All Forum Posts by: Paul De Luca

@Christina Venegas

If you know the renter is problematic, why would you even consider making them a tenant?

@Sam Abazari?

 $46,800/year in cash flow with $500k is a nice yield at 9.36% ($46,800/$500,000). Personally, I would keep the property but I don't know your situation and if you could better use the money elsewhere.

@Will Mejia

Congrats! How much cash flow is the property producing per month? And is it pretty easy to manage or no?

I would compare the return on your rental to your stock market portfolio. It could make sense to sell the property and invest it in stocks if you can get a better return there, but there is also some benefit to having a little diversification. With no mortgage on the property, you have significantly less risk in the event of a downturn.

 House hacking is the primary strategy I have used to grow my portfolio and that's the typical client I work with as well.

What strategy are you interested in?

 That's a little over $10k/year in cash flow, which is very strong yield for the price. Assuming it's worth $65k, that's a return on equity of 15.7%. I'd keep the property if those numbers are correct.

@Kristin Vegas

How much cash flow is the property producing per month? Is the property & tenants mostly easy to manage or is it taking up a lot of your time? If you were to sell the rental, what would be your budget and buying criteria to house hack?

Whether it makes to sell the rental or keep it depends on your answers to these questions.

@Charlotte Wilson

To clarify, as @Perry Farella pointed out, there is an upfront MIP charge but there is also a monthly mortgage insurance premium (MIP).

Any time to put down less than 20%, you will have to pay monthly mortgage insurance. Typically this is called private mortgage insurance (PMI) but with FHA loans it's mortgage insurance premium (MIP).

FHA MIP is permanent over the life of the loan but you can refinance into a conventional loan once you have 20% equity. If you get a conventional loan, you can have the PMI cancelled once you hit 20% equity.

Quote from @Michael Johnson:

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $1,500,000
Cash invested: $35,000

4-Unit building in Wicker Park, Chicago. 3-unit front building with a duplex up and a back brick coach house.

What made you interested in investing in this type of deal?

I wanted a place in a A class neighborhood in Chicago with good tenants

How did you find this deal and how did you negotiate it?

Off market deal from a previous listing a year prior. My agent @Jake Fugman caught wind it was about to be listed again, we got in prior to that happening and made an offer.

How did you finance this deal?

5% down federal loan

How did you add value to the deal?

Utilized a low down payment loan, maxed seller credit, tax proration and closed on the 1st of the month to maximize my cash and acquire this property

What was the outcome?

Closed with no issues, inherited great tenants and have really enjoyed living in this neighborhood

Lessons learned? Challenges?

It is possible to utilize low down payment loans and live in great neighborhoods in Chicago

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Jake Fugman was my agent

 Nice work @Michael Johnson & @Jake Fugman !

How much is it renting for and what's the PITI?

 Do you not have any of your own capital to get started? If not, maybe you can partner with family or friends. If you do find a money partner, expect to do all of the sweat equity and manage the deal.