All Forum Posts by: Mark K.

Well, I put an offer in on a triplex and I got a counter offer which I have accepted. So, it appears if all goes well I'll be getting my first multi-family home. I do already have 2 SFH.

The numbers appears to be good. The COC ROI will be 14.88% and the monthly cash flow will be $535.95 after subtracting for vacancies, repairs, cap ex, taxes, insurance and P & I.

Tenants in one of the apartments is being evicted.  In that apartment, once we have closing, I plan to replace the water lines as they are Quest. I also plan to paint the entire place and to replace all floors. 

For the floors, I'm thinking about vinyl in the kitchen and bathrooms, laminate in the living rooms and common areas and carpet in the bedrooms and on the steps. 

Do you think this is a good combination and are there any suggestions on what brands to use?

Thanks for any advice you all can give me. 

I know a young military couple that will be moving to the Miami, Fl area in a few months.

They aren't very familiar with the city yet.  They are interested in getting a duplex in the downtown or north Miami area.

They are also looking for any realtor recommendations in that area.

Thank you for any help you can give them. 

Mark

An update,

I was leaning toward the SFH without seeing it inside as I know the layout, I know it needs floors and wall work and so on. I was thinking of putting a low offer on it. I really wanted to look at it last Thursday when it first came on the market, however, my realtor couldn't help me out until today. In hindsight, I should have gone with another realtor as I found out yesterday evening that someone out there put a cash offer on it and it was accepted. I guess it was another investor.

I may not have been able to get the house, but it would have been nice to have tried. 

I looked at the Triplex today. 

First off, all 3 tenants are low income.  The places are dirty and messy. Rents are low, so that's part of the reason it's low income folks living there. 2 out of 3 are elderly.  

There is Quest water lines in the building.  

<<Quest (polybutylene) water pipes are made of plastic resin and were commonly used in water supply lines in homes from 1978 to as recently as 1995. However, the inner walls of the pipe flake and become brittle, possibly as a result of oxidants in the water. Today, building codes dictate that polybutylene pipes not be installed in homes. Repairing a pipe of this type requires cutting out the broken section and replacing it with CPVC. The pipes are joined together with adaptor couplings.>>

https://www.hunker.com/13417371/how-to-repair-a-qu...

So, I know I would have to replace these water lines.  The building has a basement apartment and 2 apartments on the main level that have a 2nd floor to them. Each has 1 1/2 bathrooms, kitchen, hot water heaters, so there are a lot of water lines to replace. 

Combine it with it appears all current tenants need to go. The seller did say he's evicting one of them. 

If the 3 apartments were empty, I'd want to paint everything, replace probably all of the carpet and floors and the water lines. Also, the roof has never been replaced, but from what can be seen, it doesn't appear to need it immediately. 

I'm thinking an easy $10-20K or more could be spent to replace all carpet, 3 levels, to paint everything and to replace all water lines. However, I can't do it with the tenants living there. So, as they move out, one by one, the work could be done. 

Yet, the asking price is too much. 

Sure, every property has a price, so I'm thinking of offering a low one, but I know I have the two issues of the tenants and the Quest water lines. 

Any thoughts? 

Thanks,

Mark

I'm supposed to look at a triplex and a single family home soon. I'm trying to analyze both without being inside either one yet.

Here are some of the numbers.  They include vancanies, capex and repairs being accounted for. 

The Single Family home is 3/1, 992 sq ft, built in 1987. I've been told all floors coverings need to be replaced and it needs some drywall work, small holes, and painting. I drove by this and I think the roof needs to be replaced soon.  It has electric baseboard heat and no central AC.

They are asking $85K.

I'd try to offer perhaps $60K first, but could go up to say $75K. Here are numbers based on getting it at $75K.

Buy price, $75K

Rehab costs, $20K

Closing $2.5K

Total is $97.5K

Rent could be $925

Cash flow is $333.45

COC ROI is 10.67%

Total cash needed based on rehab estimate and such is $37,500. I'd put 20% down on it.

If I could get it for less than $75K and if rehab could be done cheaper, which I think it could, the numbers are even better.

