All Forum Posts by: Mike DeLeo

Hi BP, 

I am just starting out in REI and I have been doing a lot of reading, research, and analysis. It's come to the point now where I want to get the ball rolling and land my first deal, specifically, I am looking to invest in the Philadelphia area. I am interested in finding a property in South Philly, Tacony, Bridesburg, Port Richmond, Far Northeast areas of Philadelphia, but of course am not limiting myself to only these parts.
Any agents that are familiar with investing in Philadelphia neighborhoods please feel free to reply in this post or message me, or if you know agents please recommend them. 

Thanks so much!

Mike

Hi BP Community,

I am analyzing small MF units (2-4) and I am unsure how I should be estimating vacancy costs.

I will be living in 1 unit, and the remaining 1-3 units will be rented to produce income. So (correct me if I'm wrong on this), the vacancy cost only exists if the place is empty (which hopefully it won't be, but we are setting aside money just in case this does happen?). So I am estimating the amount of mortgage I will have to pay over the year if one or more units were empty?  Or is it the % of income lost due to vacant units?

I appreciate any insight on this concept. I am a newbie and in the process of researching for that first deal. Trying to get my ducks in a row.

Thanks BP!

Mike 

Hi BP Community,

I found what I think could be a great property, a duplex with the potential to become a triplex, but I have my reservations....

1. It's in a nice location in Northeast Philadelphia, family area, low crime rates, row homes with end duplexes, and also across the street is a larger apartment building with about 20 units. This 20+ apartment unit is what makes me nervous. Would it be wise invest into something directly across from a complex like that? Hard to fill it and keep tenants since they have option right across the way?

2.The triplex conversion is the exciting part - at the moment the two units are vacant, and there is an unfinished basement that could be turned into a 3rd unit. The basement is already gutted and framed out (from photos) but everything else needs to be fixed up, and I am sure needs ZONING for the 3rd unit to be livable.

For such a great price and the potential to create a triplex - triplexes are hard to come by from my little experience in this area, I feel like this is something I should be jumping on. Of course, I need to see what the BPers think...

So what do you think?  I haven't given any sound numbers for deal analysis, I understand that, but does this plan sound feasible? Will it be difficult to fill a triplex across the street from a 20 unit apartment building? Is it too large a risk to take on in my first multifamily deal?

Thanks for all the help.

Gotcha. Thanks @Joe Fairless

@John Cohen

Thanks John. That's the plan, because I won't be living there forever, so I still need to look at what it could potentially bring in, ya know.

@John Cohen @Joe Fairless

   Do you think a lender will think that's pointless for me to show them all incomes, since I will be living in the one unit?

@Joe Fairless

I am looking at NOI for the property:

When considering only one unit's income I see the NOI for one, clearly.
When I consider both units' rent I at least get a better idea of what the property's real value is, in terms of it's potential income.

So I was wondering if I should be including the income from two units or just one unit - but this was for my personal analysis. 

You mentioned showing this to a lender - so lenders are more interested in seeing your level of debt-income, expenses, rather than the quality of the property?

Thanks

@John Cohen

At least for the required 1 year, and then depending on how things are going stay for 2, or move on to my second MF unit. I've heard of situations where people did another FHA, which is worth looking into.
But I agree with your comment on using the rent to show higher NOI, otherwise it can be a little misleading in terms of the property's overall value, couldn't it? If I do consider both units' rent, then once I moved out I will know what kind of cash flow it will produce when both units are rented.

Thanks John

Morning BP Community,

I am on the hunt for my first multifamily property deal, I want to get an FHA to finance the property, live in one unit and rent out the other(s).

As I am analyzing figures for all different properties here is the question I have:

When calculating the income for a MF property, for example a duplex where I will live in one unit and rent out the other, does it make sense in my analysis to include the income from both units as part of the property's income? Or should I only include the unit that will be rented?

My gut feeling is to count the income for both units, but I want to get some feedback from BP. What do you guys think?

Thanks,

Mike

@Alex Applebee     Congrats on getting the job done and coming out on top. I am a newbie and love hearing success stories of others.
Were you working full time during the 6 months of rehab on the property or was this your FT job?

Do you want to flip something similar again, but just do it better and more profitable at it, or will you venture into something a bit larger?

Mike

Thanks for all the advice guys. If I got one thing from all of your knowledgeable comments it's "GO GET PRE-APPROVED!" Will do

To continue with the pre-approval  - I was talking with a friend today about his pre-approval process because he is looking to buy a home. He made it sound very simple, and somewhat misleading to what I've been hearing from real estate investors. He got pre-approved over the phone and online, but did not receive a letter documenting his pre-approval.

Does this sound legit to those who have gone through the process?