All Forum Posts by: Sean McFadden

Hey all,

I am going to my first showing tomorrow to take a look at a duplex that I may be interested in purchasing. I will be there with my realtor as well as the realtor for the seller. I have an idea of some of the questions I want to ask right off the bat, but I was wondering what you guys usually ask.

I plan to ask about the current tenants, the seller's reason for selling, condition of Capex fixtures, what the neighbors are like, etc. and whatever comes up organically during the showing.

Anything else that would be valuable to ask?

@Ryan Allison, @Jaysen Medhurst

Thank you for the feedback! Based on this information I've started having conversations with my realtor and and lender to try and scale up the price point at which I'm pursuing MFHs. 

Ideally, I would like my first investment MFH to not require any renovation. This is purely based on the fact that I don't have the cash reserves to support a property sitting while I get repairs completed. While I think I have the support base of contractors to draw from in order to turn repairs around quickly, I think I'd feel comfortable doing this on a 2nd or 3rd property. I posted this because I'm very interested in leveraging repairs to add values to properties and am thinking a bit ahead.

I am not going to rule out a 203k loan entirely for my first property, however. I'm still in the early stages of house hunting, and I may change my mind as I learn more/speak to more people.

Hey all!

It's been a little difficult finding a multi family unit to house hack that fits my criteria and that falls within my range of my pre-approved loan amount. It seems like the best deals come from properties that would stand to gain from forced appreciation. I guess I have a few questions about this concept.

- Do house hacking deals exist where little to no repairs are required? I've found that any properties that fit my criteria for cash flow and are in an attractive location  tend to be scooped up, AND very quickly. I understand this may be due to COVID restricting the supply of houses and driving asking prices up. Southeastern Connecticut might be a tough market to buy in at this time. If that's the case, I can spend more time saving and educating myself!

- In cases where I would be pursing an FHA loan and an opportunity (in the future with some cash reserves) where I can force appreciation, is there a limit as to what a government inspection will allow? I'm assuming the house must be livable, so any of these opportunities must be aesthetic.

- And FINALLY, my biggest question is just how do you determine what these Forced Appreciation Opportunities are? How do you walk into a house and figure that upgrading a certain part of it will return you greater value than the cost? Who figures the ARV? I feel that I could not just walk into a house and start picking apart areas to add value. How can I better educate myself on this topic.

I appreciate any and all responses!

@Ryan Twombly, I just connected with you! I am in the early stages of a deal analysis for a property that doesn't have huge potential cash flow, but may be a great starter home to house hack. If I get deeper into it, I will reach out for some feedback on the numbers. I appreciate the offer!

I ended up taking a drive to New London today to take a look at a couple properties that had some cash flow potential. The properties themselves didn't look terrible, but it was the surrounding houses that had me nervous. Most of the surrounding properties were dilapidated, boarded up, or straight collapsing in on themselves. I also didn't get the safest vibe from the area. All in all, I had a bad gut reaction.

I am likely going to be financing one of these MFH with an FHA loan which will require that I take occupancy immediately and for a year. Safety concerns with that plan aside, I am also concerned with potential issues with tenants (turnover, late payments, damaging property, etc.). As the surrounding area does not lend itself to attracting stable tenants, I am thinking purchasing one of these properties may not be as great as they look on paper.

That being said, I was in the area for all of three minutes before I drove home, so it was an initial impression. I'm prequalified for 180k at the moment, so my fear is that if I want to house hack MFHs in the area, this might be the only viable option.

Has anybody had experience with a Buy and Hold strategy for MFH properties in New London? Are my fears unfounded?

@Jaysen Medhurst, the feedback is much appreciated! If you ever get a chance, I do have a few follow on questions/comments:

• This was the property, yes! The MLS listing also shows that both units are occupied by tenants. I may run into an issue there, given my loan predicates that I live in the unit immediately after purchase and for a year following.
• The other expenses actually does roll up Property Taxes and Insurance into the equation. I didn't list them out separately because I was in a rush to write the post and it was late. Given that information, does this change your assessment?
• For the miscellaneous costs you mentioned (lawn care, snow removal, pest control, admin, etc.), what's a good base rate to use? I figure a lot of these expenses I can handle when I only have the one property to manage, but I am not afraid to overestimate to give myself a bit of margin in ensuring cash flow.
• In cases where I may need access to money for closing costs + down payments + initial repairs (which could run upwards of 10k), what's your opinion on a separate loan (I think it's called a bridge loan?). I know it's not ideal, but I'm not working with a ton of cash saved up so I might have to get creative in order to make a deal work.

