All Forum Posts by: Paul L

Thanks, yes the offer is contingent on inspections and finance.

The property was built in '81, I wonder if that makes h/w floors unlikely? I'll find out soon enough I guess.

I had the inspections done yesterday, and we found a few nasty surprises:
- termites in crawl-space, remediation 1K.
- water in crawl-space due to poor grading (and some other easily fixed issues like fixing downpipes and cleaning gutters etc), also, all the insulation is falling out from under the floor, and mold etc is starting to grow but no serious rot issues yet. Remediation cost?
- one heat-pump is older than I thought, 20+ years, and isn't blowing any cool air, backup electrical heat didn't appear to work either (no gas furnace at this place). So this probably need to be replaced. 4K.
- roof needs some repairs, due to a very shoddy installation last time it was done. remediation 1K.

Has anyone had luck renegotiating with the bank. With this knowledge in hand I need to get the purchase price down another 8K to make it work. Do they want to see quotes, or can you just list out the issues and state a sum?

Thanks for the tip Jon. Doing the prep sounds like a good idea. I'll shelve the 3 color plan :-)

Maybe this talk of refi in 90 days is bs to try and get business. I guess I'll find out soon enough. I'll be sure to post if this is possible. Both brokers are associated with the REIA so I'll ask around at the next meeting and see what other people think.

Any bright ideas on cutting down on the carpet expenses? Should I remove the old carpet myself? How do I know if I can keep the pad?

I'm sure I read about the liability angle on this forum, something along the lines of: if you provide the materials then the contractor will be viewed as an employee.

Still, thanks for the advice, it is greatly appreciated.

Thanks for the feedback Ty. To clarify the situation on the painting, we're talking about 3000 sqft, and some wallpaper needs to be stripped too (<20%). I was also intending to do 3 colors, not sure yet. But certainly, the rehab costs is something I'm wary of. To ballpark the numbers I've been working with a mentor from my local REIA and have attended several workshops at the REIA where rehab has been discussed. So hopefully I'm not too far off. I haven't been through with a contractor yet, I'm having the inspections done this week. It will be interesting to see if that repair list closely matches mine! Finding good contractors is the next headache, I intend to start with those recommended by other REIA members, then try the web.

I thought providing the materials myself was a bad idea due to the liability implications. Maybe this is a good strategy to use in negotiations, then follow up with another quote asking them to provide materials too.

I've got my first deal underway. Monthly rent $1600 total for both units. ARV 130K. Picked it up for 62k, and it needs ~20K of rehab. We close in 1 month. I'm intending to do the interior painting myself so that should save 3-4K on the rehab. My intention is to use conventional finance on this deal with 20% down, then refi as soon as possible and repeat the process. I've spoken to two brokers who indicate they can arrange cash out refis in 90 and 180 days. My problem with this is the closing costs, which are estimated at $4600 including escrow. Doing that twice in 3 months is a serious overhead. Any ideas on a more efficient way to do this?

J,

It sounds like you got a great deal there :-)

Douglas, do you realize that CAPS comes across like yelling? I'm not sure that my posts deserve such a reaction. Anyway let's take a look at the cash-flow numbers.
Cash-flow = gross rents - expenses - P&I
176 = 550 - 275 - 99 (7% P+I, 30yrs)

I'm not sure how you get to GRAVY after 2.5 years. 15000 / 176 = 7+ yrs. What am I missing in this analysis? You might argue that J would have more than 15K of equity on this deal after the initial repairs were done. I don't know what the market value is.

I've been living in the states for 3 years now, 6 mnths in Dayton. My wife and I are eager to purchase our first investment property this year. Our game plan is to buy and hold for cashflow. The investment landscape here seems radically different to what we're familiar with in NZ, so I think we have a steep learning curve ahead of us. I'd be very interested to hear what people think of investment opportunities in this area. From what I can tell it is a city in decline, with negative population growth and a lot of lost manufacturing jobs. The surrounding towns seem in better shape than Dayton City itself. Being a bit gun shy on Dayton, our current thinking is to look to Columbus since it doesn't appear to be reliant on manufacturing for employment - state capital, massive university etc.
We may encounter a few more hurdles getting started since neither of us are permanent residents (green cards are probably a year away), although we didn't have any problem purchasing our own home. I'm working here on a L-1 visa, so I can't legally get involved in other business ventures. But my wife can on her L-2 visa and our daughter is a US citizen, so maybe my wife and daughter can get us started with an LLC. I expect some discussions with an accountant, mortgage broker, and lawyer are in order.
Anyway I've been reading posts on this site for several months now, and have found it very informative and enjoyable.