All Forum Posts by: Marine Palamutyan

@Jeff Zimmerman thanks Jeff! Yup, makes total sense. Appreciate your input.

@Natalie Schanne thanks for taking the time to share your thoughts! :) That would’ve been perfect if I were single, but we have a newborn so I wouldn’t feel comfortable with having a roommate and sharing common areas with someone else at this time.  But it’s a great solution! 

Hello BP Community! So I’m super excited about getting our first rental property, but we have a dilemma and would love to get your thoughts on this. Should we house hack in LA without cash flow, but higher appreciation potential, or buy a rent only property elsewhere with cash flow but slow appreciation? Scenario 1: we purchase a 3-4 unit property with FHA 3.5% down payment, live in one and rent the others. However we would have zero cash flow and need to pay ~$4000/month out of pocket just for mortgage. Small multi-family properties in LA area are around $850k-$1.3mm in an area where I would feel safe to sleep at night and in a condition that would get FHA approved Scenario 2: we purchase a rental property in Fresno or out of state, with 25% down and aim for $100/month per unit cash flow. But this would wipe out all our capital AND we would still be paying $1700/month in rent for our current apartment (we are first time home buyers). So need to save up all over again before we could buy another investment property while we pay $1700/month towards paying off someone else’s investment property mortgage. :) Any recommendation for us newbies? Thanks in advance for your input! Marine

@Caleb Godsey as everyone already mentioned, add CapEx. I usually do 5%, unless the property seems like it needs a lot of work. After you deduct ALL expenses @Brandon Turner usually recommends $100/month per unit in cash flow, so you should look for $300/month for a triplex. Try the rental property calculator! I‘m hooked! It’s pretty cool and you can play around with different purchase prices and expenses to see what would make it a good deal. I would also recommend getting prequalified ASAP so you know what you can purchase and have more realistic numbers. Plus it shows sellers that you’re a serious buyer. Good luck!

Thanks all for your input! We decided to walk away from this one. The seller is actually asking $295k and I was hoping to get for $275k, but they didn't agree for anything less than $295k because they've done a lot of upgrades, so there would be no CapEx for a while, but to your point margins were very slim and I had underestimated closings costs. After running the numbers again, it didn't make sense.

We're switching strategy to house hacking with FHA and will look for a small multi-unit in LA :)

Thanks again!!

P.S. @David Jarvi LOVE Robert Kiyosaki’s Rich Dad, Poor Dad! That book got me all fired up (of course along with @BiggerPockets .com) to take action this year! I’ve analyzed 18 deals so far, I guess 82 more to go! :) 

@David Avetisyan @John Thedford @Cassi Justiz

Hi @Cassi Justiz! Thanks for reviewing the deal. Really appreciate your input! We are trying to negotiate a lower purchase price (I'm hoping for $275k) and found out tenants pay for gas and electricity.  Lender pre-qual interest rate quote is 5.35% since it's an investment only property.  I should ask for fee details though, haven't gotten that, thanks for the suggestion!   And would be good to also check out insurance rates (I've been going off of redfin estimate) Thanks again!! It's really helpful to have a second pair of eyes look at it :)

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