All Forum Posts by: Spencer Funk

I have found a distressed property around the corner from me that apparently the county now owns. I looked at the County records and there was a tax deed auction that no one ever bid on. How could I go about trying to buy this? I live in Hillsborough County, FL

@Brenden Mitchum

Thanks for that. The repairs and things do seem a lot to be setting aside, but together with my underestimating capex hopefully it evens out.

BTW, my expenses were totaling at $1325. The $1974 came after subtracting my expenses from my gross rents. I think that is where we differed. I'll try to format better next time.

Hi Everyone, 

I am looking at doing my second buy and was hoping I could get someone to check me out. I am at the stage where I need to figure out how much to offer. My first was a house hack so there was little to no risk to me. This is the first time I need to rely on analysis..

There are two duplexes right next to each other, listed at $159k+$165k=$325,000

Current rents are: 3 doors @ $800 and one door at $900 for a total of $3,300 total gross rent. (Passes the 1% rule.. but nowhere near the 2% rule...)

Taxes: just under $1700 for both of these respectively, which I work out to be $283 a month.

Insurance: I got a quote @ $1,303 which works out to be $217.

With Vacancy & Repairs @ 10%, I am looking at $330 and with Cap Ex @ 5%, I am looking at $165.

All added up, my net (before paying for my mortgage) is $3,300-($283+$217+$330+$330+$165)=$1,974. If I can get them @ 300k with 5% interest and 20% down, I should be netting $686 with a mortgage at $1,288.

Does this look worth doing?

I am feeling like a damn robot with the cap ex, repairs, and vacancy. How do I know how to move these numbers around? Can I go softer on these numbers since I am getting 4 doors out of the deal because I am pooling my risk? I honestly have no idea how to intelligently work these. Is it really nothing more than plugging the numbers into the spreadsheet? I suppose I could find out how much estimated life is in the roof and AC and really nail down my cap ex projection, but other than that, not really sure here...

I'm looking at a couple of duplexes that are right next to each other that appear to be owned by a local hard money lender company. These are priced at $155k and $165k and I am hoping that I can get a bigger discount if I buy them both, which I can as long as I get them for less than $295k. The appraiser website says that this company bought them both recently at $135k each. I am wondering if anyone has any ideas for how I should approach making an offer on both and maximizing my chances of getting a great discount. I have a realtor involved, so that may complicate things. But I was considering trying to negotiate one as low as possible and then pull out my proposal to buy both as my last negotiating card. Anyone have thoughts on this?

@Theresa Harris

OK thanks. This is the detail I was missing. My understanding was that the DTI was calculated using gross income. I would have thought full rent would be gross. 50% makes sense though. Very helpful!

@Chris Mason

Thanks so much!

Thanks @Anthony Gayden! Actually there is no problem there for me. I just wanted to make sure that I correctly understood the DTI concept. The logic didn't seem sound as long as properties had positive cash flow.

Hi everyone. I have been studying the craft (reading books and listening to podcasts) and have heard it mentioned that some people will surpass the threshold for their DTI radio (~36%) long before reaching the maximum number of mortgages that major banks will issue (~10). My question is how? As long as folks are collecting more in rent than paying out then each property should actually HELP the DTI ratio, right?

I appreciate anyone helping me understand a bit better. I'm sure I'm missing something here. Thanks!