All Forum Posts by: Matt Slykhuis

@Connor Dunham  Thanks for the response! The property has an oil-fired boiler that is shared amongst both units. There are separate electric meters, but shared water. The boiler was new in March of this year, and the utilities numbers are based on the previous boiler. The house has recent window upgrades as well.

Good to know on insurance -- I haven't gotten a quote and was just taking a guess. 

I haven't considered closing costs at all, as far as who is paying them. I have budgeted $5200 into my CoC return numbers though, so I think that would assume I would pay most of the costs.

As far as cash reserves, it won't be an issue. I have the capability of doing an investor loan on the deal (25% down), but that drops the return to 8% and I would prefer not to tie up that much cash if I don't have to.

Good suggestion on AirBNB or similar -- I hadn't thought of that, but it could be a good way to get some decent income for a couple of months.

To make things even more interesting, it sounds like the tenants that are staying put are not the greatest tenants. What I mean is, fairly loud and have had the police called within the past year for a party they hosted. They are month to month, so I would plan to not renew a lease with them next summer and seek better tenants at that point.

Does this deal seem too thin?

@Joseph Weisenbloom  Thanks for the reply!

I wasn't clear in my original post, but the "PIT" was "Principle-Interest-Taxes" which included property taxes. I left off the "Insurance" because it was going to be an estimated number whereas the PIT is fairly reliable.

Date-wise, I don't need a place to live until 1 April. So Any time between closing and 1 April is "costing me" as the current tenants are leaving and I don't expect to find a 2-month tenant, nor would I necessarily want one due to the risk of such a short term tenant.

I'm looking at eating the cost at this point, in order to lock up the deal. I can even tell the seller that I will close in March for more $...but I know they don't want that because they can't get a loan until this house has sold.

Hey all. I'm looking for a place to live in a new location, and am considering purchasing a duplex I've found that's FSBO. I originally looked for a property to buy for several months, then resolved to renting, but found this property and am thinking I can make it work as an owner occupied home and therefore low money down.

List: $295k
Desired Purchase Price: $270k (5% down with VA loan)
Rehab: $2k (paint only)

Monthly:
Rent: $3700 ($1850x2 after I leave)
PIT: $1637
Insurance: Estimating $225
Vacancy: $370
Management: $370
Maintenance/CapEx: $370
Utilities: $400
Snow removal: ?? May be able to pass to tenants

Total Expenses: $3,370
Est. profit: $330

Cash on Cash: 21% (Total out of pocket costs about $19,500)

Up front it looks like a no-brainer, but here's my slight hesitation. If I were to purchase this an investment property, with 25% down, it doesn't meet my criteria of 20% CoC returns (10.3% CoC). One of the tenants is also moving out soon and I don't need it to live in for 3 months, so I will have 3 months of one-sided vacancy immediately until I move in.

My alternative housing option would be to rent something slightly larger for about $2,000/mo. Since I will manage this property myself while I am living in one side, and do much of the maintenance myself, my costs will be significantly lower than what is mentioned above. I'm estimating that this house will save me about $1400/mo vs renting.

I'm also concerned my Maint/CapEx number of 10% is not going to be sufficient. The good thing is that all of the appliances are new within the last 5 years, laminate flooring and carpet within that same time frame, and a new boiler last year.

Thoughts?

@Account Closed  Welcome to BP! 

I am in a similar situation as you, but up in Fairbanks, AK. I have been reading and studying over the past few months to get ready for some investing. I've found that BP is simply THE place to search for answers to your many questions. You can also stay current on the forums and learn a lot of things you never knew you didn't know!

I would also recommend reading the the Ultimate Beginner's Guide, a free book published by @Brandon Turner and @Joshua Dorkin! If you're a podcast guy, I highly recommend you check out their podcasts as well. I started on podcast 1 back in July and have made it through 36 episodes! I listen to them while working out in order to maximize my time efficiency. 

Lastly, be sure to set up keyword alerts for your area or interests. That's how I came to find your post!

