All Forum Posts by: Lance V.

I just took a position in Phoenix and am looking to sell my Denver condo and move to the market as well. I've seen some 2-4 units available in my price range (500k with 25% down). I would plan to live in a unit and haven't finalized my exit strategy to get out of it yet. It will be a significant downgrade living standard and these units are not my very desirable to me personally. 

I completely remodeled my entire unit and would love to do the same but don't want to stay in the SFH market. Zach, have you seen anyone flipping these 2-4 units?

Hi everybody,

I'm looking at a duplex near me in Chicago that I'm interested in purchasing as an owner-occupant. It's listed at 25k and both units are 3 br / 1 ba. The rents I'm seeing are around 800-1000 per unit.

It's a Fannie-May homepath property. It says you can purchase for as low as 3% down and that it's approved for a Homepath renovation mortgage.

Can anyone explain this a little bit to me so I understand my options? For the record I have close to 0 cash right now but 700+ credit and a stable salary.

J Scott,

I may have written the tax % wrong. I live in work in Chicago right now and the property taxes are 15.5 (or maybe that's .155) but across the border in IN, like this property, they're only 3.5 (again, maybe I should be saying .035). It's a much cheaper tax rate ... I wasted a lot of time looking for properties in Chicago here when the real deals are 30 minutes away in IN and much more affordable.

Hi everyone,

Long time reader, occasional poster. In a position to make my first move and am looking at a property that may fit the bill. Please review and let me know if I'm overlooking anything. Beginner owner-occupied in a duplex. Appreciate any help.

http://www.trulia.com/property/12548477-639-117th-Pl-Whiting-IN-46394

Price: $64,900
Bedrooms: 6
Bathrooms: 3
Market Rents: 600 and 600 conservatively = 1200
Size: 2,520 sqft
Year built: 1924
~ 3.5% property taxes

Needs some work but looks to be in pretty good shape. Would like to get it for 60-65k after rehab costs according to the numbers I've crunched.

Thanks!

Lance

Oh sorry, forget to mention comps. A neighborhood rehabbed duplex sold for 175k in April, although it had more square footage. There's another one on the market for 169k right now that just got listed.

I'm seeing a trend in the area and neighborgood. Mid 90's these places were purchased for around the same price as they're selling now, anywhere from 40-100k. Mid 2000's they all sold for anywhere from 250-350k. This indicates to me that these properties are at near bottom value leaving a great opportunity for a long-term buy and hold. I do feel bad for the foreclosed owners who purchased so high in 2004-6 and are selling so low now ... The one's who purchased in the 90's sure got their money's worth when they sold in 2004-6.

Chris,

I'll estimate rehab after viewing the property and again with contractors/rehabbers to ensure accurate estimates.

From the looks of it:
2 x bathrooms, 2 x kitchens, floors and walls.
1 bathroom has new shower/bath - a plus
1 kitchen has new counters/cabinets - a plus

Besides kitchen and bathrooms, the usual suspects, everything else looks cosmetic. Again, will be determined from walk through.

Only way I'd take it (or any property) is to steal it. Dependent on the rehab cost estimates, i'd like to get it for 35K or less. From the preliminary math I've done, I'd need a max price of 60k with rehab. My rent costs were very conservative, about 150-200 below what I'm seeing in the area for nicely done places.

Okay it's a listed property but for sake of practice, please help me run through some numbers. It's in the area I'm trying to be as an owner occupied 2 unit, and it's cheap. I'm considering viewing, doing my DD, and putting in a low offer. Pictures show it to be half rehabbed before it became a REO.

Asking $65,161
2 flat - 3/1 and 2/1 (all it says is 5/2)
2 car garage
$2,656 taxes (seems high, 2009)
Near UIC

Conservative rent estimates : 600 x 2 = 1200 although I'd be living in one. Other rentals around for 2/1's are 800-900 although rehabbed nicely.

Applying some rules:
1200 gross rent with 50% rule = 600 NOI
1200 gross rent with 2% rule = 60k max price (minus any rehab)

I don't really know where I land financing wise but I have 700+ credit and around 10k in the bank with a decent income. Currently live very comfortably paying $700 rent. Also the taxes come out to 221/month which seems very high and I don't know what insurance costs will be.

Thanks,

Lance

Max, I started off doing the cold calls and door knocking when i was an agent too. I was really young and inexperienced (and scared shitless) but that's what we were taught. Fast forward a some years and now I'm making a good living doing that for a supplement company. May have just picked up my biggest account yet ... {Health Supplement Chain} ... 450 stores ... 10% of sales. Estimate they'll do $45,000 if they order only $100 per store initially ... they'll probably back stock their 3 distribution centers too though. 10k now may be 20k + sooner than I realize, and then more. : )

Ok enough excited rambling, I'm trying to establish a criteria and take action. I would rather not re-up my lease Aug 1st although I'm not going to rush into a bad deal.

Jim,

I believe a 2-flat would be the easiest way to enter this field. I also think owner-occupying a 2-flat means not cash flowing. I mean, It would be blowing away paying rent. But I doubt I could cash flow, whereas a 3-4 unit would probably be better able to cover the costs including me living in one unit. Thoughts?

SolidReturns and Max Drizin, the only way I know to find motivated sellers is the following:

- Listed properties that are distressed, foreclosed, REO, motivated seller, expired listings, etc.

- Compiling lists at recorder of deeds for lis pendens and mass mailing them. Same could be done for obituaries from newspapers.

- Advertising yourself to buy properties such as bandit signs/craigslist, etc. but theirs no targeting there.

If you have others please let me know.

Of course I did this all before for residential. 2-4 unit is considered residential anyways, I believe. Correct me if I'm wrong Dennis, but doesn't a 2-4 unit still qualify as a residential loan?