All Forum Posts by: Thomas Smith

@Anthony Dooley  @Lara White @Scott M.  thank you all for your input! I appreciate your insights and I feel more confident about my decision. 

I have a few applicants that I am currently sorting through for a vacant unit. I am leaning towards one over the other three due to prompt and respectful communication, arriving on time and following directions for the showing, nice personality etc. The applicant looks good on paper, and through our reference process, however there is one thing I am caught up on. He is not currently employed. He is a fully disabled military veteran and his disability compensation exceeds our income requirements for this property. I did not ask any specific questions about his disability status, but he did provide official documentation proving the lifetime compensation.

Should his unemployment be a concern?

My most recent purchase was a double in South Buffalo near South Park high school. Our first purchase was a double in North Buffalo which we currently house hack. 

@Account Closed directly. He recently helped me purchase a duplex that is going to cashflow very well once it's fully stabilized. He has great insights and can help you think outside the box to find a deal that might be overlooked by the average investor. 

Closing costs were covered by the seller at purchase and by our equity at refinance. We had to come out of pocket for our insurance on the refi end due to a clerical error by our closing attorney. However we were reimbursed that cost about 2 months later.

@Matthew Irish-Jones each unit is 2 bed/1 bath. The lower unit has a bonus office in the basement.

Investment Info:

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

Purchase price: $209,000
Cash invested: $8,300

House Hack/BRRRR Deal
- Purchased 11/2018
- Occupied the lower unit
- Started renovations on upper unit 1/2019
- Completed renovations on upper unit 1/2020
- Minor renovations in lower unit
- Refinanced 9/2020
- New appraised value - $260,000
- Total renovation costs $7,500
- New mortgage (PITI) - $1,312
- Monthly living expense - $312 split with my fiancé
- Our unit will rent for $1,150+ when we decide to move
- Total rents $2,150+
- $42,000 in equity after refinance

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

I knew the easiest way to get in to real estate investing was to house hack a small multi-family property with a low down payment option.

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

We originally found this deal on the MLS listed at $219,000. Our negotiation tactic was a bit unorthodox. We had some good friends that lived across the street and put in an offer on the house to buy as an investment. They backed out after the home inspection revealed some foundation issues in the basement. They shared their home inspection with us, and we offered $199,500 with no inspection. After negotiations we settled on $209,000.

How did you finance this deal?

We used an FHA loan and put 3.5% down.

How did you add value to the deal?

The upper unit was vacant when we moved in. We spent about 12 months slowly doing the renovations ourselves, with the help of some family and friends. The upper unit received new flooring, paint, light fixtures, closets, retiled bathroom with new fixtures and vanity and a full gut kitchen remodel. After we completed the upper unit, we finished some miscellaneous tasks in our lower unit. These included paint, flooring, painting the kitchen cabinets and subway tile backsplash.

What was the outcome?

We were able to refinance out of our FHA mortgage to a 30 year fixed conventional mortgage. We dropped our monthly payment from $1,600 t0 $1,312. Our rate dropped from 4.625% to 3% and our PI dropped from $147 to $28. Our appraisal came back at $260,000 and our lender did 85% LTV as owner occupied. Our tenants are paying $1,000/month.

Lessons learned? Challenges?

We learned that we need to better prepare for our next renovation. We did the work during our free time, which was hard to come by. We learned which renovations we were good at and which ones we will contract out next time. We also found out that it's harder to find tenants in the middle of winter in Buffalo!

Maybe physical dollar bills an coins will fall out of circulation, but the money in your checking and savings account is still technically cash. 

Hi @Ryan Greene when I run my numbers I like to overestimate for maintenance, vacancy and cap ex. I use 10% for all 3 and that money will go to a reserve account. Depending on the property I also throw in $50-$100 in the miscellaneous line.  If the place still cashflows after those reserves, then it's worth digging in to further. 

Once you have a comfortable amount in your reserve account then you can lower the amount you allocate each month, thus increasing your cash flow.

It's always good to expect less and end with more than to expect more and end up with less.

@Charles Carillo believe it or not, I don't have an account with either. My current bank didn't have the type of loan I was looking for. My dad has his business accounts through the one bank, so I am leaning towards them.