All Forum Posts by: Joshua Janus

This looks like a great deal! What is the estimated ARV after all of the cash you invested in it?

I would be very surprised if just >3% means it's worth the wait. That would be wild. 

followupboss

This situation doesn't seem like it would produce good, long term tenants. As Nathan said the previous owner has "trained" them poorly and that will be evident at some point in the future which would be best avoided. Are they paying fair market rent?

How is the STR market in the property's area? Would airbnb'ing the casita or house be realistic and provide you a larger some of cash flow?

Do you think you are buying into some equity with this property? It doesn't seem to have the ability to produce a worthwhile cash flow to invest in, even if you rent out all of the home's bedrooms and the casita. You should look into using an FHA loan on a 2-4 unit which should still allow you to only put 3.5% down.

Is an FHA loan a viable option for her? Does she have a consistent income history? I would use that if it is possible.

I would definitely go ahead with this 203k loan. The positive cash flow over time is much better than the additional 1.11% in interest. You can use the cash flow to fund another deal that you wouldn't have had the opportunity to get into before. 

A 3 unit in a B-class area for 110k seems a little unlikely. That is a great cash flowing asset if those numbers are accurate and it isn't in a warzone. 

I would advise finding an investor friendly realtor. You really want someone that invests in their market themselves and understands the numbers. They should be able to determine the COC, annualized return, estimated ARV of a BRRRR, accurate rent comps and more. The valuation and market value of a multi family property differs from a single family and you want someone that understands the distinctions if you go that route. If they just represent first time single family home buyers and aren't constantly finding off market properties and reviewing deals, you'll find a better investment through someone else.

The more you finance (generally), the greater the interest and principal payment will be every month which will eat away at your cash flow. Example

If you financed 100% of the purchase

Rent= $1,500

Expenses= PITI (principal, interest, taxes and insurance) + maintenance: $1,400

Cash Flow = $100/month

If you paid Cash for the purchase

Rent= $1,500

Expenses = you would not be paying principal or interest so it would just be- taxes + insurance + maintenance: $700

Cash Flow = $800/month

Big monthly cash flow difference due to the financing and can make a bad deal look good with a cash purchase.