All Forum Posts by: Robert-Lee Pass

Quote from @Bruce Woodruff:

Quote from @Robert-Lee Pass:

well i saw the property yesterday. has a few weird things about it . Pex Piping , Slab foundation, no slider or door for rear access from inside the house (have to add a side gate entrance to the rear) No garage, No Dining room (possibly could put a small table but the island would be a better idea)

What's wrong with Pex? It is used a lot today, actually has many advantages over old copper. Same with slab....what's your concern about that?

Re the back door, can you take out a rear facing window and use that existing header to pop in a french door?

No garage is a bummer but certainly not a deal breaker.....

Most people don't use dining rooms any more anyway.....

If the numbers are that good, I'd go for it....

i don't know anything about plumbing haha i just hear people laugh at or talk down about pex . maybe a plumber said it once , Shrug.
that back door idea is awesome! i was thinking a slider but the bedroom is too small id say for a slider so close to the bed. french doors to exit from the master would be decent . and yes there is a code sized window in there that we could use the header on thanks for that idea

Quote from @Michael K Gallagher:

@Robert-Lee Pass I as well don't have any concerns with the "odd" items you mentioned above.  if it is a newly built property it likely had to go through all code and city inspections to be correct, so I'm not sure why you would need to add anything like the slider door, unless its just a feature you'd prefer.  But the pex piping is a plus in my mind especially in a cold weather climate like CO.  Slab is also a plus in my mind getting rid of any water intrusion issues that might come up with a basement.

If the rents in the current condition make your numbers work, I'm not sure any of the things you mentioned are issues in my mind. 

 Hey , thanks for your insight, i also know all those things so i guess my real issue is im afraid the unit wont appeal to people and i either cant get it rented , or the type of people that would accept that type of product would be the type that make me regret this decision.. shrug maybe irrational fear from hearing stories or podcasts. its possible . but thanks again.

adding the gate , carport all of those ideas were just for the renter not myself.

I have no real life people who are around me that are in real estate, own rentals, nothing . Its hard for me to understand not caring about those things in my own life.

Quote from @Adam M.:

@Robert-Lee Pass Sounds good to me? I agree with @Greg Scott, i feel the nervousness coming in through the post! That being said, better to drill into concerns now than after closing.

Fortunately, I think the weird items are not that weird at all: slab foundation is actually ideal compared to let's say pier and beam. The side gate entrance and rear access... is this truly a make or break? It's a 2023 build so since it's newer construction, that tells me that egress has (hopefully) been properly accounted for and it's a preference issue. Are there similar patterns in your neighborhood/will tenants/other prospective buyers care about this also? I would ask your agent if it's unusual in your market if it's a concern and if it will affect the rentability of the unit/demand.

10K cash I'm guessing that's down to the VA loan? Which is great! Considering it's under market and in a good area among many other things, it sounds like analysis paralysis to me and I would go ahead with the offer. I am curious though you mentioned neighbors and dining room-- are you living in one of the units? That wasn't quite clear as it sounds like you own your current home. If so I would be more concerned with what's happening to the other residence if so! Hope this is somewhat helpful and sending good luck on that offer!

OFFER UPDATE - I shot the offer last night at 375k closing paid (365k basically for him) he countered at 399 but will pay closing . this still turns the deal to a 27% cash on cash 7.6 cap kinda more realistic
numbers i would say haha I'm about to respond to his counter so i came here to see your guys' thoughts

thanks for your reply . Yes its a VA , yes i will be staying in one side for a bit and leaving the wife and kids in our current home . ill spend over 51% time there for the year and then rent it out. the numbers will be when its fully rented out after i leave. the down payment is so low because i pay 20% of anything over 325K using remaining entitlement on a second home loan via VA

I don't care about using the dining room myself i just assume other people do so it'll turn them off? also the garage .. its not impossible to find that setup but it is more rare. it pulls -$50 per car spot off the rent or -$100 with no garage. that's accounted for with the rental comp.

As far as the rear access being make or break im asking you guys on that one. that's the part im not sure about. its an otherwise great deal except these cost cutting measures by the builder. i didn't notice this before walking it yesterday

Im afraid im falling in love with the numbers and these weird things with the property will attract a lessor tenant than i want to deal with and ill be stuck in a nightmare property like i hear about people falling into on accident because they thought the numbers on paper were so much better but the property was crap and nobody wanted it . that's what im afraid of i guess.

i did do extensive research on this particular neighborhood so i am familiar with the stats and boots on ground type as i live pretty close about 30 min .
The neighbor thing i mentioned. Ive just heard people say things about how a good neighbor will really help them with the looking out for the property and contact me when things are going on i should know about but im not around to see

Thanks for your time if you read all that
- Rob

Quote from @Greg Scott:

Congrats on getting over the fear to make your first offer.  That is a big step.  The next one will be easier.  I can tell you are still nervous from your post.  I'm trying to unwind some of the details.

You say 37%+ CoC return if you can get in for $10K, but not clear how you get to $10K. Are you using hard money? I would do the math on your cash required and recalculate. Do it again with a "worst case scenario". You need to understand your likely range of returns.

