All Forum Posts by: Zack Clopper

I really liked using Holly at Clearview title, I used her twice last month and she very organized. I am using Drew at Dulaney currently which is also good. Both are investor friendly in my expierence.

@Scott Skinger I did run the numbers a few certain ways as far as less money down and so forth. The seller is only looking to do owner finance if he gets between 40-50k down. I am able to get 20-25% CoC return where I invest on SFH which is why I rather not put much of my own money into the deal as I know I can get higher return elsewhere. I just figured this deal would be nice if I could get into it with no money out of my pocket. I always keep reserves also. I will get a better idea of how old everything else is on the property this weekend, also I would have a partner so if anything breaks we would be able to split the repair costs which I forgot to mention.

@Matt Conrad ill have a better idea this weekend when I view the property as far as how old everything is in the home. The area I don't see going down but I also don't see them really going up either too much. They have been pretty stagnant over the past 10 years. I don't expect the value of the property to go up too much. I do not want to use my own cash for this because I would only get around 15% CoC return where as I can get 20-25% in the area I typically look for homes in an this area the home values have been increasing a lot too over the years.

Hey everyone,

An agent approached me with an off market deal he had for a 6-unit in a C class neighborhood. This is the first time doing an analysis on a 4+ unit so wanted to run numbers by everyone. The owner is willing to do owner finance on the deal with the below terms.

Asking Price: $280,000

Down payment: $42,000 (15%)

I/Y: 4.25%

Amortized: 360 months

With the current numbers on the property this is how it would cash flow however market rents are around $650-675 on average so the rent could go up slightly but rather account for current rents. Also I would consider looking into billing the tenant back for water or trying to sub-meter down the road to increase cash flow.

Current Rent: $3,725

Mortgage: $1,170.82

Taxes: $308.33 (3,700/year)

Insurance: $133.33 (1,600/year)

Vacancy: $372.50 (10%)

Repairs: $186.25 (5%)

Capex: $279.38 (7.5%)

Water Bill: $266.67 (3,200/year currently paying)

Property Management: $372.50 (10%)

Cash Flow: $635.22

However I am thinking about taking a loan out for the down payment from a friend/investor who is looking to park his money for a few years at 8% interest. The terms of that loan would be the following:

Down payment/Closing costs: $49,000

Interest Rate: 8%

Amortized: 120 months

Monthly Payment: $590.79

Cash flow with assisted down payment: $44.43

I would like to go this route and just save the $44.43 towards any future repairs in those 5 years. Even though its amortized for 120 I would pay off when I refinance the building whether that be from equity or cash I have saved up.

The building does have a new roof and windows installed last year also. I am going to be looking at it this weekend. Just wanted to keep my capital for when I find a deal and need to go the traditional route. I know the cash flow is not the greatest but since its owner finance I figured I would put some thought into it.

How does everyone feel on my numbers did I account for enough or too little?

Thanks in advance

Zack

@Ned Carey Thank you, I am always reading your posts. Hopefully I will get to meet you at one of the real estate meetings one day and talk.

@Account Closed I used a conventional loan with Sierra Pacific Mortgage with 15% down in White Marsh area the lender is Michael. I used my own cash to do the renovations. At first I was debating about doing hard money but with needing less than $5,000 in repairs it didn't make much sense due to the high interest I would have been paying for 6 months. I plan on doing a Cash out Refi or HELOC on the home at 6 months or a little after depending on which lender I go with and their requirements.

@Christine Johanns sorry for the long delay. I used Sierra Pacific Mortgage, I believe they are national lender. Sierra does not require you to have prior experience as long as you have a lease in place at least that is how my lender is doing it. However most banks do require 2 years tax returns with the rental income on it before they will count it towards your income. Also 2-units and above you have to put 25% down instead of 15-20% which the Cash on Cash return for that year brings the percentage down which makes it less attractive to me. I decided to just sell the stocks I had because the ROI was much greater in rentals then on average in the stock market however this depends on your area too. However I had been slowly selling out of my stocks for about a year when they were up. If it were me I would just sell out of my top gainers and use that money for the down payment or renovations and keep the other money in stocks to keep myself diversified.

I put the minimum amount down because I ran the numbers with 15% paying PMI or 20-25% down, the break even for putting the extra 5-10% down versus just paying the PMI was 10+ years which I will probably sell before 10 years to get a bigger property. Hope this helps some.

@James A. thank you, I already started putting offers in on a few more properties to try and get one more under contract by the end of the year just not much fitting my criteria on the market right now in Baltimore County.

@Dennis Del That is what I did as well and I am very familiar with the area as I grew up near Frederick.

@Mike H. The home should appraise pretty easily at $115,000 based on others in the same neighborhood in the past 3 months. If they give me 80% of that it would be 92,000 and my loan is only $67,xxx. Only have put in $23,991.73 I should be able to get all my money back plus maybe a couple extra dollars. I plan on trying to do the same going forward. Although I thought the process of foreclosure was a bit of a hassle and could have been my agents fault not sure. I would do it again just because of the discount they put on the properties in this area.

@Steve Vaughan Thank you, I think I did the right thing as I would love to go full time with this in the next 2 years to have more freedom.  I have read quite a few of your posts as usually don't post too much but hopefully I can change that. 

@Michael Lee Thank you, I hope it goes well also. Homes in the same neighborhood have sold in the past 3 months around 110-125k. I believe mine is one of the nicer ones in the neighborhood with a new Trex deck on the back along with new windows/flooring/etc. So I believe it could appraise easily in the 115-120k range depending on the appraiser. I am planning on doing a HELOC on the home after 6 months but doing a HELOC on my primary first as I found a lender willing to do 100% on your primary with a point added to the rate and I have been fortunate enough that the market has increased in my area in just 3 short years. Good luck with yours when you do the BRRRR on your rental I will have to look out for your next success story.

@Joshua Tobin thank you

@Laticia Braxton thank you, hopefully I am as lucky in future projects as everyone knows hidden costs can arise.

@Michelle D. Thank you

@Diem Tran I ended up building my own calculator in excel but I build financial models for a day job so was easy for me to tweak to how I wanted which helped me greatly. However I thought Bigger Pockets calc was a great help too. Good luck on your next rental, what market are you looking into?

@Stephen Lee Thank you, always good to meet up with local investors as I do not know many currently.

@Eric H. Thank you, wish you the same as well.

@Juan Jimenez Thank you

@Derek Luttrell I did do all the work myself with a little help from my family. The windows luckily my father had expierence with so I helped him install the windows everything else I was able to do more less. When I first did the walk through I tried to take pictures of everything I noticed and of course I missed stuff that the inspector picked up.I then just priced everything out on Home Depot’s website. After I had a good estimate I added 15% on top of my number which came out to be right around 4,000 since I knew I would miss something and that is what helped me decide if I was going to close on the property or walk away.

I did not do anything to the plumbing however some of the electrical I had to rerun lines and also had to hard wire the smoke detectors in the basement and second floor because of a Baltimore County law. I have a little electrical experience from my primary residence. The home was built in 1956 I believe not sure without looking up but the electrical is not in bad condition honestly looked like someone updated the plumbing and electrical at some point. Since I closed on my rental though I am redoing all the plumbing in my primary so ripped out the walls and this weekend I’ll be running all the lines and using CPVC which is very easy to work with and anyone could do the work just take the measurements and mount correctly. Honestly though I am glad I attempted all of this stuff like most people will say it gives you a better idea how much you are willing to pay in the future for someone else to do the task.

I am around the same age and was in your shoes earlier this year, let me know if you have any other questions and will give you my perspective not as good as some of the guys that have been in it for a while but hope I can help.