All Forum Posts by: Rob Ferdinand

Hey Phillip, I've read a little about 203k in the past, but not much. My understanding is that whatever amount is allocated for repairs is utilized "as you go", as it's distributed to contractors etc. My question is, how are mortgage payments typically structured throughout the rehab process? 

For instance, If the repair portion of the loan is up to $100k. The rehab has a downtime of 4 months to complete. The repair costs have been about equally divided at $25k/month, what would the mortgage payments look like across those 4 months?

@Avery Heilbron Congrats on the new deal! You clock the duplex at $1,100 once you move out. Is that rental income minus mortgage, or does it reflect general expenses such as vacancies, repairs, capex, and management?

Do you feel that the casino is affecting Everett's prices at all? good or bad?

Thanks for the tip on PM. I tend to be more conservative, but with such small margins here in the N. Shore, a couple of overly conservative metrics will skunk the whole analysis! I'm starting to learn there is no "napkin math" in this arena. Which is why I was posting at 2 am about water & sewer costs! Thanks again for that one HAHA. I'm sure you'll run across more posts from me as I fall deeper into the rabbit hole.

Thanks

RF

Lots of great feedback!

@Natalie Schanne - Really informative, thanks for the detailed reply!! You're totally right about the numbers changing dramatically if I live there! I've played with that math a little. I would only plan to stay a year or 2, and I want to make sure it will produce once I leave. Roommates are out of the question for me and my 8 year old boy :). 

What I HAVEN'T been considering much is appreciation! I've viewed it as a "freebie" or "future emergency fund" :). I'm more concerned with cash flow within the first year. Just for kicks, I'm going to play around and project appreciation into some models that forecast 5-7 years out and see what that does. First, I'll definitely have to research how to better analyze overall ROI when it starts to get denser, including appreciation etc.

LASTLY, Off-market properties. I'm guessing all the good off-market bargains are instantly canalized by those with much deeper pockets, and stronger contacts in the biz. Aside from networking with agents, what are some ways to stumble into the off-market beauties?

Thanks again!

Yes, Revere and Saugus are actually my top picks. Since I'd be house hacking for at least the first 2 years I don't want to move too far away from the city. I've been searching (Malden, Medford, Everett, Winthrop, Chelsea, Revere, Lynn, Swampscott, Stoneham, Saugus, Lynnfield, Danvers, Peabody) but I'm not finding a ton of stock, especially within my price range. Lynn seems to have the most listings, but most of them are in need of major rehabs and I'm just not positioned for that at the moment.

I've been reading a lot of articles trying to gauge what the experts predict will happen to the housing market as a result of the pandemic. I've concluded that nobody knows and it would be foolish to try to hold out for a dip in prices. However, I do believe that in the near future (Next year?) there will be a spike in foreclosures, even if the overall market isn't noticeably tilted. I think a better strategy would be to get my first deal out of the way so I can then strategize to snatch a forclosure(s). For me, that may even mean seeking investors and trying my luck at wholesaling to build some capital...BUT, first things first.

Hey David,

I'm going North about 30-40 minutes max. About the Danvers/Peabody line from Boston. 

Thanks for the reply. And yes, lower liquid investment and higher rent yields will increase the ROI. I'm using real MLS list prices and comparable market rents, so these are "real world" figures I'm modeling. It's possible my local market just isn't ripe for rental properties within my budget. If that's not the case, something must be wrong with my numbers and that's what I'd like to figure out.

Hey, everybody,

I'm not quite sure if there are problems with my calcs, or if everything I find on market are simply bad deals. Please let me know if I'm doing anything wrong here? Here's the details...

I plan to use FHA loan on a multi. Initially, I will house hack, but I'm running numbers to see what it will do once I leave and it becomes solely an income property. I'm analyzing North shore homes, 2 & 3 families, on the outskirts of the city. I've worked out some kinks and THINK I am as accurate as I can get.

I'm using list prices from MLS and estimating rents from craigslist. I'm including closing costs into the mortgage ($7,500 generically, is there a good percentage to use?). 5% (each) for vacancies, repairs, and cap-ex. 10% for management. Local utilities have been estimated, and of course, PITI and PMI using a mortgage calculator.

With 2 families -($500k-$525k range)
What I'm finding is that they refuse to cash flow with 5% down. At 20% down they will cash flow but the COC ROI is under 4%, and also falls shy of the 1% rule. (I've also included a 1% "clean-up" cost for minor repairs/paint as a one-time cash expense, into the COC ROI)

With 3 families -($600k range)
At 5% down payment, they seem to cash flow nicely, over $200/door, although the 50% rule is pretty negative and I just meet the 1% rule. In this scenario, the COC ROI is suspiciously inflated at over 20%. (Also included the 1% clean-up fee).

3 fam- ($650k range)
The numbers are much more realistic. Cashflow just over $100/door. COC ROI 11%, but 50% rule is WAY negative (About $1k) and falls under 1% rule.

I'm aware the 20% vs. 5% down payment makes a world of difference, plus saving the PMI. I can't afford 20% on a 3 family, and the 20% on 2-family scenario just seems off to me at 4% COC ROI.

So...Is anything glaringly off with my numbers, or is this expected for the current market?

Thanks for reading!


 

@Lien Vuong, That makes sense. Thanks for the insight!

@Alejandro B. Thanks for the reply!