All Forum Posts by: Polly Wu

Expense is missing Vacancy 10%, Property Management 10%, Insurance, Repair & Maintenance, Landscaping, CapEx 5-8%. What's the estimated rehab cost, current occupancy? Average is only $555/unit/month. Assuming with a 5% 30yrs fixed loan, the COC will be under 2%.

Sorry but not a good deal. 

I'd suggest you learn how to analysis first before looking at deals on MLS. There are a lot of podcasts and webinar you can listen and watch. That will be a great place to start.

I live in L.A. and just started looking into properties in Fort Wayne, IN. I was confused a bit by how big of a difference the rent could be for a 3 bedroom 2 bath SFR with similar conditions in different areas when I looked it up on Zillow.com for rent. Hope my fellow BP member at Fort Wayne can share some insights about its economy, current development and rental market. Thanks!

Great info!  Thank you all for sharing!

I was thinking about your situation more on the drive home.  This could be an opportunity for you in another way. Instead of buying it and having such a big financial obligation right out of school without any steady income, you could use it as an opportunity to learn about rehab.  If the owner really wants to sell the house at a higher price, most likely he will have to fix the house first. Why not volunteer to the owner to help him coordinate the repairs for free? You could use the chance to get to know about rehab process, cost estimate, dealing with contractor, time management. 

Hi Patrick,

I am new to real est­ate investment. I ju­st started learning at BP a couple months ago. But I live in Diamond Bar for the past 6 years and kn­ow the area. As a BP fellow and people from your neighborhoo­d, I would share my opinion with you.

First of all, it’s a very smart choice to try to buy the hou­se you are renting in this area as Keep and hold for appreci­ation. This is a very good and safe neig­hborhood with fantas­tic schools. House value is very stable over the years even during the recession in 2009. For a coll­ege student, you are already thinking li­ke an investor! Great for you!

However, this area is NOT for cash flow investment unless you do something creat­ive like house hacki­ng. Living in one ro­om and rent the other 3 out. Even so, gi­ving the high proper­ty tax and other exp­enses and maintenanc­e, plus the CapEx re­serve, you may still be short. If you wa­nt to flip the house, you better follow the 70% rule for fli­ppers, otherwise, it won't be a profit. Also, you will need to consider the fina­nce for the repair as well as the down payment.

One thing that may help you negotiate wi­th the owner is to find out why the he is selling. The more info you find out ab­out the owner, you can use it as your le­verage in your negot­iation. I don’t think you can get the ho­use appraised and es­timate the rehab in such a short time, but it could be helpf­ul to take pictures of the problem areas in the house, looki­ng up the estimated cost and show him the numbers in your ne­gotiation.

Here’s a link to some posts on the Rehab cost estimate. Hope this will help.  https://www.biggerpockets.com/renewsblog/estimate-...

Whether you decide to go for it or not, I cheer for your cou­rage! Do not get emo­tionally attached to this deal. Keep a cool head.

Best of luck! Let me know how it goes.

Polly

Great post. Thank you for sharing your experience and lessons learned over the years. 

At your remarks on the current Phoenix multi family market, do you mind elaborating a little bit? 

Thanks!

@Chris Martin

Hi Chris, Thanks for conducting the researching and sharing the statistic data with us.  it's eye opening!