All Forum Posts by: Orlando Goodon

I see what you are saying. Helpful. I think one BIG factor I missed is INTEREST. Just paying the minimum mortgage payments is going to get eaten up by interest. So I have to factor in, cheaper house means I can pay down faster, which cuts interest and might even build equity faster? I mean eventually it would have to. If I pay double the morgage or triple or 4 times. At some point I'm going to pass the guy with bigger house that is flat and only paying minimum. Not sure how to calculate that threshold. Just to be clear I'll make extreme example. If I buy a $200k house and pay $100k a year in mortgage payments, I'll be WAY ahead of a guy with $1M house that only pays the minimum. I'd say, I'd pass them in less than 6 months as you can't build much equity in just a year if you do nothing other than pay and pay mortgage. 

However there is appreciation. If guy with million dollar house only gains $5000 in equity in first year but house value goes up $30k, that can help even the field with a smaller house that is being paid down faster, right?

I think I'm going to have 10 more spreadsheets tonight. lol

About to make my first deal but I've never done one, so I don't even know what a good deal looks like. With 20% down, it's easier, but when you only have 3.5% down, I need to set lower expectations with a FHA loan deal, but I don't know what that looks like. Is losing $300/mo OK, considering limitations of such low downpayment? What exactly would a bad deal look like? I know it's relative but some example deals would help. Something that shows a few 3.5% down deals, with all the basic numbers.

I've heard things like $200/door is a target but not sure that applies to a 3.5% down deal. Also, Any house I buy, I'll have $3000+ in deposable income, so technically I don't need profit. Building equity alone is good. I'd LIKE profit as I need to build another down payment for next deal, but it's not needed.

I actually planned to pay $1800-$2000 additional mortgage payments for faster paydown. So basically I would live like a tenant. Paying what they pay or more. Plus keeping a $12-$15k reserve.

Been searing online but not seeing 3.5% deal examples.

 Well, with such a low cashflow house (WHEN you calculate it as a TRIPLEX, not a quad, lol), all the profit would go to reserve fund. Then use that fund to pay for whatever is needed or use home equity loan.

I'd want to avoid a house with an old roof as I need more time to save. $250/mo for new roof in 10 years?

I found a real money maker...I think. Everything else I've been looking at has been -$1000/mo profit to typically $250/mo. This is near $1400 owner occupied and with only 3 units. 1.5hr from NYC. Short walks to mountain views and river. In decent shape but could use updating, so this makes it cheaper to buy...hence the price, which make me move from 3.5% down to 6% down with same money and TAXES are cheap! AND...it's pure 3BR bliss, so will command near the very top of the rental market easily. I'm thinking buy it and put $8000 into each unit. Try to get it with only one tenant and start working on one unit. When finished fill it at top of market. Then, wait for next tenants lease to expire and don't renew and fix that one too. Of course give good notice so they have time to find another place. Then finally I do my unit, while I prepare to close on my next property which should be even sweeter with a sizable deposit by then. Maybe a 3 or a 4 and do the same thing there. Then decide if I get my own single family exactly where I want it, with my garage and everything I've wanted or do I keep building my portfolio.

So excited about this new journey!! :)

Anyway...thoughts on this deal?

Well I'm very new at this but I was thinking an $8000 investment per unit? That is just ballpark, but that's an easy investment for me to make. Not too much money, but plenty of upside and long term ROIs. New Kitchen, flooring, paint and appliances. I would defer to the experts on that. Personally, I'd peak at the high rent spots and make sure mine look on par or better than them.

BTW, I just found a super deal and for the first time, I'm tempted to pull the trigger. I did not think I'd find it so soon, but get these numbers:

Price: $525,000
Tax: $9K

Triplex with 3x3BR in an $1800 market!
I ran the numbers and it blows everything else I've looked at out of the water. Before $400/mo profit was solid for owner occupied. This house looks like $1700/mo profit, $3700 when I move out. AND...it's DECENT looking, meaning plenty of upside. In a $1700 market, I could put it to $1900 or more if I refresh it nicely. This is a money maker, but the key detail other than low taxes is the price. Some crazies are selling quadplexes for $800k down the block. lol. What do you think about these numbers? Is it as amazing at it sounds to me? TOO amazing to be true? Are you thinking what's the catch are asking why I'm on here posting instead of making an offer already?

Here are some more numbers:

 Not many single families at all but from what I see it's $200k-$300k All sold. Nothing for sale right now. I see one sold for $175k in 2004, that listed for $1M in 2021, then sold for $897k. OMG. I see another 2100sqft 2br 2ba sold for $370k in 2021.

However BIG noob mistake! My cap rates included mortgage! OMG.

Now the cap rates make more sense, but still tricky to make a profit due to $19k taxes and $4000-$5000 mortgage and rents under $2k. Maybe just a bad area.

BTW, Jon, I did the math and with your 6% CAP, this $800k quadplex would be worth $341k, based on 3.5% down. $463k with 20% down. How do you do these calculations, considering NOI is a factor of down payment which is variable?

Jon, did you make any moves? I'm looking at an $800k property but the numbers don't make sense. $19k taxes kills it. Hudson view so I can push rents up to maybe $1900 for 2BR? however that tax still kills it. I can barely get 3% CAP. I REALLY want water front property with mountain views, but the numbers don't make sense.

So I thought it was my 3.5% down, but I just calculated for 20% and it's still a loser. .78 CAP and if fully occupied after you move out, it is 3.4% CAP.

NOI: $27k

Price: $800k

For me to get this to 4.56% CAP, I had to change tax from $19k to $12k and cut electric to $170/mo. So maybe the writing on the wall that I'm missing, is the taxes are just too high and the apartments are too small (all 2Br). This would work with those reductions in cost, and if it was all 3BR or even 3 3BR and 1 2br. That would be $8400 gross per month. Now that is 5.46% cap. Decent but nothing to brag about, so again I think the price of house is too high.

$600k would be 7.29% CAP with all those adjustments

or

$700k would be 6.25% CAP.

As it stands, with high tax, and high electric, it needs to be $650, for 3.5% CAP.