All Forum Posts by: Lauren Baker

@Russell Anderson Glad to hear I'm not alone! I haven't heard anything about a $12k repair allotment. From what my realtor has said you can ask the seller to pay for certain improvements or you can have them wrapped into the cost of the loan. 

It seems too that the USDA loan could vary a lot depending on what area you are in. They have offices all over the country and knowing how government works the implementation probably looks fairly different from office to office.

Another helpful thing my realtor mentioned is they are much more comfortable approving things built after lead based paint and asbestos were no longer used. 

@David Mares I like your suggestion of major employers and trends in the area. Bigger cities have a lot of different niches so knowing the different neighborhoods could help you understand the area demographics for potential buyers/renters. 

Knowing that would be useful for price point and what amenities people are looking for. Don't want to over improve.

Hi Everyone!

I have recently been approved for a USDA 502 direct loan and am hoping to find a home that is somewhat of a fixer upper. I'm curious as to what the exact dwelling qualifications are. 

USDA regulation §3550.57 states "Existing dwellings must be structurally sound; functionally adequate; in good repair, or to be placed in good repair with loan funds; have adequate electrical, heating, plumbing, water, and wastewater disposal systems"

My question is more on the specifics of some of this language. What exactly does it mean to be "in good repair" or "adequate" 

Any input from inspectors that have experience with this loan would be very much appreciated! 

Thank You!

Lauren

@Bill Richard I am currently living in one unit of this house, so I do have some insight on the condition already, but I would definitely have an inspector look at it before jumping on it. 

1) It has been 15+ years since the roof has been replaced, and I am already factoring that cost into my rehab budget. The water heater in the upstairs unit has been replaced within the past two years, and the downstairs unit (the one I live in) has the element replaced yearly (a $10 fix), but it will probably need to be replaced in the next couple of years. The windows are old, and I'm a little worried something might come up with the electrical. Again, if any major expenses come up with the inspection that would likely deter me from buying.

2) Technically the garage would be fine to park in, but the way it is situated it would only make sense for the tenant in the lower unit to use it to park. It faces a weird direction so it would actually limit the amount of parking for that tenant because they would be backing out into their other parking spaces. The house has very limited storage, so I think that would be a valuable feature to tenants. I know I would love to use it as storage, but the owners have their own things in there.

3) Good point about the FHA loan, I was concerned about that and was wondering if it would work doing the 203B, but I am planning on doing the work myself because I have a lot of very talented family members that would be willing to help. I already talked to the landlords about a land contract, but their lawyer advised them not to go that route.

4) I have been having a very difficult time finding comps because of the very limited amounts of multi family homes for sale/recently sold. I may have a connection with a realtor that I could ask for comps or what they think the ARV is.

I think the margins will be low until I move out, and am renting both units. From what I have learned here on BP, this was an acceptable approach when hacking a multi-family. I just have to be sure that the house will make a profit when selling. It also won't be just me paying the bills, my boyfriend will also be living there. 

Welcome to BP @Bill Richard. I'm in the central/northern Michigan area and am currently looking into investing my first deal! 

Good luck on your new journey

Thanks for your input, John. Gas and electric are metered separately for each unit, and the tenants are responsible. Water and trash is a combined expense that the owner pays, which I would keep it as is. 

Hi there,

I am struggling a little bit with analyzing my current deal (I think I'm having slight analysis paralysis, or I just don't know where to start). 

I'm currently renting this house, and am looking at buying the house from my landlords through FHA. It is not on the market.

It is a duplex (upstairs and downstairs unit). Both units with 2 bedroom, 1 bath. Built in 1968. The house is located in Farwell, Michigan which is near central/northern Michigan. 

The owners have expressed an interest in selling the house for what they owe on it which is $38,000. In the end I wouldn't doubt if they wanted a little more, maybe $45k?

Currently each unit brings in $350 a month, I would shoot for around $500 after making updates. The house is located right in town, very close to the school. There is also a detached garage which I have thought about renting to tenants as storage for a small monthly charge, ($30?). It doesn't make sense to use it as an actual garage the way it is set up. 

As far as expenses go, the owners estimate water and trash to be $65 per month, the current mortgage payment is $565 (with an interest rate of 5.75%), and taxes were $1,433 last year. 

I am estimating that rehab will cost around $15,000 

They don't remember what the property was appraised for the last time it was appraised, but the current SEV is $30,450. Can this number help me calculate ARV? I can't seem to find any comps to this house in the area.

I haven't looked into qualifying for an FHA loan yet, and at this point I simply want to see if this is potentially a good enough deal to call an inspector.

If anyone could weigh in on whether they think this is a good deal, or could give me any guidance of something I'm missing. It seems to me that this will be a decent investment for house hacking. 

@Ryan Peach, as far as turning the basement into more bedrooms I would suggest not doing it depending on the set up of the house, and how many bedrooms you would be able to make out of it. 

Being a college student, I know that people tend to like to find a group of friends that all want to live together, and it can be very difficult to find a large group of people who all have the same paying capabilities and expectations for a house. 

Maybe adding one more bedroom in the basement and turning the rest into a common area for all roommates would be the best investment. Knowing the cost/requirements of having bedrooms in a basement would also help make that decision.

Good luck!

@Amanda Smith welcome to BP! I am from the Central Michigan area and am hoping to dive into my first deal. Good luck on your goals for the year.

@Julian Hall what type of investing are you looking to do? Once you figure this out it will be easier to network with people on BP, and in your area as well. I would suggest checking out local REI groups in your area.

The ultimate beginner's guide is a great place to start to find what kind of investing you want to do if you are unsure. 

Make sure you set up your keyword alerts as well.

Best of luck!