All Forum Posts by: Phil K.

Thanks for the replies so far everyone. Overall I'm planning on putting a whole new "face" on the house by changing the paint etc so it has a different feel. 

@Bob Woelfel The one odd thing on this, is if you actually google the property address, on the 2nd or 3rd page of results there will be the news article about what happened. Again I agree that what the chances of a tenant looking that up, but the info is out there

The key for me is in the appraisal here for the refi so that is why I was mainly curious on an appraisal and if that would be effected. 

Hi All,

I'm running to an interesting property that may be a candidate for a BRRR type situation. Here are some of the details:

ARV: 120k

Purchase: 65k

Reno: 30k

Average rent is about 850-1000

However there is one catch to this property, there was a murder in the home. It was not a gruesome murder, however it still did happen. Overall the home is in decent shape, but I can't help but think that the potential stigma to this property may make it hard to rent out. In my state one does not need to disclose of this, but of course if asked need to disclose.

Another question I had, was that when the appraisal goes through for this property, could the history of the property potentially affect the value that the appraiser decides?

I am curious as to others that have went through a deal like this how it turned out. My plan would be to keep this as a long term hold. 

Thanks BP!

@Sasha Mohammed Thanks so much Sasha! The reason why I ask this is because I have enough funds right now to do a BRRR, but haven't found any good owner occupy triplex or quads that I would like to owner occupy. I'm thinking of doing a BRRR possibly, then refinancing that - but I wanted to ensure that I would still be able to leverage an FHA afterwards.

Thanks!

Hello,

I've been doing some research but I'd figure I'd post and ask as well.

If I were to have some properties that say I BRRR'd and had under conventional loans, but were not owner occupying any of these would I still be able to qualify for an FHA loan? I wasn't sure if it would be possible if you have other conventional mortgages that you don't occupy.

Thanks!

Had a feeling you'd be commenting @Brian J Allen! John, Brian has some great insights. He's out in Worcester all the time so his advice here is great.

Funny that you mentioned those window wells, I was watching a video from @Mark Ferguson that had the window wells in a basement unit:

Basement window well youtube video

Definitely cool to see! Lets in tons of light

@Matthew Paul Totally agree, I've seen some units in Worcester MA that say its a "bedroom" but doesnt have a closet, almost makes me wonder if this would still be considered a legal bedroom.

@John Kubilis That's a tricky one John, I'm not positive if the dehumidifier would be enough. I'm not positive if this is the right route to go, but maybe you could call a few different appraisers and just ask the question to them? I'm sure they'd be able to give you some decent feedback as to whether it would be possible to put a bed down there. Please update us with what happens! I'm very curious to hear if you can expand this out, definitely will be able to get the rents up if you can add this.

Hi John,

I found this link below:

Requirements for bedroom in MA

I know that post is quite old. But here seems to be the notes:

"As an appraiser, we want to see (1) a closet, (2) a "normal" size window (not a basement-type window), (3) egress into a common area (can't go through another bedroom to get to it) and (4) above grade. Size doesn't matter so much, so although 9x7 is small, if all the other conditions were present, I would call it a bedroom. "

EDIT: just found this article below that seems to be a bit newer.

https://www.maxrealestateexposure.com/legal-requirement-for-bedroom/

Hopefully this helps!

Phil

Thanks @Charlie MacPherson!

I'm assuming this is in regards to SFR's correct and not multifamily?

 Hey Cam,

I'm glad to be of any help I can. I'm a new investor myself but heres to add on your points.

- I've not tried to get any actual loan through any lender, I more or less took a stab at what it would be like to invest at a negotiated lower price so I could understand the impact of margin and what it looks like in the calculator. Moreover, what would you personally say is a more realistic margin for a negotiation on an REO?

I would say that this is a case by case basis, it would most likely be best to have the agent youre working with reach out to see the margin. I know that Brian is an agent in Worcester and he mentioned that there wasn't much wiggle room on this price. Do you have an idea of the financing that you're looking to pursue? Whether it be a HML/Private lender or conventional financing, it's always a good idea to get an idea of how much a lender is willing to lend.

- True, in your experience would you say that banks are eager to show? Do they show REO properties on request or do they only have set public showings? Does it vary from bank to bank?

Another case by case basis, I would reach out to the agent to see if you could setup a showing to get it checked out, or work with your agent to setup a showing.

- When I was attempting to estimate the rent I assumed that it would be the cumulative gross rent from each unit which makes me a bit confounded. I could be grossly misunderstanding this, but we're assuming that between all of the tenants on each floor that the total rent for that floor (unit?) would be the going rent rate (which I believe I understand you say is priced more realistically at $1200?)

The total rent would be for each unit. From what I have seen in Worcester, $1200 PER unit. So taking this into account since it is a triple decker, $1200x3units = $3600 in monthly rents. Again, I would definitely check out zillow, hotpads, etc to see if this is in line with the area.

- I am incredibly grateful for that range of insurance info! Who did you call? Any recommendations?

I started by Googling a few as well as asking my agent for some recommendations. From what I've found it's hard for a insurance company to give you a quote without an actual property in hand. I've been given some wide ranges from like 2k-3600 a year. It is also worth mentioning as Brian did that this is a flood zone, you need to get flood insurance on this which is probably another 3k a year.

Feel free to shoot me a PM if you'd like, glad to connect and let you know what I've been seeing.

Hey Cameron,

Great job for starting to crunch the numbers! I'm still a new investor myself but I found a few things that I'd point out. I'm local to the area and have been looking at the city as well.

• I saw that you had put the price of 190k, this looks to be a short sale so you're going to be needing to get the short sale lenders approval on this. I'm not too sure what kind of financing you're going with but this might be important to point out.
• The units themselves actually look pretty decent, but without having pictures of the basement it is a bit tricky to tell, best would be to get a showing of this to see how it looks in person.
• I saw that you had the monthly rents at $5100. For this area I've seen rents range from 1200+, the nicer furnished and nicer area is on the higher end. I would check out sites like Zillow, craigslist, and rentometer to get the rents. 
• As Aaron mentioned, your property taxes look a bit on the low side. I took a quick peek at the Redfin listing and it looks like it's at about $303/month. Also, he is correct in that you should make sure with whatever loan you're starting with you're accounting for the holding costs of the loan etc. 
• I would also adjust the insurance costs, I did a bit of calling around a while back for 3 deckers in Worcester and I believe I was quoted around $2400-3500/year, but best to double check yourself and call a few insurance folks in the area.

If there is anything else I might be able to help with, I'd be glad to take a peek! Keep on crunching those numbers!