The triplex has three 2/1 apartments in it. Each has central AC and I think a heat pump. I've been told the inside is in good shape. All 3 apartments have tenants. I'm not sure if the roof has or has not been replaced yet. It was built in 1995. There is no grass to cut. I've been told nothing needs to be done inside at this time.

Asking price is $225K. I'd try to get it for $190K to $195K and see what happens.

Let says I could get if for $205K. Let's say it needs a roof and it costs $7K.

Here are the numbers.

Buy for $205K

Rehab for $7K (roof)

Closing costs $3.5K

Total is $215.5K

Rent is current is $1780. They are under market value. Let's say I can bump rents up to $650 when leases are renewed. That gives me $1950/month.

Assuming the above,

Cash flow is $559.91

COC ROI is 10.88%

Total cash needed is $61, 750.

If I could get it for a better price, and if the roof isn't needed yet, the numbers get even better. The unknown is can I get it for $190 or $205 or $215K.

Based on the above, COC ROI is very close to the same for both. Cash flow is higher for the triplex, but so is the cost out of pocket to get it.

I currently have 2 SFH's that I'm renting. The above one is in the same general area and it would give me 3 in that basic area. Since I'm spending less out of pocket, I could save up to get a 4th SFH sometime later this year.

If I get the triplex, it takes more cash to get it. I'd not get any other properties this year, but hopefully would in 2019.

There are a lot of assumptions, but based on what I wrote, can anyone give me any advice on how to decide between getting the SFH or the triplex?

Thanks so much. 

I prefer to keep my rentals close to me for the time being while I'm building my business. Perhaps down the road, I'll buy something further away.  We shall see. 

I'm supposed to look at both properties on Monday.  I'll see what happens.  

Yes, @Eric James, vacanies, capex and repairs are all included in my numbers.

@Dennis 

@Dennis Wasilewski from what I've seen, prices closer to UVA or JMU are higher than here in the Valley.  I have a realtor/investor friend/mentor that is helping me. She has probably around 100 or many more doors. She thinks the triplex is a good deal for around here just based on the price. Neither of us have been inside of it yet.  Same for the single family home. The downside to the home it's 3/1 and not 3/2.  Plus, it doesn't have a basement. 

My other 3/1 home is the same. 

My 3/2 home has a basement and is much better.  

Thanks, @Dennis Wasilewski  In my area, MF are hard to come by.  I know of a duplex for sale that rents just a bit more than this triplex, but they are asking $239K.  That's a loosing price there.  I have to put down 25% on a triplex, so that's why my down payment is so high. 

The only other MF's I've seen since I've been looking over the past year or so are super old homes that have been made into duplexes that sell at high prices and don't rent for much.  The triplex I'm considering is probably about the best MF home I've seen in this are for sale.  If I can get it under $200K, it's a great deal here in this small area. 

I'm not ready to buy out of my area yet. 

I'm excited to look at both of these properties in person to see what I think. I do hope others will respond with their opinions on both of these.  

I'm supposed to look at a triplex and a single family home soon.  I'm trying to analyze both without being inside either one yet. 

Here are some of the numbers. 

The Single Family home is 3/1, 992 sq ft, built in 1987.  I've been told all floors coverings need to be replaced and it needs some drywall work, small holes, and painting.  I think the roof has been replaced, but I'm not sure yet.  It has electric baseboard heat and no central AC. 

They are asking $85K.

I'd try to offer perhaps $60K first, but could go up to say $75K.  Here are numbers based on getting it at $75K. 

Buy price, $75K

Rehab costs, $20K

Closing $2.5K

Total is $97.5K  

Rent could be $925

Cash flow is $333.45 

COC ROI is 10.67%

Total cash needed based on rehab estimate and such is $37,500.  I'd put 20% down on it. 

If I could get it for less than $75K and if rehab could be done cheaper, which I think it could, the numbers are even better. 

The triplex has three 2/1 apartments in it.  Each has central AC and I think a heat pump. I've been told the inside is in good shape.  All 3 apartments have tenants.  I'm not sure if the roof has or has not been replaced yet.  It was built in 1995.  There is no grass to cut.  I've been told nothing needs to be done inside at this time.  

Asking price is $225K.  I'd try to get it for $190K to $195K and see what happens. 

Let says I could get if for $205K.  Let's say it needs a roof and it costs $7K.  

