All Forum Posts by: Mike S.

@Edward B. Thanks. I've read a lot regarding the BRRRR strategy however putting theory into practice is where I am failing, especially given my current market environment, where $100k would likely only serve as a down-payment.

What it sounds like you are getting at is to use a HELOC for the "Buy" and "Rehab" to avoid initially being overly leveraged ? But then later, I'm going to use leverage through a refinance (cash out, I assume) ?

Did I get that right ?

Hi All - 

Not sure if this is the best place to post this but I couldn't find anywhere else more appropriate. I have a Owner Occupied Duplex and I am really struggling with how I finance my next opportunity. Like I need some cash! I am starting with small multifamily however if something came along bigger, I would consider it if the numbers were favorable. I'm particularly interested in cash-flow assets however wouldn't turn down solid appreciation. 

My duplex that was just appraised at $500k and my 1st mortgage balance is $286k with a 30 year fixed rate at 3.7%. Most lenders I have spoken to require a 25% down-payment for non-owner occupied investment properties. Given this, how do I best utilize my existing equity to obtain the cash needed to finance my next opportunity  ?  

Specifically, I'm looking at folks that have done this in the past and can offer first hand advice on what works best given the options.

Thanks.

Kyle, I'm also in Wisconsin. What did you end up doing regarding your HELOC strategy and how did it work out for you ?

@Will K pretty much downtown Madison. Market is fairly strong here. I am in the suburbs and I pay $1,300 for nice 2 bedroom.

Thanks Jon. This is very helpful.

I read a lot of these posts and I am still struggling with the exact calculation of the 2% rule. I apologize for being obtuse. What is the formula ?

Is it ideally: Gross (..Emphasis on Gross) Monthly Income >= 2% of the Total Property Purchase Price ?

Thanks.

Tim,
I did not fully comprehend the meaning of what you meant when you stated, "I would never find a place that my wife and I would be willing to live in for any length of time that could." Can you clarify please?

I will be hopefully staying in this property for a long while, but the thing is I have no interest in buying and living in a SFH. I rent a SFH now and want to make the leap toward a beneficial RE investment, hence my desire to go MFH. Additionally, the SFH in this city area will go for about the same price, but only 20% higher rental rates or $1,800, if I can even find one.

Additionally, I understand where you arrived at the $2225 (thank you for running the numbers down) however should I be doing this based on the full PITI ? I mean taxes are here at ~10k annually expected for this property.

Thanks for the thoughts.

Steve, I will be living in unit 3, that is making the deal (and calculation) difficult for me to assess.

I am new to the forum after reading a lot of valuable posts. I have a question on what my desired rental income should be (including my own 'rental' costs for living in the property) and the applicability of the 2% and 50% RE rules in terms of the owner occupied multi-family investment. I figured I would start here since this is a new opportunity.

My wife and I currently rent at $1,500 a month. We live in Madison, WI. Real Estate is fairly stable here.

I am currently looking at the following:
3 Unit Multifamily
Sale Price: $449,000
Downpayment (20%):$90,000
Annual Taxes: $10,103
Annual Insurance: $1,572
PMI: $0
PITI([email protected]%): $2,687

Rental Expectations:
Unit 1:$1,500
Unit 2:$1,500
Unit 3 (My unit and costs..in other words): $1,500
Total: $4,500

I keep reading about the 2% rule and 50% rule and assigning 50% of the rental gross to repairs and the other to Net Income after the mortgage. I can't make this work. I am wondering if my own rental costs should go toward the calculations?

Sorry this is a bit generic of a post...but need to figure out if my expectations are out of whack.

Thanks for any help.