All Forum Posts by: Michael McDermott

Like the title says, I am looking to purchase my first duplex/triplex/quadplex. My thinking is because I do not have enough funds to purchase a pure positive cash flowing investment property I will purchase a multi family property (using 5% down), live in one unit for a year or so and eventually use the unit I was living in to generate cash flow on this property. But I have a few questions first...

1) When I am evaluating how much of a multi family property I can afford, how do the rents from current tenants in the property (with leases in place) factor into the purchase price/my income from a lenders perspective?

2) Should I strictly base the purchase price on the 2% rule? I'm finding this extremely difficult even with foreclosure listings.

3) When I look at a  2/1 duplex that is listed for $225,000, has taxes of 6,660, has both units rented for 950 and 850, I calculate my payments (taxes included) to be roughly 1,500 a month. Does this seem like a bad deal? How much would you pay for this property? 

Thank you in advance.

I am looking for advice on how to proceed financially. Here is a snapshot of my finances: I have one rental unit which nets me roughly 250$ a month, the balance on the mortgage is 108,000$ which I have paid down from 117,000 (appraised for 125 in Nov of 2009). My student loan payments are roughly 450$ a month with a balance of 33,xxx$. Currently I pay about 750$ a month in rent/utilities. From my full time job I net about 2,600$ a month, I can save about 1,000$ a month and have 10k$ in savings. I am looking to purchase another rental unit in the near future but I am not sure if it makes more sense to save as much cash as I can, pay down my student loans as much as possible or pay down the mortgage, refinance and increase the cash flow on that property. Any and all advice is appreciated. Thank you.

I am looking to purchase a multi-unit as my second home and am looking for mortgagees that offer less than 20% of a down-payment. Through doing a little research I found TDs "Right Step" program that only requires 5% down but cannot find any more information on the program itself. Has anyone used this program and can give me some advice before I walk in the bank?

I have owned the first home for 5 years now this November. 

I have 1 property in which I rent out for $1,300 a month, my monthly payments to B of A are 1,046 including PMI (FHA loan which I should have refinanced before I moved out). I am now looking to buy a multi-unit to live in and rent out the remaining unit(s), duplex or triplex around the 200-250k price range. I have about 12k in cash savings and am saving about 1k a month living pretty frugally.

Would it make more sense to pay down the FHA loan, refinance into a conventional and use another FHA to purchase the multi-unit OR use the cash as a down payment on the multi-unit and leave the FHA the way it is until its paid down through rental income? I may have the option of asking my parents for a loan to pay back with interest. I'm just looking for the most cost effective option.

Or are there other options which I am not aware of? Thanks in advance!

I currently own a single family attached rental unit in the suburbs of Philadelphia. I bought the house using an FHA loan, the house was appraised at 125 in 2009 and I took out a loan of 117. Last September I turned this into a rental unit which I am making about 300 a month on and using part of that to pay down the principal. My equity is at about 15% right now. I would like to buy a duplex in the near future but cannot afford the down-payment of anything above 5% really, so my idea is to convert this FHA loan into a conventional loan so I can use the FHA loan again to purchase a duplex for me to live in and rent out the other half.

Does this idea make sense? Would anyone advise against this? Is there a better option that I am not exploring?

Thank You.

Could you elaborate on "plenty of liability insurance" and how this differentiates between regular insurance? Thanks.

I currently own one single family rental property and am looking to purchase a duplex or a triplex next to rent out. Would it be in my best interest to create an LLC? I'm a newbie here and am looking for all the guidance I can get.