Again, welcome!

I can tell from the contractual language that it's designed to be used for any buyer representation, and is not specific to that deal. The interesting thing is that the agent submitted it to us for signature without filling in any of the details. It still has all of the standard language, but the blanks __________ are left in place for the important details like period of contract, buyer, and broker assignee.

I appreciate all of the feedback in this thread! Regardless of what happens with this particular property, I am convinced that I need to clarify with my agent that I only wish to partner with them on the buy-side for MLS properties.

Thank you both for your thorough responses!

I have only asked to walk through one property so far. My agent had a separate client make an offer on the property already, so she didn't feel right showing me the place and taking an offer from me as well. She coordinated for a separate agent from the office to walk me through the property on very short notice. The only thing I didn't like about the situation was that it fit the criteria that I had laid out almost exactly, but I wasn't given a heads up on the property.

I certainly do not want to take advantage of anyone or have them work for free. While she has been very prompt on providing me additional information on items I request (disclosures, utility statements etc.), I wouldn't say she's put a ton of time into the whole thing. If I had MLS access I would not even consider a buyer's agent. Once I start direct mailing for my own properties, I certainly will not use a buyer's agent.

Also -- it gets more complicated. I have previously submitted an offer with this agent, and part of the offer packet was a contract. My wife (we were offering under her name) signed the page, but nothing was filled out other than her signature. For example, the section that states who the representative is was left blank, the period of the contract was blank, retainer fee was left blank, etc. I fully acknowledge we should not have signed this as a blank document, but is this now obligatory?

Here's the situation:

I have been working with a buyer's agent to find investment properties. My agent has never asked me to sign a contract, and has yet to walk me through a property yet. We have contacted somewhat regularly (1-2 times per week on average) via email whenever I have asked for more information on properties that I've found on the MLS. This agent has only "highlighted" one or two properties that I should look at -- the rest have been me finding interesting ones on the MLS and initiating contact by asking for more info.

Separately, I've found an FSBO that I may be interested in. They say they will work with a buyer's agent, but in this case "my" agent hasn't done anything to facilitate the deal. I am ok with my agent getting paid their commission for MLS properties that I can't do all of the research for, but for off-MLS properties it seems like I'm giving money away (in the form of the seller not going as low on the price) if I use my agent.

I know that legally I am ok with no contract in place, but I also don't want to get a reputation as someone who gives agents the run around. Thoughts?

Welcome to BP!

@Roy Schauer

@Roy Schauer, a fellow BPer, leads a great investing group down there, REX. You should check it out on meetup.com! Also be sure to connect with him on BP -- there are quite a few investors down there in Anchorage!

Good to have you here on BP! Sorry I'm a bit late in replying to this, but I am new to the Fairbanks area and also interested in REI. I still have a lot to learn, but have been enjoying all of it so far!

When you come up with a time to meet let me know, I'm always interested in meeting other investors in the area.

@Tamara George  Is 279 Shannon Drive the property you are looking at? If so, here's how I evaluate that deal:

Monthly Rent: $3600 (you claim $2000 is possible but personally I would not pay more than $1800 due to the one car garage.

PIT: $1130 (estimating tax due to county site down for maintenance)

Management: $360 (10%)

Vacancy: $180 (5%, I usually use 10% but current owners claim history of low vacancy)

Utilities: $383 (assumes heat is the ONLY utility paid for by owner)

Maint/CapEx: $360 (10%)

Rehab: $5000 up front (This assumes not much needs to be done)

If your purchase price is $270k and you have a down payment if 25% for an investment property ($55,000), I calculate the cash on cash return to be 11.22%. This is decent, but not outstanding for me, especially since I lowered the vacancy factor from what I usually evaluate. 

Personally, I would only be interested in this property if the price were more like $220k. That gives a CoC of nearly 20% and, in my opinion, leaves a lot more room for error. Alaska is just such a unique market that I think it pays to be conservative on your deals.

Hopefully this helps you make a decision!