All Forum Posts by: Sean Ploskina

I got a quote from a wells fargo loan officer stating the closing costs for a 203k loan was going to be 8k on a 105k loan.  This seems really high to me.  Am I wrong?  Help me BP!

You don't have anything listed for general repairs which unless they have other numbers assume at least 10%.  Also I 2nd what was said about the 8% vacancy, that is low for that area and building type.  I normally nearly double that and assume 15%.

So that is an additional 170 per month for repairs and 119 for vacancy.  Total 289.

424-289=145 per month cash flow or less than 10%

Are the units undervalued compared to the market?  Because at that price you will struggle to offer a low enough offer that will impact your cash flow significantly.

I have just gotten a 3/1 duplex under contract from the VA and one bathroom is missing the bathtub. The previous owner started rehabbing and ran out of money. The lack of a bathtub excludes it from conventional financing from several big and small banks. But I don't qualify for a 203k because I was told I am on four deeds.

Any recommendations BPers?   

2nd @Ben Leybovich on the 1031 exchange and the Cap Ex.  Personally I do not factor in the depreciation when evaluating a property because I want a buy and hold property to make money every month, not at the end of the tax year.  If you are feeding the beast every month with the assumption of getting it back at tax time you are banking on Uncle Sam.  

Try getting in touch with some property managers in the area.  They will be managing the types of places you are looking at.  Or talk with the sellers of the properties, take what they say with a grain of salt and add 25-50% to what they say their expenses are.

Where was his most recent residence?  Did that manager have any issues?  If this was several years ago, he has had consistent income, and no more recent problems I would consider it.  But only after really digging into everything about this guy that you can find.

What are the reasons for the 55K in repairs?  Breaking it all down for the seller will help them understand your offer.  

For my analysis of a property I take the average market rents and reduce by at least $50 for cheaper places and 10% for more expensive.  That way I know I will be cash flowing if things go a little sideways.

In general my units are marketed at the average for the type of rental.  Being too much under the market I have found can lead to the wrong tenants reaching to get into those units that they wouldn't normally be able to afford.

2nd @Elizabeth Colegrove.  Do the numbers based on what you put into the property. 

Norfolk Plumbing.  They have done big and small jobs for me without an issue.