Here are the numbers.  

Buy for $205K

Rehab for $7K (roof)

Closing costs $3.5K

Total is $215.5K

Rent is current is $1780.  They are under market value.  Let's say I can bump rents up to $650 when leases are renewed.  That gives me $1950/month. 

Assuming the above,

Cash flow is $559.91

COC ROI is 10.88%

Total cash needed is $61, 750.

If I could get it for a better price, and if the roof isn't needed yet, the numbers get even better.  The unknown is can I get it for $190 or $205 or $215K.  

Based on the above, COC ROI is very close to the same for both. Cash flow is higher for the triplex, but so is the cost out of pocket to get it.

I currently have 2 SFH's that I'm renting. The above one is in the same general area and it would give me 3 in that basic area. Since I'm spending less out of pocket, I could save up to get a 4th SFH sometime later this year.

If I get the triplex, it takes more cash to get it.  I'd not get any other properties this year, but hopefully would in 2019.  

There are a lot of assumptions, but based on what I wrote, can anyone give me any advice on how to decide between getting the SFH or the triplex?

@ Robert Carraway

I will need to put 25% down on the triplex.  Once I retire in a week, and get the 457 money, it will give me roughly 80% of the down payment.

I'll probably use a bit of my existing HELOC to get the rest of the down payment.

I could ask my credit union about increasing my HELOC so I could use that to cover all of the down payment. But, should I?

If I do, the 457 money goes into an interest bearing account and I can hold onto it so I have a larger cushion.

Yet, I then have to pay more back on the HELOC loan, so my really good positive cash flow will!l just be good cash flow.

I'll keep thinking on it.

Does anyone else have any thoughts?

Hello fellow BP'ers,

I currently own two single family homes that I'm renting. I bought the first one about 14 months ago and the 2nd one just 3 months ago. It's been a learning experience, but I have decent positive cash flow, so all is well. 

I'm also in the process of hopefully buying a triplex. I should know later this week if my offer will be accepted. 

Let's say I can get this triplex. It's currently rented and I'd have positive cash flow. 

This is how I've done it so far. With my first rental, I took out a small HELOC and was approved for $30K. I used about $19K of it and a bit of money out of my pocket to pay the down payment and closing costs on that first house. I put 25% down. I hadn't found or heard about Bigger Pockets while doing this.

With my 2nd home, I closed on 12/1/17. I paid a 20% downpayment using savings to do so. At that time, I still hadn't heard of BP. 

Roughly a month or so ago, I heard about BP. I have read two of @Brandon Turner books, I've watched a bunch of podcasts and webinars and I'm a Pro member. 

With this triplex, here is how I'll get it if it works out. Or, this is the plan at least. I'm retiring from my job in a week. I'll get a pension.  

I have a 457 plan and once I retire, I can cash out of that. For the triplex, I have to put 25% down. I'll use this 457 money, after they withhold 24% in taxes of it, to pay the down payment.

Here is what I'm wondering as I plan to move forward. 

I'm going to work PT and my wife also works FT.  We can keep saving up money and in a year or two, we could buy another single family home. And, we can keep repeating this. 

Multi-family homes in this area are sort of rare to find. As of this moment, I'm not ready to buy out of my area. I do want to get and read @David Greene's book on investing via long distance. I'm retiring from being a police officer, so perhaps I can follow in David's footsteps. 

I'm also debating doing this. 

My personal residence is fully paid for. It's probably worth about $185K. I do already have the $30K HELOC and it has a balance of about $10K due on it.

Do I try to get a larger HELOC? If I did, I could use that money for more down payments on rentals.

I've always been frugal and the only risk I take, besides my job, is investing in stocks, which I don't find risky. I've returned around 17% since 2005 on buy and hold long term quality companies. I find it easy. Real estate is much more work than investing in stocks. But, so far, I love being a landlord. 

If I get a HELOC for 70% of the value of my personal residence, this seems risky. What if hard times are in my future and I struggle to pay the HELOC back. Could I loose my personal home?

Anyway, if I can get this triplex, I'll have 5 doors. I'd love to grow that to 10, then to 15, then 20 and so on. 

I do appreciate any and all comments, thoughts, suggestions, criticisms and so forth. 

Stay safe,

Mark