All Forum Posts by: Justin Madison

I want to serve the Lord and make more disciples for Him.  I’m very passionate about 1-on-1 discipleship/mentoring, helping young men to follow God more closely by being more loving, kind, thoughtful, and generous toward others.  Also, I really enjoy real estate investing and want to bless others by helping them along in the success I have had.  I want to take trips with my family to go and serve those in need, whether it’s overseas, or across town.  I’m already seeking to build that culture of serving God and others into our family and I want to do that all the more.  I know that God has blessed me not just so I can have things, but so that I can share those things and help those in need.  [James 1:27 ESV] “Religion that is pure and undefiled before God, the Father, is this: to visit orphans and widows in their affliction, and to keep oneself unstained from the world.”

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $80,000
Cash invested: $89,000

1600 SF, 3/2, in a nice neighborhood. $120K ARV

How did you find this deal and how did you negotiate it?

Have friends and a team with boots on the ground.

How did you finance this deal?

Cash

Hi @Logan Allec, thank you very much for the feedback and I'm glad to hear that you and your wife found a 4-unit house hack yourselves!  I would love to hear more about how you guys found it.  Also, I checked out your website and it's nice!  Good job!  Keep up the great work!  God bless you!

Hi @Chad Hale, thanks a lot for the feedback.  Yes, you're right, I need to factor some rehab money in the deal too.  Thanks for the insight on 4-plex insurance rates, that's helpful.  And thank you for your insight on raising the taxes .5%.  That certainly matters.  Thanks Chad! 

Here are the updated results, with increases to property taxes and insurance.

Hi @ChadHale, thanks for the encouragement.  I'm slowly getting there, by the grace of God. =)
I actually haven't been looking much in the last few months, but about 6 months ago, I ran across a couple 4-plexes near downtown San Jose that were off-market and selling for $1,000,000.  I wasn't interested at the time, so I didn't inquire.  I'm sure they've been swept up long ago by now.

Hi @Account Closed.  Thanks for your comment on property taxes.  I think you are right that I had them figured a bit low.  So I adjusted them to be 1.2% of the property value, or approximately $13,200.00 per year.  Regarding the mortgage, on a 30 yr fixed mortgage of $880,000.00 (80% of $1.1M) at 3.75% interest rate, the monthly payment is $4,075.42/month, or $48,905.04/yr.  For insurance, I adjusted that to $1,100 per year, I'm not sure what the actual insurance premium would be.  Do you think $1,100/yr. is too high?

If you're interested in @ScottTrench's spreadsheets yourself, here is the link. http://biggerpockets.com/files/user/scotttrench/file/house-hack-vs-buy-SFR-vs-rent

Should I house-hack or continue to rent?  I always heard of the house-hacking idea and never thought it possible for someone like me, since I live in the very expensive San Jose, CA and always thought the numbers would never get to positive cash-flow since real estate prices are so high here.  But, I gladly stand corrected.  Thanks to @ScottTrench and his book Set For Life, where he clearly and concisely outlines the numerous benefits to house-hacking and created a spreadsheet to analyze Renting vs. Buying a SFR vs. House-Hacking. I have used the spreadsheet he created to analyze a potential 4-plex purchase for $1,100,000, and found that with a 20% downpayment of $220,000, and a conservative estimate of collecting $6,050 per month in rent ($2,016 x 3 units, while living in the 4th), one could not only live for free, but have a positive cash flow of $8,382 per year while living for free. Not too shabby. I'm considering this strategy, and I'm interested in your thoughts. Just so you know our rent situation, we rent a 2 bed/1 bath condo for $1,650 per month. We have very kind, generous, God-fearing landlords that like us since we take good care of their place and pay rent on time. The condo is enough room for us for the next few years since my wife is just pregnant with our first child.

I will post the spreadsheets with the numbers below.