All Forum Posts by: Joshua Frahm

@Barbara G. One unit was renting for $1500 the other unit for $2000-$2100. The $2100 dollar unit is approx 1,800 sq ft. Brand new kitchen, Cherry Cabinets, granite, two full baths with granite, separate laundry room, two floors, master bed has 3 closets, living room, family room, separate dining area with direct access to a huge deck, one side of a very large garage, private yard and the town has every amenity you could want and also only a 40 min commute to downtown Boston, MA. 

Unfortunately, they took a higher offer closer to asking. Win some and you lose some..

@Bryan O. Thanks for little boost of confidence there! You are certainly right about the management and vacancy percentages; I am only making sure I cover my bases for some years down the road when I may not be living there anymore. Figured if I budget for an almost worse case scenario and the numbers still work, then I have something good! Appreciate you commenting on this and again for the boost of confidence! 

- Josh

@Huy Ly You are correct with FHA and having to live in one of the units. I know some people try to manipulate the system and finance with FHA and not live in it. My opinion the risk is not worth getting caught committing fraud on a federal loan.. I would plan to live in one unit for a minimum of a year.

@Brandon Barnic I agree and thanks for the recommendation. Ideally a 3 or 4 unit would be nice to get some extra cash flow but they are hard to come by in this town. This town is predominately single family homes, larger apartment complexes are beginning to be built and you do have duplexes but tri's and quads are rare! In the surrounding towns a lot of the 3-4 units on the market are not in the areas I would want to live (rougher areas) and with the FHA loan I would be living in it for at least a little while. Also, those areas do not bring in anywhere near the rent of where this duplex is located. Most 3 unit properties I have evaluated that are on the market, do not even match the rental income of this duplex due to the market rents in those areas. We are only talking 10-20 miles away.

Potential first investment property

Duplex: Both large 2 bed, 2 Bath, each has a garage, large yard, in single family neighborhood, separately metered, laundry in each, needs very minimal work, pretty much turnkey.

$340K - Potential purchase price

$11,900 - FHA down payment 3.5%

$2,432 - Monthly Mortgage (Includes: PMI, RE Taxes, Insurance)

$29,178 - Annual Financing

$3,500 - Monthly Rent (both units if I was not living in one)

$42,000 - Annual Rent

Operating Costs:

$3,264 - 8% Vacancy Rate

$4,080 - Management 10%

$2,040 - Maintenance 5%

$2,000 - Utilities Water and Septic

$11,384 - Total Operating Expenses

Annual Cash Flow: $1,162 (Note: Once I refinance the property in the future and get rid of the PMI of $228/month it will increase cash flow to $3,900)

Cap Rate: 8.92%

CoC first couple years with PMI: 6.51%

Budgeting for management costs but I will be managing the property myself for at least the first couple years.

Thoughts?

@Anthony Simboli Welcome to BP, you seem to have a similar background as myself. Are you looking to invest down in MA and toward Boston? What about NH? 

You should join us at the Investor Mastermind meetings in Nashua as Shaun stated above. It is a great laid back meet up with all local real estate investors, we have a great time.

Regards,

Josh

Thanks everyone for the help@Mike Hurney.

@Mike Hurney I do not at this moment. I believe you are correct about the septic regs as well. I am doing more research. 

Couple of questions about subdividing a property in NH. Relatively new to REI and have pretty much zero education on property subdividing.

Other information on subdivisions in other states is welcome too.

I have done some preliminary research and was not to successful in finding the exact information I am looking for and hoped some of you could provide some insight.

A duplex on 2 acres with frontage on two roads. I was told to subdivide a parcel with a multifamily house on it, there must be a minimum of 4 acres. Does that sound accurate? 

If this duplex is renovated into a single family home would that be a way to subdivide the property?

Thanks,

@Ronald Perich @Brie Schmidt Yeah I knew based on the numbers this was not a good investment, I just wanted to give an example of how i was evaluating to get your input and I appreciate all the advice. The reason I do not have reserves in this is because i have a large reserve set aside outside of this budget.

I appreciate the help guys! 

Josh

@Brie Schmidt @Ronald Perich 

Below is an example. Note: this spreadsheet is based on purchasing with FHA loan.

Anything standout to you or something I am missing? Last few have seemed like good deals initially but after going through the calcs they have not measured up. Could it be due to low down payment with less equity for the first couple years?

Thanks guys,

I am in the process of evaluating several multi family properties in my area. I plan to live in one unit and rent the other(s).  Right now, I am evaluating each property as if I was not occupying one of the units because a couple years down the road I will plan to move out and just rent all the units.

My question, is there a different way i should be evaluating the numbers for these properties or am I on the correct path? 

Any other tips or best practices?

Any advice would be great, thanks guys!

-Josh