All Forum Posts by: Antwoine McCoy

@Martins Francis congratulations and welcome to the club.  I actually have two multi-units directly northwest (Bloomingdale) and west (Old CIty II/Truxton CIrcle) of you.  I just secured a tenant for a client via the HCVP program which paid $4,753 for a 4 BDR.  Are you familiar with the intricacies of the program? 

@Eduardo Conde reached out and asked for more information and since I had to follow-up I figured I would share with everyone on this thread.  Below is the HCVP (Section 8) Small Area Fair Market Rents (SMFMR) for Baltimore City for FY2021.   

@Ethan Kramer definitely high.  Contact Michael Bogar of Mid America Mortgage or Katie Simmons Hickey of Caliber Home Loans 

On an investment property ($597K) refi 3 years ago I paid 1.875 Origination fees and 4.875 interest rate with Caliber with a 709 score.  And that was a cash out refi of a multi unit property.  Why are they charging you 2 whole points?

@James Mc Ree I actually worked at the DC Housing Authority for 10 years and still perform consulting for HUD and focus on Affordable Housing financing initiatives. @Russell Brazil is correct, in DC proper the payment standards are based on the 60 neighborhood tract submarkets, if you know what submarket your property is in then you, in essence, know what it will rent for. For larger metro areas HUD has moved to a submarket FMR system that is driven by either neighborhoods or zip codes, in DC it is Neighborhoods and PG County it is zip codes. For example Old City I, Old City II, 16th Street Heights, Massachusetts Heights are just a few of the neighborhoods that pay 120% of the HUD FMR which is basically the chart I listed above. IN PG County the driver is zip codes and I know that in the 20720 zip code the max rent for a 4 BDR is $3,950 (PG is a little different than DC on the way final rents are approved). For those neighborhoods where the HCVP rent may be higher than the market rent I collect and if I am not going after a HCVP tenant, then I will discount the rents using a factor of 5%, 10% or 20% in my analysis. If the neighborhood gets higher market rate rents than HCVP then I will increase it by those same ratios. FOr example, I have a 2 unit in Old CIty II and one of the units is leased via HCVP and the listed paymnt standards was $3,113 (all utilities) and that was the number I advertised and that is the rent I received. @Eduardo Conde as for the expenses, I am conservative and prefer to analyze it using percentages upon initial purchase. To me if the deal looks good in Year 1 it should be good in Year 3, after that I adjust according to personal and market conditions. I self manage my units via my Real Estate consulting LLC and charge myself 5% of rent collected.

This post is for my DC area (DC, PG, MoCo, Alexandria, etc.) investors and interested investors. I have been using the HCVP Small Area Fair Market Rents as a basis to running my numbers when analyzing possible investment property deals. In short, for the expense side I identify my assumptions outside of Principle, Interest, Taxes & Insurance (PITI) to determine the bills or payments due. For the revenue, I basically use the HCVP Payment standards, specifically the small area fair market rents to determine the potential rent revenues for a property. I use a multiple to either add or subtract the established rent amounts based on the neighborhood, specifics and circumstances of the property I am analyzing. For instance, in the Old City II neighborhood of DC I know that below are the rents for each unit bedroom type:

Now depending on the property I either add or subtract an identified multiple to get a gauge for what rents potentially are in the community.  For example here is a quick analysis of a property for sale in the neighborhood using the rents above as a gauge.

https://www.realtor.com/reales...

The property is a 3BDR/2.5BA home selling for $827K and I am assuming that the prospective tenant pays all utilities.  Below is the snapshot of my monthly rent analysis that tells me the property isn't cash flow sustainable using a 20% down mortgage at 3.5% investor interest rate.  I confirmed the current Real Estate taxes and Maintenance and Replacement Reserves are 5% of the rent.  I have 0% for vacancy rate due to the fact that it is a single family and I have to assume the my HCVP tenant will stay for at least the 1st year (I have had shorter but for the purpose of the convo...).  Basically the property would lose about $408 per month.  Below is my monthly snapshot and I welcome peoples thoughts on the perspective revenue (and expense) numbers they use to analyze a deal.  I hope this helps someone out there and at least initiates dialogue.  

@Audrey Burke thanks for the kind words, how has your investing been going in the DC area?  

@Jason Piccolo that re-fi was about 3 years ago.  Since then I have focused on working with existing landlords who are interested in the Housing Choice Voucher Program (HCVP) and helping them to locate tenants. I also assist the tenants in putting their best foot forward with landlords and making sure that they are knowledgeable of the ins and outs of the program.  

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Washington.

Purchase price: $595,000

2 unit building (1-3BDR/2BA & 1-1BDR/1BA). The cash out re-fi was at a 75% LTV and allowed us to pull out $145K. So the new baseline was a $597K mortgage on an asset ( 2 unit) with an appraised value of $853K. We secured an investment interest rate of 4.875% and our PITI was $3,836 ($3,161 P&I and $675 Taxes+Insurance). At the time our monthly rental income was $5,034, leaving a monthly cashflow of $1,198 ($599 per door) before payment of utility and repair expenses.

How did you find this deal and how did you negotiate it?

Refinanced a property I already owned

How did you finance this deal?

Conventional Investor rate financing

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Caliber Home Loans - The Simmons Team

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Washington.

Purchase price: $595,000

This was a cash-out refinance from a property that I purchased (with my partner) in 2005 (initial purchase price was $546K with only $5K down, the pre-bubble no doc good ole days). The property is a 2 unit building (1-3BDR/2BA & 1-1BDR/1BA). The cash out was at a 75% LTV and allowed us to pull out $145K. The $145K cash out does not include transaction/refinance costs of $24K (ouch). So the new baseline was a $597K mortgage on an asset ( 2 unit) with an appraised value of $853K. We secured an investment interest rate of 4.875% and our PITI was $3,836 ($3,161 P&I and $675 Taxes+Insurance). At the time our monthly rental income was $5,034, leaving a monthly cashflow of $1,198 ($599 per door) before payment of utility and repair expenses. The property has appreciated 70% since we initially purchased it and the rents have increased 66% during that same time.

How did you find this deal and how did you negotiate it?

Refinanced a property I already owned

How did you finance this deal?

Conventional Investor rate financing

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Caliber Home Loans - The Simmons Team

I believe all of the respones have been right on point with one exception.  Of course the Baltimore market will cash flow but the question is the level of appreciation.  Although m family was born in Baltimore I have only invested in DC and PG County.  The stability of rents and the appreciation potential in those areas mean more to me than an extra $300-$500 in cash flow.  I have always heard great things about the Federal Hill area but I would take DC and the near suburbs over the best parts of Baltimore everyday and twice on Sundays!