary significantly depending on where you live. In St. Louis County, for example, the average effective tax rate is 1.38%.' Best case scenario $3,400 rent on a $600k place is nuts. I'm hoping you had a typo and this place is going for $59,900. In which case the taxes are insane and should go way down once reassessed. 

Rental comps in the area are all 650 or above per zillow, craigslist, and the listing. I used lower rent in my estimates to account for worst case scenario, neighborhood downturn, etc. I left out expenses because I don't have exact figures but was just assuming 50% of rent leaving great cash flow after the mortgage and decent cash flow after PITI.

My big fear is just wondering how these are available on the MLS. I've run the numbers on hundreds of SFRs and they never look anywhere near this good. Are there just that many fewer multi family buyers or are there so many eviction and rent delinquencies that expenses would go way over 50% of rent? Or is this why most investors recommend multi family and commercial?

I live in Columbus, OH and am looking at doing my first multi family deal. On my local MLS I see multiple 4 unit (2 bed 1 bath) properties at approximately $100k asking price that rent for $500+ per unit or $2,000+ total. I'm looking at conventional financing with 25% down and a $375 monthly mortgage payment. Taxes are $3,600 a year. Insurance will be about $1,000. Just under $760 PITI. They are all small sturdy brick ranch style buildings, mostly renovated and need maybe 10k max in additional renovations. They are separately metered for gas and electric and I would pay water. They are in C- neighborhoods. The point where I would stick it out for a year as an owner occupant to do FHA financing and take advantage of the minimal down payment, but my wife feels otherwise. They seem to sell within a week or two after hitting the market and I see a few listed right now most of which are already under contract.

It's very difficult to hit the 1% rule and find solid cash flow in and on the edge of suburbs with SFR's without finding some kind of off market/ foreclosed deal.

Should I be buying every single one of these or is there something I am overlooking?

Not every lender will let you, but the FHA will let you put as little as 3.5% down on a 1 - 4 unit home you intend to occupy as your primary residence.

On a loan under the conforming loan limit of $424,100 most lenders will let you put 3% down with stellar credit.

On a loan a high balance conforming loan over $424,100 and under the loan limit of $636,500 most lenders will let you put 5% down.

On a loan of more the $636,500 you are in what is considered a jumbo mortgage loan. You will struggle to find financing at less than 15% down.

Those are on single family homes. The triplex max loan amount before it becomes a jumbo loan is $984,525 dependent on your county.

Most lenders also have a stipulation of at least 20% - 25% down on conventional loans on multi family properties.

For a low down payment your best bet is going FHA and keeping the loan under $984,525 as long as you intend to owner occupy.