All Forum Posts by: Marland McKinney

Buying a MF just to say you did can really burn you. Finding good quality 1% deals on the MLS has not been easy sense 2012. Trust the real numbers, no massaging. You are only lying to your bank account. Averaging the deals it looks like a median of negative $1700 cash flow out of your pocket. Over 20K losses per year.

  Great replies so far on a great topic.  I have been in the hacking game for over 15 years, and take pride in it, similar to a plumber.  You can make good money, but get no respect.  

 I believe a 30 year contract needs a 30 year plan.  Set the numbers not as a house hack, but as a stand alone LTR. This way allows you an exit plan to move out, and on to the next property.  From personal experience, the difference between a 1% property, and a less than 1% property is night and day.  This duplex sale price is $405K.  With both sides at max potential rent of $1700 x 2 =$3400, thats not going to cut the mustard.  Even if you fudge it to $385K w/ said concessions, its still $450 in the red.  "Always trust in the 1% rule for guidance."  Plus by looking at Zillow's taxes and previous listings of this duplex, the purchaser is paying $130k in renovations for this flip!  Its nice, but not that nice.

Its late and I may be mistaken, but it looks like they missed a few key items. The report shows the purchase price and the down payment as the same. This throws off the numbers. The devil is in the details. As an example lets say you get an FHA loan @ 3.5% of 150K = $5250 downpayment. Or a Conventional loan @ 5% of 150K= $7500. Now add the stated #3300 closing cost. So to get in the door you will need $8550 or $10800. Now the next issue, Refinancing is not free. The price to do so can be lumped into the new mortgage or paid up front. Refi price will very, but plan for a ballpark of 3-6% of loan refi amount. If the amount is 140K you are looking at $4500-$9000 for; appraisal fees, title fees, origination fees, attorney fees, flood certification fees, and recording fees. Something to think about is the possibility of not being able to refi. Home prices are starting to fall and maybe fall hard. In the 9 month plan stated, the property may be underwater by 20%, leaving you stuck with the original loan in place. All this is not a deal killer. Make sure the real world NET cash flow is at $200+ a month, per Brandon Turner. In the CoVid-19 era, better make it $400+. Good luck and stay safe.

$200 NET for each rental, is the minimum I look for.  

I have attended a half dozen OD "open houses".  The process is nice and easy.  Just call the phone number and they tell you the lock box code for an allotted time.  Pretty fast and the house is all to you.  I did notice the camera and router they use is Huawei.  This was interesting because It was the first and only time I've came into contact with a Huawei product.  If you don't wear a tinfoil hat, Huawei is possibly linked to Chinese Govt. spying.  Just ask the US and Canadian govts.

 These are hot items moving in Denver over the last few years.  Caution: The plex is bought as a whole at today's high prices, then sold in pieces to several buyers like yourself, in order to make a profit. Kind of shady. The problem results in the single unit will be way overpriced and far from the 1% rule.  Also you are not in any real control or say, being a minority in the plex.

My two cents are; get that zillow add cleaned up to not show how much you paid last year.  It makes you look like a jerk trying to rip off the new buyer.  The fit and finish is not up to standard.  The bathroom pic showing the pedestal sink and toilet, both have the supply lines sticking out like the plumber should have his hands cut off.  Then the painter just painted over them.  Very "flip and rip." Lack of attention to detail can sink your ship.  However the main issue, as many have already said, is the comps are off.

I say no at a glance. Getting $100 a door using a heloc spells disaster unless everything goes exactly as planned for a few years.  The risk is too big of the payoff.  I feel a heloc should be reserved for the "oh sh**"great deal.    Don't forget you're closing costs and Cap X.  

  Also, You may not be able to make the planned repairs with tenants in place.   I would plan my numbers counting on 50%-100% vacc for that time.  Plan for the worst case scenario.  If the numbers still look too good to be true.  Then you have found you're baby. 

Interesting question, and excellent answer.   Thank you for clarifying recapture, as it has been glossed over here.  Likely because it's not as sexy as most BP topics. 

Yeah, I'd like to see that link on those trends too!  BTW, Chris, nice 1031 podcast yesterday.