All Forum Posts by: Tim Youse

Agreed on Appraisal. I've paid about $400 for that in the past. This particular bank said due to the sale price being so low, they required the additional discount point.

It was recently renovated (new paint and carpet/HVAC), so when I looked over the property I noticed it might need a new gutter/downspout out back, possibly a new rubber roof (or patch) and some odds and ends. Nothing major like new systems or structural repairs. I factored in $3500 into my numbers to be safe.

I'm looking to purchase my first deal in Baltimore, MD and have found a decent deal on a 3 bedroom for 79k that needs little work. The property should cashflow about $340/mo using property management and about $460/mo if i self manage. I got an approval letter from my local (national chain) bank and looking over the transfer/closing costs, they seem high to me with $15,800 down it's another $11,000 in charges and fees - so $26k out of pocket on an $79k house. Does this seem right or should I shop this deal around to see if I can get better terms. 

Here are the numbers:

30 year loan at 5.125%

Purchase price: $79,000

Down payment: $15,800 - (20%)

Charges and reserves: $11,554  (outlined below)

1) Closing costs

• Origination fee: $1,235
• Discount points: $1,027
• Appraisal: $785
• Credit Report: $45
• Flood cert: $8
• Tax Service fees: $82.50

2) Title Charges

• Closing Fee: $450
• Lender Title insurance: $279.80
• Title search: $200

3) Prepaids

• Hazard Insurance premium $1,200

• Hazard Insurance $1,300 
• Property Taxes $1,833
• Escrow Adjustment ($200)

5) Transfer charges

• Recording Fees $230
• Transfer Taxes $2,370

6) Settlement charges

• Owner Title Insurance $349

If you want to go lead free - have it tested with an XRF gun. You can contact Neil Roseman at Leadprobe.  Leadtec is another  good vendor. (BP wont let me post phone numbers or links so google both). It runs a little under $300, and they'll do a full report - testing every single surface inside and out for lead. They'll mark the areas so you can address them all.

Sorry if you already posted the answer,  but did you use a conventional loan on the purchase? And then you plan to refi out into another conventional? No hard money or cash? 

Yep - 3rd bedroom can be turned into a den - as Seth suggested. You might be better off holding out for a 3bedroom tenant if you want better cash flow.

It sounds like you're limiting yourself. You are getting in your own way by getting in the mindset that you can only use your dad's money. If you find a deal that works for him - great - do it, however if YOU believe in the deals you want your dad to fund, but he won't, then sack up and get funding for them - prove him wrong. 

Are we heading for a recession? Perhaps - but they've been saying that for the past 3 or 4 years and in that time properties have gone up 30% or more in some places. If you are planning to buy and hold, then acquire properties that cash flow from day 1 and it won't matter if prices go down - as rents are typically not affected by the RE market. 

If prices go down in the future, THEN get your dad's money. He can afford to wait, as from the sounds of it, he's already established a successful RE business.

So in reality, you're not frustrated with RE investing - you're just frustrated with your Dad.

Here are some images from the listing from 2008. No indication of what it currently looks like of course, but at least you can see the layout.

 https://www.redfin.com/MD/Baltimore/4112-Dudley-Ave-21213/home/11104599/mris-BA6748472

Looks like it has 2 bedrooms on the 2nd floor, a main floor bedroom in the back, and the kitchen is in the basement with a walkout to the backyard through the kitchen -- a somewhat typical layout for homes in this area. Most likely the HVAC and HWH are in the basement, toward the front of the house and there may be a hook up for sewer for adding a 2nd bathroom there as well. 

There are tenant placement services in Baltimore you can use that will still allow you to self manage once a tenant is in place. I would recommend you using one of those services rather than having tenants view the property by themselves while you handle the scheduling remotely.

Congrats on the purchase. How firm is that $75k rehab estimate? If you have a SOW, I would try to get more bids and see if you can get that rehab cost down so you'll have an easier time of cashing out on the refi.