@Natalie Allen
Nice report! It's clear you spent time thinking through things diligently, especially your expenses.
A few thoughts that come to mind:
@Guifre Mora I believe is right when he's challenging you to think about a 5% down payment at 3.6% for an investment property. It might be possible for you to get those terms with seller financing, which would be awesome! From what I've learned, sellers that will do seller financing typically want paid back in full after 3-10 years, so keep that in mind in your offer. Would you be willing to sell the property or refinance it with a traditional bank at a given point? Just a simple phone call with mortgage officer at a bank (or a few) should help clarify how much you'll need for a down payment and what interest rate you might receive - or at what point a bank would be willing to help you refinance.
-I got pumped reading that the numbers didn't work at the asking price, so you're trying to find the purchase price that it would work at. Comps in the area should help you get a better idea of what the ARV is, and comps are a big factor in refinancing with banks too.
-If you go seller financing, you can drop the PMI expense. If you go bank financing instead and the property is just an investment property where you're required to put 20-25% down, then you can also drop PMI! A nice way to shave off $100!
-Are utilities on separate meters where it would be easy to charge tenants and have them pay for the costs directly?
-How old is the house, and what repairs might be needed that leads you to have 7% for both repairs and capex each month? 7% for both seems aggressive, unless the home is super old and needs new plumbing, electrical, roof, HVAC, etc. soon. I typically go with 5% for both repairs and CapEx.
-By having tenants pay for water & sewer, electric, gas, and garbage and by dropping PMI, this property could be great if you got those terms for seller financing. After speaking with a mortgage officer, maybe re-run numbers for both seller financing and traditional financing and see which one works best for you!
Congrats on taking steps to learn!
This. Is. Awesome!
1. In my original report I put 5% down at 3.5% because I was unfamiliar with the terms of multi family house hacking (residential loan) vs an investment (commercial loan) as I would not be living in the home. I figured this out after a response I got off of this feed. Yes!!
2. The full story, and I will make it short, is I am looking to purchase a home to use as my primary residence and run a tailoring business out of. As I was doing more research I discovered that this triplex was right next door and was for sale by the same owner! My original plan was to buy one house not two. I am learning very quickly that things DO NOT always happen they way you see them happening:) Soooo, I want to finance the SFR, and then get this triplex as an investment possibly through seller financing and better terms. My goal for 2020 was to get an investment property (SFR, duplex, triplex).
Question: What would be the advantage of refinancing with the bank if the seller actually agreed to finance? Rather than 3-10 years, the banks may have longer terms? Keep throwing any suggestions my way as I am eating this up!!
3. I am currently waiting to hear back on whether or not the utilities were separate for each unit. I plan on going to the house today to take a another look.
4. The house was built in 1909. I usually do the 5% for repairs and capex, but received advice to increase the two due to the age of the home🤷🏼♀️
