All Forum Posts by: Keith Torsen

@Don Gouge

The upside is that I sat down and did the work to analyze it. That's a huge win for me.

The initial numbers seemed really good, pumping me up for a possible buy. I'm looking to house hack a small multi family. I don't want to start with a duplex if I can help it. This triplex looked more promising than the duplexes I've seen around.

Alright, big step forward for me as I've just completed my first property analysis using the Four Square worksheet.

Property is in Sacramento, CA. It's a triplex, and I would be house hacking it.

Assuming I also paid myself "rent", (so I'm looking at it as full occupancy with owner-occupied), I could get $1,000 per month per unit, grossing $3,000 per month for the triplex. It's also noted that only two units are currently rented, allowing me to move into the third almost immediately.

Mortgage is estimated at $2,097, at 5% interest, 3.5% down. All other expenses total $651.

My numbers are using 5% each for CapEx, vacancy, and repairs. If I factor in 10% as suggested usually, it has negative $500 cash flow. I didn't factor in prop management.

So that brings us to $3,000 in rent, and $2,748 for expenses. Cash flow would be $251. Closing costs at estimate of $8,000, and about $5,000 in rehab budget, total investment equals $24,375, with an $11,375 down payment

Divided by annual cash flow of $3,018, equals a 12.4% return on investment.

This is at asking price of $325,000.

Too good to be true? What am I missing, besides not factoring for prop management ?

Update guys.

First, this property will not cash flow.

Second, even if it did cash flow for me, it's going against what I'm looking for. Everyone says to focus and to stick with what works for you, and investing out of state doesnt work for me right now.

I'll be passing on this deal, but thank you all for the input!

It's got flip potential, but I'm not a flipper. I'm looking to stick with BRRR, if I understand the BRRR strategy correctly

@Dan Heuschele

Thanks for that. The tenants want a buy and hold option because they want to live there long term.

Realtor thinks ARV could be $260,000 up to $350,000, depending on the repairs we make and similar homes in the area going for around $300k. I dont have repair costs yet, or any other numbers but I was wondering if this would be worth pursuing. I guess to make it work would be more like a mid-term cash-out BRRR where I refi after a couple of years, hoping for forced appreciation and market growth. Leveraging that money as I see fit when the time comes.

We dont hope here, so I'll hammer out some solid numbers as this week goes on. This is all preliminarily, and right now I'm frazzled at the thought of actually maybe making my first deal.

@Tim Herman

Good tip, thank you. I forgot my financing works differently. I've been more focused on my actual local market, but a friend of mine from back home showed this to me, and I already knew some people looking for a place to rent there, so my mind wasnt in the right place at first.

@Randy E.

The tenant has indeed agreed to a fair market value on rent, which quick research data leads to an average of $1,375.

This market may not work at the 1% rule in general, so yes, I have a lot of questions for the realtor at this point, and I will talk to her tomorrow. I'm just doing what I can today online, and making sure I have a clear path forward for the week on this.

According to only Zillow data, comparable houses in the area have sold for much more than the asking price of this house, so my realtor is sure there will be some forced appreciation right off the bat once the floors do go in, and any other repairs are completed after inspection. I'll ask my realtor for comp lists from her directly, as well.

Thanks for the reply. Gave me a lot to think about.

@Kelly DeWinter Auction price starts at $160,000.

Realtor thinks we can put an offer in of around $180,000-$185,000 and have it accepted before the auction comes around.

But yes, I do need more data and some more comp properties

Hey all.

A property came to my attention this week, and today I finally sat down to look at pictures and see if its something that I want. I live in Sacramento, but the house is 800 miles away in my hometown in Arizona. I have tenants lined up for it. I need some more solid numbers, but with what I've got right now, can y'all weigh in? I will give updates during the upcoming work week as I hammer down the digits.

Listed for auction at starting bid of $160,000. Listed on another listing as about $198,000. Both from Zillow.com.  My realtor informed me that there is a current $185,000 asking price from her source. Other than the floors needing to be redone, the house is in otherwise good working order. New roof, new water heater, landscaping seems good and up to date.

Average rent for 3 bd/2ba house in the area is $1,375. I will use this as my starting point for rent.

Mortgage payment through conventional banks, at 3.5% down as a new home buyer, means that my mortgage payment is $900/ month on the high end.

Taxes, from the county website, come out to about $106/ month. 

Tenant will be paying any landscaping/lawn care, and utilities. 

So my questions are first; since this is a listing going to auction in 3 weeks, what do I need to look for in that? Auction.com states that it's been foreclosed due to nonpayment on the last mortgage, issued 6 years ago. Any hangups or snags regarding auction properties?

Two, I don't quite understand how to calculate cap ex and vacancy, especially on this house.

A $185,000 asking price for a decent house that needs new floors. Once the floors and a new paint job have updated the property, according to Zillow, comparable houses in the area go for $250,000 - $400,000, thus we could be looking at almost $70,000 in leverage in one or two years, once I'm ready to refinance. I'll be going for the BRRR strategy, as that is my strategy of focus, and this will be my first deal.

Again, I know i need more numbers, but for the more experienced folks out there, what can we make of what I have, and what do I need to look out for on something like this?

@Brian Gerlach that's totally my plan, 1 year in, move on to the next house hack property. I've already found a realtor I want to go through, and he's been wonderful, doing everything he can for me.

This is very encouraging, because there is a lot of hype about cashflow OOS in the midwestern towns, and it seems like such a hurdle to get started in an expensive market, but I'm so worried about trying to take this first step, long-term appreciation wasn't even on my radar. Thank you.