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All Forum Posts by: Raymond Wu

Raymond Wu has started 3 posts and replied 6 times.

Post: 6-Unit Investing Scenario (numbers included)

Raymond WuPosted
  • Investor
  • Stratford, CT
  • Posts 6
  • Votes 2

Hello BP,

I currently have about $20k in the bank and I was considering purchasing a 4 family unit using an FHA loan, but my realtor just showed me a commercial 6-unit building, with the seller willing to finance the remaining 20%, while I put down the 20k (~5%).

I'm a relatively new investor and just closed on my first property December 2016. This deal feels like an opportunity because the seller is willing to finance the remaining 20% with a 5-year balloon payment at an interest rate of approximately 6%. Just wanted some feedback and thoughts on the deal.

Would it be wise to execute the 6-unit deal first then purchase a multi-family with an FHA or vice-versa?

Here are the numbers:

Price $ 369,000
5% $ 18,450
Seller Finance 20% $ 73,800
rent roll
$ 900
$ 940
$ 975
$ 975
$ 1,033
$ 1,050
total (monthly) $ 5,873
Annual $ 70,476
EXPENSES
Tax $ 11,000
Utilities Expenses $ 9,360.00
heat & hot water $ 6,000.00
insurance $ 2,800.00
NOI $41,316.00
CAP 11%

Post: Tenants Trashing Apartment

Raymond WuPosted
  • Investor
  • Stratford, CT
  • Posts 6
  • Votes 2

DearBP Community, 

As a young investor and new to the REI world, I need some advice on a situation at one of the investment properties I currently own. I have tenants that moved in not too long ago with her five kids, and I recently got a call from the tenant regarding a leak. I went to the apartment the next day to fix the tenant's kitchen sink and upon walking into the apartment, I realized the apartment is a mess! The walls are colored with crayons, pencils, etc. The floors are scratched, there's spilled liquid on the hardwood floors. The radiator components are falling off, the window nets are slashed, and the kitchen cabinets are scratched and chipped.

I have a security deposit ($1600) from the tenant, but I’m afraid this will not be enough to cover the damages. The tenant is already having trouble paying the rent. How can I manage to get the tenant to cover the cost of damages beyond the $1600 amount upon lease termination?

Thank you,

Ray Wu

Thanks for the clarification, @Mindy Jensen ! Seems like the conventional loan is the way to go. I don't have a specific lender, any recommendations are greatly appreciated! 

Thank you for your response, @Mindy Jensen 

The plan is to refinance the current HML with an investment loan, then to use an FHA loan to purchase the next multi-family and live in one of the units.

What would be the lowest down payment requirement for a conventional as opposed to the 3.5%FHA loan for multi-family properties? Would a PMI be required for the conventional?

Any thoughts on this strategy? 

@Scott Hollister , Thank you for your response and advice!

To address your questions:

The home was purchased as an investment using hard money. I made a few rookie mistakes initially that forced me into a time constrained situation, and the only way to save the deal was to go hard money. Initially, it was supposed to be an owner-occupant loan.

The property was in fairly good condition when purchased, so no work has been done. However, my property manager suggested some work/repairs on the property, but I’m trying to do the work/repairs after the refi process just because the high mortgage payments are really eating into the cash flow of the property.

I want to use an FHA loan because of the low down payment requirements. I don't really have much cash after the expensive closing cost on the hard money loan. I'm not very familiar with the 203k rehab, but will look into it.

The terms for the HM loan are: 6-month loan, 10% APR, and 5 percentage points with no pre-payment penalty.

Thanks,

Ray

Hello BP community,

I’m a young engineer and just moved to Connecticut for work. Graduated in 2015 and want to begin investing in real estate.

I recently just purchased a multi-family house (4 units) last month using a hard money loan due to some initial mistakes with the financing part of the deal. Now, I'm in the process of refinancing the hard money loan. I plan on purchasing another property later this year using an FHA loan.

Questions:

How should I structure the refinancing of the hard money loan? Which will still allow me to take out an FHA loan to purchase another property this year?

What are some limitations to an FHA loan? Monetary gifts? 4 multi-family units qualified?

Any additional thoughts/suggestions/criticisms are welcome and will be appreciated.