All Forum Posts by: Lauryn Meadows

Hey guys, just to be clear I do live in this area. I live 5-10 mins away from the property. I live in a tri-state area. The no balloon payment is just the way this particular banking institution works on any commercial loan, but they can raise interest rates every five years at a 2% cap. I've been to the neighborhood and the houses are actually very cute and clean on the outside. They are small however, and I've not done a walk through of the inside of the properties. We do however have an appointment to do so next week. The current owner is older and wanting to liquidate his portfolio. We actually looked at another one of his properties (4 unit) about 6 months ago but passed because it was not very clean and looked very much like a C minus property. 

Thanks @Steve Osowicz! That is all great information. I really appreciate it. I've contacted several real estate agents, and quite frankly haven't had any luck with them. I need to reach out to the commercial brokers in the area.

Thanks everyone! I appreciate the feedback. It seems like a lot of the investors in this area (Ironton, OH/ Ashland, KY) do section 8. A lot do month to month rentals as well which is not something I'm interested in. It does seem like there is a demand for middle class renting in the area but not enough properties. We've considered building a small to medium size multi ourselves but I worry the returns may not be as good as just purchasing an existing property.

So with this being the majority of my area (low income rentals) do you all think it is best to start investing out of state? I do think there is a demand for middle class rentals in the area but the very few B class multi family properties. I've contacted a few of the people in the area that own medium sized B class multis to let them know that I'm interested in buying if and when they are ready to sale. I want to buy right, but I also want to get started!

It's worth noting that I do live only about 10 mins from the neighborhood these houses are in. I live in the KY/OH/ WV tri-state area. It's also not unusual to be able to pick up a house on the MLS for $30k in this area. In this area the medium house hold income is $37k, and it seems that low income housing is what most investors are doing in this area. This is an older man that is wanting to liquidate his investments. I want to look into investing in better markets in the future but would like to get a small portfolio built out my back door first in order to get my feet wet in land-lording. My question is, what steps should I take to look closer into the deal to foresee possible costs?

I will be sure to re- calculate with a 10% vacancy and maintenance. 

Thank Bill! I did not know that. 

Hello!

So I'm looking into purchasing 10 houses from one owner. These houses are small (7 have 1 bedroom 1 bath/ 2 have 2 bedrooms and 1 bath/ 1 has 3 bed rooms and 1 bath/ all are around 1000 sq ft or smaller.) My husband and I are really wanting to get into multi family investing, and while this isn't a multi family complex it is an opportunity for us to jump start our real estate portfolio. 7 of the units are HUD (section 8)/ tenants pay their own utilities. 100% occupied. Do not know the terms or length of the leases. Here are the numbers.

10 Houses

Asking price: $269,000

(These are numbers he gave me)

Gross monthly rent: $4,524

Annual gross rent: $59,388

Taxes: $4,640.54

Insurance: $4,168.00

Total of Annual expenses: $8,808.54

NOI: $50,579.46

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Loan with bank portfolio lender:

-20 year commercial loan

-No balloon payment

-Interest rate: 4.75%

-Interest barring every 5 years at a 2% cap on interest rates

-20% down payment ($53,980)

-Estimated monthly payment: $1754

-Annual amortization $21,048

----- it may be worth noting that we have $20,000 cash for this but will have to take the other $30,000 out of my husbands annuity retirement account which would inevitably lower the cash flow for us personally but we haven't called the financial planner to see what those payments look like. We do plan on doing that this week.

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NOI- loan payment is:

$50,579.46-$21,048= $29,531.46

Cash return= $29,531.46/ 12 months

= $2,460.95/ month

-$460.94 cap ex

=$2,000/ month cash flow / 10= $200/ unit

So looking at this, it is close to an 18% cap, and close to a 50% cash on cash return. This is in a small area in eastern Kentucky so it's normal for cap rates to be around 13-15%. Also, this deal has been on the MLS for 3 years so I'm a little worried to numbers look too good to be true. Of course, I'm going to try to talk down the price to increase returns but assuming the deal "as is" what are your thoughts? What else should I be doing in the due diligence stage in order to make sure my numbers are correct? Can I renegotiate the HUD (section 8) rental income to increase that revenue?

Any thoughts, suggestions, words of wisdom are welcome! This is the first buy and hold deal that we are really wanting to tackle. We are currently working on our first flip house as well, but end strategy is buy and hold. The flip business is strictly to fund buy and hold deals.

Thanks for any and all advice!! 

Thank you both! I'll be looking into these suggestions! 

Hey all! So a little background, I've never done any type of development project. My husband and I are currently flipping our first property, and that's the amount of real estate investing experience I have. (Other than buying and selling my personal home for a small gain, but was not intended to be an "investment" when purchased.)

My husband and I were in the process of starting to build a home (we've already sold our primary residence and are now living with my in-laws.) Well, long story short, the property with the right of way is now going to have to go through the foreclosure process vs. the owner signing a Quit Claim Deed. (My in-laws own the tax leans on the property.) So, now we are in a situation to buy and we want to be financially smart and let this be a part of our strategy towards financial freedom. 

I'm looking everywhere in my area for a four unit multiplex to purchase, but I'm not having any luck. (We thought if we could "house hack" and utilize the 3.5% down payment on a FHA loan it would be the smartest thing for us to do financially.)

As I said, we aren't having luck finding any properties for sale (I'm in a fairly rural area) let alone good deals! I have had my eye on a piece of land that is below market value that could be developed for a small multi family.

The most experience I have with new construction is speaking to multiple builders to bid on the primary residence I (was, or am in the future) to build. 

We are in a unique situation where we have some cash, and we are ready to make a move. Plus, I have my husband on board to make sacrifice in our personal living arrangements in order to get closer to financial freedom (huge score!) I've done a lot of research on value-add multis, but not new conscrtuftuon so any advice is much appreciated! 

How do these loans work? Are they similar to personal home construction? 

Do you see similar returns on new development? 

Again, any advice is much appreciated!