Check other rentals in the area to see if any of them lack a dining room.  Do they rent for less?

Good luck

Yes sir the cash needed to close will be about 14k now with the counter coming back at 399 and closing covered. its a VA situation so the down payment will be insane. 
Just assume im correct on cash needed to close. 
Return is 35-40K per year . or 300 cashflow after setting 300 aside for future maintenance and repairs.. that is of course if i can rent it for the 1600 . if it drops to 1500 well then its still 100 over that 300 im saving every month.

what do you think now ?
worst case scenario with a realistic rental comp comes to 25% cash on cash with the 399 offer and closing covered. cap is 7.6 i believe at that price

@Chris Seveney this would be an owner occ VA loan the numbers will be for year 2 when both sides are full

well i saw the property yesterday. has a few weird things about it . Pex Piping , Slab foundation, no slider or door for rear access from inside the house (have to add a side gate entrance to the rear) No garage, No Dining room (possibly could put a small table but the island would be a better idea)
this is a 3/2 1100 per side 2023 build Duplex on 0.3acres inside a decent neighborhood Class B)

what do you think about that? do those things sound like deal breakers? the deal works really good on paper , its not in a bad area its actually in a decent little community with a k-5 across the street and all that. neighbors are cool too . just met them yesterday

Pretty much all systems are go , the wife is on board, the price is right , otherwise a great deal but these weird things the guy that built it chose to do.. (I'm able to get into this thing for only 10K the cash on cash return is absurd from 37-56%
(depending on closing paid and points I pay, its an 8% Cap, 350-450 cash flow (after variable expenses + depending on final rate) Brand new.. seems like a decent first step but the functionality.. A Perfect nice 3/2/2 1400 sq ft per side is 575k , this one could be 365k if they accept my offer i sent last night) this rents for 1600 the perfect one rents for 1850-1900 but takes 6x the cash to get in breaking all the returns with cash flow going to 0 , Cash on cash going to 2.3%, and cap going to 6.7, overall a larger piece to manage.

I do understand I went from the top tier tenant that will pay the most for the perfect setup down to the unit that can be paid for with section 8 and will attract a lessor tenant or someone single / new young family / retired / disabled / fixed income etc.

Here's the deal figures With closing paid , seller counters 10k above my offer, 6% VA loan, no points

Does the property lacking those features make it a deal breaker ? it is reflected in my offer. I'm currently 60k under list (-13.9%) = 187k per unit

Should I just shut up and buy the thing with the amount of cash required to close? this isn't even 10% of cash on hand but is my first real estate investment past my own home

Thanks everyone ,

- Rob

Excited to hear everyone's opinions on the things missing ( I was OK with all of it then realized no dining room in bed last night after I sent the offer)

well i saw the property yesterday. has a few weird things about it . Pex Piping , no slider or door for rear access from inside the house (have to add a side gate entrance to the rear) No garage, No Dining room.
this is a 3/2 1100 per side 2023 build Duplex on 0.3acres inside a neighborhood.

what do you think about that? do those things sound like deal breakers? the deal works really good on paper , its not in a bad area its actually in a decent little community with a k-5 across the street and all that. neighbors are cool too . just met them yesterday

Pretty much all systems are go , the wife is on board, the price is right , otherwise a great deal but these weird things the guy that built it chose to do.. (Im able to get into this thing for only 10K the cash on cash return is absurd from 37-56% (depending on closing paid and points i pay, its an 8% Cap, 350 cashflow (after variable expenses) Brand new.. seems like a decent first step but the functionality.. a Perfect nice 3/2/2 1400 sq pft per side is 575k , this one could be 365k if they accept my offer i sent last night)

@Robert Ellis , The cash im using on this deal is only 10k . Offer sent yesterday at 375 with closing covered so 365. was listed for 430 dec 20th

Build with equity? you mean buy the land  Collateralize it , construction loan the build, refi out into the next because theres equity in it after completion?

then you said something about do more of a multifamily product not single family and do much better rents are higher appreciation etc. but that sounds like your saying multifamily appreciation is better and rents are higher..

im pretty comfortable letting that 10k sit in the house and not needing it to recycle into the next. Right after closing on this im actually looking for another with a normal down payment size lol this is just my second VA home

Awesome , thank you for that. After learning this information about HUD rental rates i switched my subject property from a class A asking 2150 for a 3/2 down to a class B asking 1600 for a 3/2 just no garage and 200 sq ft less per side. but -175k less purchase price

thank you for that about the utilities. i get it now . Would you be willing to check 80817 for me . this is my home address and the figures i read are insane .. id say over 1k market. 3400 for a 4/3 but its only 2200-2400 market value

am i reading that correct?

My area basements are very common. crawlspaces are also a thing .. But a SLAB foundation.. whats your thoughts on that vs a basement / Crawlspace setup for a duplex rental? Slab easier and no water issues like a basement .. maybe less maintenance .. have to rip up concrete to access anything tho right?

Just curious. Basement vs Crawl space vs slab

Thanks everyone ,
-Rob