All Forum Posts by: Account Closed

I'm ashamed of this but have to be honest @Hattie Dizmond 

 and @Joel Owens . I didn't realize the list price was $460k. That totally changes the game. Thanks for the response. And Hattie, I'm taking your advice on FHA as we speak and converting my current FHA mortgage to a conventional ;-). Ready to house hack very soon!

So I saw a 4-unit property during my quad-plex search.  I got all excited when I saw one has an assumable loan.  But I don't know what the right questions are to ask.  I sent an email to the given realtor on the property and here is what they wrote back:

"The loans on this property are assumable with a current rate of 2.875 each and with a 1% assumption fee for a qualified buyer. The loans are variable but they have been at this rate for several years.

All units are two bedroom one bathroom with enclosed private backyards & washer and dryer hook-ups.

Loan details:- monthly payment = $577.15/month, next rate reset is on 3/22/15. Max rate reset is 2% per year which caps at 12%. Remaining loan balance is $108K for each loan, or $216,000 total, and they have approx. 21 years left. The loan rates are tied to the weekly average of the one year treasury securities index.

All of the units are currently occupied but you could always evict (without cause) one of the tenants when you purchase it."

I don't know what the reset of 2% means. Is this an ARM? Are there closing costs associated with a loan assumption? Given these numbers, does this look like it's worth looking further into?

I know I ask a lot of questions.  And thank you for your time.

Kyle

Welcome Kathleen :-)

Congrats to graduating! Have you already been scoping properties near you? I'm not familiar with your market, but I would imagine it would be difficult to find a unit in your desired range. But it's always possible! Are you looking for SFR/condo/multifamily/other? Are you interested in purchasing from a distance?

@Joel Owens 

Hey Joel, 

I don't currently own any vacation rentals, but I've been gaining some traction for a knowledge base.  My girlfriend and I stayed in Levenworth, WA for a few days in a VRBO.  It was actually adorable and a busy unit.  I picked the owners brain and he was quite excited about his profits in this unit.  He highly suggested me doing the same - VRBO for manufactured units.  He described the structuring as similar to a regular home and the income is very favorable.  I've never been a fan of manufactured homes, but it might be something worth looking into as a VRBO.  

Wow great replies!  Thanks for the valuable input.  I suppose if I was to add a sauna or steam room, it would have to be in a home I intend on staying in for the rest of my life.  Not worth throwing into a home built for rent or sale.

@Carlos Alvarado 

I'm in the belief that cashing out your house and applying that cash toward - for example - 20% down on 10 more houses that are rented with positive cashflow is by far a smarter financial move than continuing to hold one property and gain income.  In the end, it's faster than waiting to save 20%.  This is all assuming all 10 houses turn out well.

Out of sheer curiosity, I would like to throw this question out there.  Hypothetically, if I was to buy a house, install a sauna - say upon adding a finished bathroom in the basement -... How much would this affect the value of the house?  Would it be worth installing in the first place?

@Justin Howe 

 when you are referencing a persons name and want it to work on your computer, use the @ symbol like you are and begin typing that persons name.  On the bottom of the chat box you should see that persons name pop up.  When you click it, it will be linked.

Ok perfect!  As far as I understand it, you're looking at a quadplex (has 4 units).  Have you read the Ultimate Beginners Guide book on BiggerPockets?  It has excellent starter information.  

If you qualify for FHA, you would have to live in one of the units (at least 1 year requirement). I'm honestly not experienced with using line of credit so i can't help there. I still think the best move, if you haven't already, is to check in with a mortgage broker on the loan type, rules, and your pre-approval amount.

I would also check the install date on the current roof, water heater(s), and other appliances.  This would give you a good idea on other possible expenditures.  I hope I'm not getting too ahead of myself in this information.

I hear that property management fees average around 10%.  If you were to use a management company, I would assume the higher percentage unless it's promised at 6% already.

Hi Justin,

i'm a little new to real estate investing.  But I'm confused on one piece of information you have.  You're looking at a 4-plex, but it has 8 units?  Doesn't that mean it's an 8-plex?  I've been researching like mad about financing and plexes.  One of the first things that pops up is that any plex/building holding 5 or more units requires a commercial loan.  

Kyle