All Forum Posts by: Obed Calixte

It comes down to your goals and the numbers.

It is hard to say yes or no to your question without either of those.

If I understand correctly - You want the bill to be split such that you pay up to a certain portion and then remainder sent at the same time pro-rata to the co-living tenants. 

It may exist but I've never once heard of such a solution.

Now to the question about billing back tenants for utility charges is possible. But not exactly cut and dry. Most property management systems allow for one time charges (which these will be as they are variable). The monthly effort of billing back will not be automated.  You will also need to have steps in place for collecting each tenant's last month's utilities since utilities are paid in arrears.

Are you making it more complicated than it needs to be? Yes.

Will it help you keep your net utility expense at or close to your cap amount? Possibly.

So you will have to decide if it's worth the effort.

Are you purchasing this with an owner occupied or investment loan?

If owner occupied, you don't have a choice but to live in it until you meet the required occupancy stipulations in the loan. Thereafter you can rent. 

Financial wise there are a couple things to consider: 

-When considering the property taxes, ensure it is based on reassessed tax amount, not current tax rate. It will change.

-Vacancy, maintenance and capital expenditures will need to be accounted for

-Will you self manage or use professional mgmt ? In either case it is great practice to account for property mgmt costs.

That's a large budget just to hit a 350K ARV. In my experience, you are over-renovating and/or have too broad a scope of work.

If you can get it for 110K or less, great. If not, walk away.

Have you run numbers on actual properties that align to each of the strategies that you've mentioned? If so, if you share those figures it will help the forum give you more insightful feedback.

Also Why are you analyzing to year 15 specifically?

That 500/m loss does not include reassessed property taxes, vacancy, property management, maintenance and reserves  - so it will be an even bigger loss.

A tax professional can assist you with your tax strategy and then you can work from there to identify the strategy to deploy. 

Your lender likely is referring only to Fannie Mae guidelines. Freddie Mac has conventional loan products for duplex w/ ADU if it legally zoned. Confirm with your lender if they have looked at Freddie products.

Now for the repairs themselves - If the repairs require licensed work, work to have the seller hire the contractors to complete the repairs.   Depending on the repair (reroof, new electrical system etc) reputable and solvent contractors can be open to being paid at closing.

There are also third party companies such as Curbio that can be a fit for this situation.

Generally when sellers say "cash" it really means they do not want to deal with contingencies,  short closing period and/or do not want to deal with needed repairs. 

Figure out what the seller is looking for. Do all your due diligence upfront (see if you can get an inspection done before submitting an offer)

On the lending side a DSCR loan is an option.

If any professionals were involved in the purchase (agent, title company, attorney etc) ask them. 

Neighbors are great especially for lawn services (you can readily see the results).

Drive around the neighborhood and look for active construction sites and talk to the contractors for recommendations. 

As a wholesaler you have the skillset to identify off market properties and find the owner's pain point(s) on your own. Not every homeowner is looking for a cash deal or quick close. Structure your offer to match the needed terms of a 203K loan.

Otherwise target slow selling fixer uppers on market.