All Forum Posts by: Rodrigo Barrera

Thanks guys yeah last time we did a deal he provided title insurance and we did a closing with a title company and a deed was recorded, would this be enough of a check? supposedly just want to move onto bigger projects.

yes taxes are expensive within the city...

Hello!

So i need some advice and wanted to see if i could get your opinion on a deal im looking at.

My name is Rodrigo. im an investor in michigan and i have 3 properties which include 4 units, one is a duplex. househacked the duplex for 3.5 years.

bought a single family last october (traditional financing) and 2 more houses (one i will live in) under a land contract, with only $7000 down per property. total rent gross is $5605/month.

So all my places are within a block of a a college that doesnt have enough housing for its students so they have to live off campus. we are full until summer 2020.

The person that sold me the two houses under land contract is offering me 3 more properties on land contract with minimal cash down, around $10-15K per property he using a gross rent multiplier method to price these so heres the break down. all houses below are rented through summer 2020.

property 1

older house maintainted well 4 bdrm monthly rent is $1550 property taxes are around $5000 annually.

1 block-2 min walk to campus

new roof furnace and water heater in last 5 years.

cashflow around $300 monthly using my number of $650K for everything.

property 2

duplex 4 and 5 bed units, rents for total $4040/month

lots of new stuff in 2017 interior and exterior.

literally across street from campus

taxes are about $10,000 annually

cashflow around $900 monthly using my number of $650K for everything.

property 3

single family next to duplex. new construction in 2017

5 bed gross rent is $2300, also across street from college, taxes around $6000 annually.

cashflow around $589 monthly using my number of $650K for everything.

land contracts are 6% interest, 30 year amortization, trying to push the balloon to 7 years ( he seems flexible on the balloon and down payment).

at a gross rent multiplier of 8 (his number) im looking at a total of about $750K, but i like the number better around $650K which is about a 7 gross rent multiple. I understand that the fact that its seller financed with minimal cash down is a huge advantage and am willing to pay a bit more for that.

at the end of the day if i ever pay all my places off, I would be looking around $160K in annual rental income if rents stayed the same. im trying to figure out if I should stick to my number of around $650K or if its an opportunity that many people never even get and that I should do even at $750K given the little barrier to entry (cash on cash return is crazy on this).I have already done business with this person and all is good.

I appreciate all you do and all the info you and bigger pockets has provided me so far! any opinion is welcome!

Thank you in advance,

Rod

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $179,900
Cash invested: $5,000

Duplex 3 bed 1.5 bath eqch side, near a college in historic neighborhood

What made you interested in investing in this type of deal?

house hacking

How did you find this deal and how did you negotiate it?

MLS...paid list price so seller would contribute to closing costs

How did you finance this deal?

FHA

How did you add value to the deal?

increased rents, replaced all cedar shake siding, painted whole house, landscaping interior paint, new appliances, remodeled one bathroom.

What was the outcome?

Still own it, a block from the college so great track record. Appreciated in value where I was able to get a $30,000 Heloc and buy more houses

I agree John that is what i was thinking as well, thanks for your input

So about a month ago we had a pipe burst in one of our unit, water ran from upstairs bathroom down to kitchen and into basement. water remediation company had fans and dehumidifiers in that tenants place for about a week running continuously. their utilities bill webt from being approx $50 normally to about $108 dollars so around double. theres 3 roommates in that unit and each one got a $100 disount for that months rent to compensate for any contractors coming in and out and not having hot water for about 5 days. my question is should i pay for the additional electricity used caused most likely by the dehumidifiers and fans? these are 3 graduate students living there.