All Forum Posts by: Sam Morgan

Thanks @Will Fraser. There are half a dozen other duplexes nearby. What I might face are the city's strict rules around duplexes, which means installing fire-ceilings and separating every other utility. Its extensive. I think it will come down to a cost thing at this point. 

If I keep it as SFR, do you have any ideas how I can rent out both spaces independently?

Or should I try and rent the whole thing as one home, advertising for 4 adults or extended family that would like to live together with some seclusion?

Hi All!

I'm under contract on a single family with an upstairs 2bed/1bath living space. A separate entrance downstairs has another 2bed/1bath living space with no internal connection between the living spaces. It appears no permits were ever pulled for the downstairs. Both will need significant updates and I'll have to pull permits to get downstairs legal. Is it better to leave as an SFR to diversify my portfolio and realize better appreciation, or convert to a duplex for better cash flow? Can I have both if I leave as single family, but rent out both units somehow? This is in NC.

Thanks for any and all replies!

@Henry Clark Thanks for the heads up!

Hi All!

I'm excited to be putting 20% down on my first off-market deal with a 30-year fixed @ 3.63%. It should cash flow nicely after renovations and hopefully I'll be able to cash out refi. I think I'm buying it well at a 22% discount (thats conservative) and there is value-add, but several big unknowns still remain. A downstairs apartment is not counted in the HLA and I can't tell if its ever been permitted. I'll need to pull permits and get it renovated before its livable. 

• Where do I start with that process of checking if its ever been permitted?
• How much does it cost to pull permits?
• Do I need separate permits for electrical work? Plumbing? Moving walls?
• How much of that work am I allowed to do myself, as long as its built to code? 
• How do I "turn it into a duplex". I mean how do I get it classified as a duplex?
• If it remains an SFR, how can I still rent out the two separate units without breaking any laws?
• A big plus is that I have the first option to buy the two adjoining lots and the lot that the house is on is deep and I could build a garage apartment. What is the first step of a new construction project? 
• How does one finance a new construction project?

Tons of varying questions and I really appreciate the input from all the great minds here!

@Will Fraser thanks for you time and input!

@Will Fraser thanks for your reply! I do have closing costs factored into my numbers. Now I'm wondering if I could have offered cash for a lower purchase price, just to have less in the property after the refi. It would take $340k to get everything back, which truly is possible (depending on how nice I can do the renovations), but I haven't looked at the cash flow for that ARV.

Wouldn't the cash flow still be based on my capital left in the property though? So, if the refi returned all of my starting capital, then my return would be baseless - unlimited?

@Aaron W. thanks for your input. With the numbers I first posted, the cash on cash is about 9.5% Not a slam dunk, but decent.

At $300,000 ARV the CoC actually does increase to 11.5%, and I think I could add a bedroom so rents could be higher too. I'm wondering if its worth trying to find the cash to truly BRRR, but I'm starting to feel okay with having more in the property. I also have first right of refusal to purchase the two adjoining lots, both owned by the seller. They hold significant value. Thanks again!

Hi All!

I am hoping to get some feedback, advice, criticism, missing pieces and anything else about an SFR I plan to purchase for $210k with an 80% LTV Conventional Loan, conduct $55k in renovations, and then cash out refi on the equity gain. The home should appraise for $270k (conservative) when complete. This is an off-market deal at the tax-appraisal price. Unfortunately, it needs $30k just in re-wiring and HVAC work... But should rent for $2,200-$2,600/month when renovated.

• a. Purchase Price: $210,000
• b. Down payment: $42,000
• c. Renovation: $55,000
• d. Total money in: $97,000 (b+c)
• e. ARV: $270,000
• f. 75% LTV Cash Out Refi: $202,500 (e*.75)
• g. Cash towards 1st loan: $168,000 (a-b)
• h. Total money in after refi: $34,500 (f-g)
• Am I doing this right?
• Am I correct that the higher the ARV, the more cash I'll ultimately have to re-purpose?
• If these numbers play out, I'm still in it for $62,500. Which is not that far from what I might put down for a turn-key property in my market anyway. Though, rents would be 1/2, as this one has a downstairs apartment. Thoughts?
• If the ARV turns out to be $300,000 haven't I just made it harder to cash flow now that I'm essentially taking out a loan on a property that's in line with all the MLS properties in my market?
• I know this is a lot, but I truly hope for and welcome any and all replies. Thanks!

Awesome @John Bradley thanks for your comments!

@John Bradley I'll be aiming for a quadraplex. Would settle for SFR with conventional 5% down in the same area as well. I'd like to keep hacking for as many years as my lifestyle allows.