All Forum Posts by: Michael Gebremichael

@Bridger L Logan 5 unit is considered a commercial property so House hacking might not work to your benefit. Also, $42k a year for an over 100 year old property that cost $325k is NOT going to cash flow.

1. A rough estimate of the NOI at half of the income is $21k.

Cap rate on $21k is 6.4%

Is the property in a decent area where it will appreciate higher than inflation rate? If not, it’s not a good investment.

2. $21k is not going to cover your debt service of $26k ($2200 * 12). You can make it work by significantly increasing your down payment, but again this suggests that it’s not a good investment specially if you are starting out.

3. If you have never owned a property before, I suggest starting out with a single family property ( 1 or 2 units) that’s cheaper. $325k seems like a lot of money to start out with.

You have to assume that you are going to make mistake. Most people, if not all, make a mistake on their first investment so it’s better to start small and grow slowly. Even if you mess up, you can come back and fight another day.

Good luck!

@Steven Hershey from a pure financial perspective it doesn’t make sense but emotionally you can justify anything. If the goal is to grow your net worth then taking money from 401k might not be the best approach.

Thanks, @Jens Nielsen and @Frankie Woods! I'm considering a property in the NW area. 

@Stephan Kraus I think the numbers make sense to me. You pay interest upfront or pay it over time. It’s like you bought interest down to 0. It’s a matter of preference. So that’s all good.

My concern is when you say cash flow positive or negative are you taking all the expenses into account? How much do you think it’ll rent?

I live in So Cal and looking to invest out of state and I’m considering ABQ. I have seen a lot of discussions on ABQ and was wondering what people think about it. If you are already in ABQ, how do you feel about your investment?

@Daisy Ferreiras No it’s not a good deal for you! If all the property needed was just $2k to bring it from an all cash requirement to accepting conventional loan and for the value to increase by almost 30% (a 1500% return on the 2k), the owners would have done it already. It is possible but highly unlikely. How many similar properties have you worked on? Simply judging on the info you provided, I’ll tell you to stay away mainly because it doesn’t seem like you have the experience.