All Forum Posts by: Mark S.

true. I guess it's as decent of a deal as I've come across in a while. The numbers haven't worked at all for most deals I've looked at lately. Need to just keep looking and not rush it, I guess.

This property is about an hour away from me. He said it's quieter in the winter because it's so cold out, but much more noticeable in the summer. I doubt it'll still be on the market this summer.

Looked at this one again today. Was feeling pretty good about putting an offer together, until we decided to talk to the next door neighbor. He says he's lived there for 27 years and is about to list his house and move to a different part of town due to drugs in the area. He said, "they sleep all day and run these streets all night, dealing dope. From one apartment complex to the other." He said the neighbors living in SFRs across the street and right near where we were are good people, but there are two small apartment complexes (one under new ownership) where all the trouble seems to be coming from. My gut says to stay away, but part of me really still wants to make an offer. What do you guys think? Are drugs an automatic "no" for you?

Okay guys, so the place had major settling issues. Cracked brick all over one of the outsides of the units. Even inside, major cracks on walls and even the wall being separated from the floor. Looks like a no go. Looked at a couple of others on the same street that will be coming up soon for $130Ks. No deal. The other concerning thing is that there are 4-5 of these that are vacant on this street (mostly foreclosures). I did like how duplexes were right next to SFRs, but I think I need to sit back on this one and wait to see if prices drop dramatically (or find one I like and throw out a low ball offer).

Okay, so in addition to the 3/2 I posted about a few days ago (which I'm going to take another look at today), I'm also trying to analyze this duplex. I'm going to approach this a little backwards and list all numbers and try to "back into" what the purchase price should be at the end. Here it goes:

DUPLEX - 3BR/2BA, about 1,200 sq ft each side. About 10 years old. Going to see this today, but appears to be B class neighborhood (will confirm later).

Expected Rents: $650/unit = $1,300/month. Tenants to pay all utilities.

Estimated Taxes: $1,850/yr (on high end; could be closer to $1,400 on low end)
Estimated Insurance: $700/yr
Taxes + Insurance = $212.50/mo

Other Expenses
Property Management (@10% only when rented): $130/mo-vacancy = $112/mo
Vacancy Loss (@ 13.90%): $2,168/yr = $181/mo
This is extremely high and could be unlikely, but according to a website I use for information on the area, it says this is the average for this area because of seasonality.
Ongoing Maintenance (@10% based on 100% occupancy): $130/mo
Cap-Ex/Maintenance Reserves (@10% based on 100% occupancy): $130/mo
Total Other Expenses = $553/mo

Financing: 20% down, 30yr fixed @5%. P&I based on different purchase prices:

$100,000: $429/mo
$90,000: $387/mo
$85,000: $365/mo
$80,000: $344/mo
$75,000: $322/mo

I doubt I will get it less than $75,000, and more likely we'll be closer to the $85,000-$90,000 range.

So, based upon these (whichI believe to be EXTREMELY conservative numbers), if I buy it at $90,000, I would cashflow just under $150/mo on the whole duplex.

If I take the mid-point on the estimated taxes ($1,625/yr), a more normal (but still conservative) vacancy figure of 10% ($130/mo), a slightly less maintenance reserve of 8% or $104/mo (since it's only 10 years old), my numbers look a tad different at: $243/mo positive cashflow.

What do you guys think? Thanks in advance! By the way, I'm going to look at it today, so I'm not sure what, if any, repairs are needed. Will post again soon. In the meantime, your thoughts are appreciated.

@Marion Edwards

Marion, congrats on your deal!
@Marion Edwards

@Aaron Yates

I've asked about HomePath loans for an investor in the past and had a similar experience. I have a lender out of Ohio (anyone can PM for contact info if you want) that will do a HomePath loan for an investor. They require 15% down without mortgage insurance (similar to what Marion is talking about). They will NOT, however, do a HomePath RENOVATION loan for an investor; they WILL do this for an owner-occupant.

Anyone have a HomePath lender that WILL do a HomePath RENOVATION loan to an INVESTOR?

Sorry for all the caps, just writing with emphasis. I suppose italics would work just as well, haha. Next time.

Sorry to hijack here, but is this true for ALL Fannie Mae properties (not accepting anything lower than 90% of asking)?

Guys,
I think there was an error when the age of the property was posted. It's actually closer to 45 years old.

@David Beard
I'm trying to find out more about the area. At first glance, looks like a C to me. I've tried a few websites and called the police station, but no real luck yet.

The house has recently been rehabbed, so it shouldn't need much. I did notice some bubbling on one spot of the utility room floor, but shouldn't be anything major. Already has all new paint, carpet, fixtures, appliances, etc.

The area is unique. There are $25K houses on the same street as $125K houses. Not something I've seen before. There are nearby apartments that are smaller and renting for about the same. There are also houses nearby that are much nicer and renting in the $800s. I might be able to get closer to $700.

The property management company I'm looking at (previously posted a thread to see if anyone had any information on them - they're called PMI) charges 10% ONLY WHEN THE UNIT IS RENTED. There's a one-time, upfront $295 "start-up" junk fee. There are no additional fees later to place tenants (which is really nice!). They also don't mark up maintenance; they just hand you the bill to reimburse them. Sounds really good to me. Is this competitive?

@Engelo Rumora

What if it's closer to a C neighborhood, which it appears to be? What, then, would you expect for rents?

@Aaron Montague

You're right. Not sure how my numbers got fudged, my bad. Would you buy this place at $40,000?

I've heard that as an investor, but not sure if owner occupied. I do know that when moving from SFR to multi, down payment requirements can change, at least from what I've been told.

Purchase Price: $45,000
3BR/2BA, 1000 sq ft, 25 years old.

Down Payment @ 20%: $9,000
Closing Costs: $3,500?
Principal & Interest (@5% fixed, 30 yrs): $161/mo
------------------------------------------
Taxes: $37/mo
Insurance (estimate): $50/mo
Vacancy (at 8%): $48/mo
Cap-Ex (at 10%): $60/mo
Repairs (at 10%): $60/mo
Prop Mgmt (at 10%): $60/mo
=======================
Total Expenses: $315/mo
Tenants would pay all utilities.
------------------------------------------

Gross Rent: $600/month
Less Expenses: -$315/month
Less Debt Service: -$161/month
========================
Cashflow: $124/month

WHAT DO YOU GUYS THINK, DEAL OR NO DEAL?