All Forum Posts by: Josh Obregon

@Jerry Hollifield is correct. It all boils down to the definitions of "residential" and "commercial" which lenders have defined for us investors. That being said, there are always exceptions. I have colleagues with close relationships to lenders that were able to treat a 4-plex as a "commercial" property. Properties 1-4 units are deemed "residential" and are valued based on comparables. Properties with 5+ units are deemed "commercial" and values are based on NOI. Why? No clue and really don't care. I'm sure a savvy BP member knows the justification behind this distinction.

Understanding those definitions, the ARV of your 4-plex would be valued based on comps in your market (other 4-unit properties in your market) since it is treated as residential property. Best advice I can give is present your business plan to 2-3 lenders and get their feedback on ARV. Depending on your strategy with this property it could still be a good deal. All in for $240K. Lets assume best case scenario rents bump to $3000/month, that's a $900/month increase or $10,800/year increase giving you a 25% ROI on your reno costs. You're above the 1% rule, get to take advantage of bonus depreciation (I recommend conducting a cost seg analysis), and you're positive cash flow. If you wanted to flip it sell the story - turnkey 4-plex, recently renovated cash flowing X amount per month.

Hope this answers your questions and gives you some exit strategies. BTW... if you find more 4 unit properties like this let me know! Where are you located?

Thank you Steve for the advice. Still working out the details but hoping to finalize the purchase agreement no later than next Friday.

I am unfamiliar with how to formulate a owner financed Lease Option to Buy contract. What are typical terms of the contract? How are commissions and closing costs typically paid? Should I use a third party to hold the down payment? During the first year when the buyer in on a lease, how should I segregate the monthly payment? Any other considerations I should take into account?

Thank you in advance for the advice and suggestions.

Looking to get into the Kitsap County area but good GC have been hard to find. I networked with one I plan on interviewing so hopefully a positive future update to follow!

@Anastasia Jordan I have not heard all that... very disconcerting. But it might be a blessing IF, and that is a BIG IF Birmingham annexes the city. I made repairs, hired a new property manager and am pursuing Section 8 housing. I met the property managers on Bigger Pockets then was referred to them by my real estate agent.

Chris Newman that's great analysis! Thank you for the information. Feel free to add on to my assessment of Kitsap County (I.e. Bremerton, Silverdale, Poulsbo etc). Chris Dalton I've been looking to break into the Bremerton market as well because of the stability in employment, the number of Seattle employees seeking cheaper rents and mortgages and to take advantage of the the price appreciation. The county has a housing shortage. I've ran numbers using the BP calculator tools on dozens of properties for rentals and flips. More often than not the rental numbers are not favorable falling well below the 1% rule. The average sell price for the county is approximately $324K in which that average house might fetch $2,000-$2,200 in rent. As you can see far below 1% RTV standard. That being said, I see the opportunity in 3 arenas: 1.) flipping, 2.) multi family BRRRR 3.) new construction. Without getting too in depth. There are deals to be found at auctions and via short sales and foreclosures (although those are drying up fast). I was messaging another investor back and forth and on her last flip she bought a house at auction for $157K, spent $5K on rehab then sold for $240K! That's a great return. The multi family BRRRR strategy, based on numbers seems very lucrative! With the 3-4 year turn over with military personnel, most of them would rather rent to avoid the hassle of trying to sell when they get new orders. I'll let you in on some inside knowledge, there are talks of another air craft carrier relocating to Bremerton which will bring in another 3,000-5,000 sailors and their families. On top of that the shipyard has several contracts lined up which means they are looking to hire more workers. Finally with a shortage comes a demand for new housing. I have no experience in development so I'd be ignorant to speak on that topic, but there are a lot of investors on BP within extensive knowledge on that topic. Hope this helps and if you want to talk more just message me.

Hi Dustie Verwers and welcome! What part of Kitsap County do you do your flips in?

I am in need of an eviction attorney that services Fairfield, Alabama. Any recommendations?

Although Birmingham is experiencing some linear appreciation, I recognize Fairfield is starting a slow decline. Anybody with "boot on ground" have further insight to that market?

Any advice on this topic will be MUCH appreciated! Great thread!