Thanks again for taking the time to respond. I feel like I owe ya a beer!

Hey guys, I wanted to run an analysis I ran on a property that was provided to be my by my realtor via MLS. Please note that this is the first analysis that I've run, so I'd like to know if I'm heading in the right direction and if I might be over/underestimating anything.

I am planning on house hacking this property. I will live in the 1BR unit for a year and rent out the 3BR unit upon purchase. I have factored in the rental unit income for my 1BR for purposes of CoC Return.

Pre-Qualified: $180,000 Loan

Property Price: $194,900 (Is it possible to get a loan for this amount when prequalified for less?)

Down Payment: 3.5% ($6,821)

Closing Costs: Estimated 5% ($9,745)

Estimated Loan Amount: $188,079

Loan Interest Rate: 3.25%

Loan Term: 30 Years

Mortgage Payment: $844.56

Other Monthly Expenses: $1,086.44

• Assumes 5% of Income for Repair Costs
• Assumes 2.8% of Income for Vacancy Costs
• Assumes 5% of Income for CapEx expenditures
• $159/mo for Electricity (Should tenants pay?)
• $107/mo for Gas (Natural Gas; Should tenants pay)
• $109/mo for Water/Sewer (Does Landlord usually pay)

Gross Income: $2,150

Monthly Cash Flow: $218/Mo

CoC ROI: 15.86% ROI

I am unsure on how to factor utilities costs into this equation. Above, I am assuming that I am paying those amounts monthly for the 1BR unit, while tenants cover their utilities for the 3BR. I think the estimates above are high for a 1BR but I think I can ask the realtor for average rates. I believe landlords typically cover the cost of water and sewage so I'm not sure if I'm underestimating that figure if that's the case.

All in all, this roughly seems like a solid deal pending there are no glaring issues during a walkthrough. Let me know if I'm totally off base.

@Jaysen Medhurst

Hey Jaysen, appreciate the advice! You're not the first person that suggested I also look for a 3 or 4 unit residence so I will include that in my conversations going forward! I think at least a triplex may be the way to go depending on whats available.

I did just buy Buy, Rehab, Rent, Refinance, Repeat and I am in the process of reading through it. My understanding is that the first step in this process is to buy a house with cash up front, then rehabbing, then renting. I would love to do something like this but I just don't have access to that much cash for my first house. I would like to work this method in future properties though!

Hey all!

I just wanted to introduce myself. I'm a 27 year old Supply Chain Professional living in Mystic, CT. I'm currently in the process of working with a Loan Officer now to get pre-qualified for a Loan. At the moment, given my credit score and income, it looks like I'll be able to take out about 200k. The loan will likely require a 3.5% down payment (although there are assistance options available depending on the area I buy). With this loan, I'll be looking to house hack a duplex. I've got a realtor that's going to help me find a property that falls within my price range and that will be able to generate cash flow. I'm looking primarily in the New London County, Groton area.

Once I settle on a property, find a tenant, and begin collecting rent, I'll be setting aside the money I save from the rental income into a separate account for a down payment on my next property. I'd like my 2nd real estate investment to be a flip house. I have connections to a strong network of contractors. Many of the men in my family have their own trade business and are very familiar with the other contractors in the area, so my intent is to leverage that when I take the dive into rehabbing a property.

I'd welcome any tips or advice for the (very general) plan laid out above. My plan is to get a solid grasp of potential cash flows and expenses before signing any deal. Opportunities to network are also welcome!

Hey everyone!

I'm planning on buying a batch of Business Cards in order to help with the networking process. I just wanted to know if it would be considered proper etiquette or not to put "Real Estate Investor" as the title, even if I haven't bought or sold any houses. If this is improper, are there any titles you would recommend that could help paint a picture for someone looking at the card?

Thank you!