All Forum Posts by: Ziad Hamati

No guarantee there. But I would contact more than one of his previous landlords. Also run a background check. Doing both of these simultaneously should give you an idea if he is a bad / good tenant and Look for red flags. 

Cash flow / CoC is low. Doesn't excite me. I personally like to a higher CoC, allows me to have reserves if something goes wrong.

Can you give additional info? What market is it? Property Type?

Is there any potential to increase rent?

Is there potential for you to add value?

Can you self manage for the first few years? That can be an additional $720 a month.

Maybe consider an interest only loan? Pay the interest for the first few years and then refinance after you adding value (assuming you can add value). That will increase your cashflow for those few years.

Trustworthy is the key word. Do you know any investors in the area? Real Estate Agents can also recommend contractors. 

One way that has worked for me, find a local facebook group for contractors. Drop a comment in that group  with the specifics of the job that you need. You will get a bunch of replies and then will be up to you to call them up and interview 

Don't be scared to invest. Make sure you do your due diligence before making any moves. Educate your self, get the comps, run the numbers. 

Paying cash and then refinancing would only make sense if you are rehabbing the property. (BRRRR)

I would use leverage, put 20% down and buy the two properties.  

Hello everyone, would appreciate an advice on how to move forward with a property. 

Property info:

List Price: $360k

Type: Single Family 2BR 2.5BA  (there is an additional office room 12’x14’)

Size: 2500 sqft

Financing and upfront costs:
I will be buying it with a conventional loan, 20% down.

I will put in another 10k down to convert the office room into a bedroom by adding a closet and installing vinyl. I will also add a shower in the 1/2 bathroom. 

Total investment: ~ $92k includes DP, closing costs and capital for rehab

Property Performance:
After the rehab, the property should appraise around $415k based on comps and that is conservative.

After the rehab, the property should rent for $2900/mo (conservative) and should cash flow around $600 (without including repairs & maintenance - self manage). 

I like the deal because i am gaining good equity after the 3rd bedroom conversion and i am increasing the rent from $2300 to $2900. With a 10k rehab, i am gaining an additional 45k in equity (ARV 415k - Purchase price 360k)

Do you think this is a good deal? My COC will probably be around 6% which is i think is a bit low. But on other side i have potential to increase my equity in the deal from 72k to 125k.

Also, how can i recapture some of my capital back? I thought about a cash out refi but it not worth it to refinance at a higher rate and paying closing costs twice (at purchase and at refi). Thoughts?

I know it is a bit of a lengthy post but would appreciate some feedback. 

David,

It is a single family, 3 stories to be specific. Office room is on first floor.  

Hello everyone,

There is a property that I am interested in: 2 BD, 4 BA (2 Full & 2 Half) , 2500 sqft listed at $370k

This house has an additional Game / Office Room 14x16 sqft.

Based on comps in the area, a 3 BD & 4 BA is selling $425k-450k. (I can see opportunity to add value!!)

I want to turn this house into a 3 bedroom by adding a closet to the Office Room and adding a shower to the 1/2 bath next to it.

It is my first time being involved in a renovation, so before I make any offers, I would like to get some thoughts on the following:

- Any permits needed to add a closet? It is basically adding a wall with some electrical outlets so my guess is we need electrical permit?

- Any permits to add a shower in the 1/2 half bath?

- What would be good estimate for this rehab? If you can please break down the costs of both.

Thanks

 Valid point Joe. Thats definitely the way of thinking when investing the traditional way. 
But Jacqui wants to do the BRRR method. Cash is the best of that method. Pay all cash, rehab by adding value, rent and then refinance to pull all her money out and do all of that again and again

Good stuff. 

You are not crazy to buy in a red hot market. You will always find a deal in any kind of market as long as your numbers work.  I have myself bought couple of properties this year. 

Should you wait hoping prices will come down? Or, What if you wait and prices keep going up and you lose on appreciation? No one can predict what will happen.  Every market is different. Some markets are seeing a slight decrease in home values, other markets are going up. In general, most markets are still low on inventory

You want to buy a Duplex to live in which is a great way yo get your feet wet as you said. Also, when Duplexes are on market, the house hacker (you) always has a higher chance of winning the bidding war against investors. Because an investor is only willing to pay up to a certain price for that Duplex. Whereas the House hacker will almost pay any price for the Duplex to live in for FREE. 

Regarding the downpayment, every lender / bank is different. I would suggest to call couple more lendors (bank, credit unions, local mortgage company) basically shop around.  Usually, rules are slightly different when a multifamily is involved, so i wouldn't be surprised if they are asking for 15%.