Rental Property Investor · Villa Rica, GA · Member since 2014 · 220 posts · 360 votes
I finally got a deal! I'm in the process of completing my first deal. It is a duplex. I'm doing a fha 203k loan. I'm going to live in one side and rent the other out. I want to get some thoughts from others. Purchase price is 63k. In rehab I want to stay below 80k. I'm turning a duplex with 2/1 and 1/1 into two 2 bed 1 and 1/2 baths. They are popular in my area and rent for 800-900. I am a newbie and need as much correction as possible. I put my numbers below. Let me know what you all think. Thanks!
You didn't add a down payment to the second option. Another consideration if you are moving into the unit, is how much you are currently paying for rent. While you are living there your rental income will be less, but you can take a bit more time renovating your side and I'll bet what you pay now is much higher than 800-900 minus the money from the other unit. Another option is renovate the side you are in first (assuming the other side is already rented) and when the renos are done and the other half is vacant, move to that side and repeat. With the newly renovated side, you'd be able to get more for rent.
Charlotte, NC · Member since 2018 · 180 posts · 144 votes
7y
Byron,
Congratulations on the 1st deal! I think living in the duplex is an excellent idea (my first deal was like this). Easy to put that $130 in mgt fees + the $180 outdoor maint. to your bottom line, since you're on site.
You didn't add a down payment to the second option. Another consideration if you are moving into the unit, is how much you are currently paying for rent. While you are living there your rental income will be less, but you can take a bit more time renovating your side and I'll bet what you pay now is much higher than 800-900 minus the money from the other unit. Another option is renovate the side you are in first (assuming the other side is already rented) and when the renos are done and the other half is vacant, move to that side and repeat. With the newly renovated side, you'd be able to get more for rent.
Rental Property Investor · Villa Rica, GA · Member since 2014 · 220 posts · 360 votes
7y
Hey @Chris Sellers I went ahead and took those items as expenses because I'm thinking down the road what I'm going to want to do. The outdoor maint. includes capx/maintenance. I guess I need to add 30-50 for landscaping. Or I can buy a riding and cut it myself.
Hey @Theresa Harris. I have a lot to learn about refi (second numbers). How much will I have to put down on a refi?
Where I live now I pay $1,100 in a 2/2. I plan on just paying the 800 like I'm a regular tenant.
With the loan I have with 203k I don't know if anyone can move in until all work is done. That's something I didn't think about but will definitely have to ask.
Another thing I didn't mention is this duplex is on 1 acre of land. Should I try to look into clearing that land off? Potentially building another property? or self storage? Or should I just leave it alone? Thanks for the feedback guys. Need as much as I can get.
My biggest struggle is the rehab. I say I cant go over 80k. Is that realistic for turning a 2/1 and 1/1 into a two 2 bed 1 and 1/2 bath. Current property is in ok condition with about 1700sf. Just would need to add on.
Investor · Thousand Oaks, CA · Member since 2017 · 302 posts · 123 votes
7y
Congrats! make sure you can get an occupancy permit prior to purchase or plan the
rehab without rental income. Definetly like the extra land for future utility building or potentialrental income. Would agree with Chris on the rehab while one side is rented.and do as much on your own as possible.
Rental Property Investor · Villa Rica, GA · Member since 2014 · 220 posts · 360 votes
7y
@Alan DeRossett Thanks for the advice. Because I'm doing a fha 203k loan I can't do any work on my own I have to use a general contractor. I also think that they won't let me move in until it is all complete. This is something I am going to ask my 203k consultant and lender. Thanks for the advice!
I'm not sure about refinancing as I'm in Canada and financing is completely different up here.
For the rest of the land, you should find out if you can subdivide or build a second house. I imagine some of that will depend on the positioning of the current house.
Specialist · Grand Rapids, MI · Member since 2016 · 1k+ posts · 611 votes
7y
@Byron Scott
Hard to look at deal without knowing detailed numbers. The area, what your estimates are for rehabs, comps for rentals and a host of other things are needed. I would ask someone local to help you versus bigger pockets. Also hard to know CAPEX without age of home or any information. I personally would not take advice to heart from anybody with this little information. Did you factor in cost of rental certs as well. Just some things to consider. Numbers are decent but I like to look at deals from a fundamental standpoint as well.
Rental Property Investor · Villa Rica, GA · Member since 2014 · 220 posts · 360 votes
7y
@Charles Kao Thanks for the feedback. I'm in Villa Rica, GA right outside of Atlanta, GA. Comps for rentals are 800-900 on 2 bed 1 and 1/2 bath. The property was built in 1988. I am trying to take care of most of the capx things with my rehab (new roof, repair electrical, also will check other things like water heater HVAC and stuff. What are rental certs? What is the average cost in a suburb/rural area?
I'm coming to biggerpockets because I'm new. I don't know anyone in the area. I have been reaching out and trying to get to know people but haven't found anybody I can talk to ask questions.
Plus biggerpockets is just one more set of people to have an opinion. Even if I don't take any of the advice, I'm sure people on here know way more than me and will bring up things I haven't thought about. Thanks for responding. Need any feedback I can get.
Specialist · Grand Rapids, MI · Member since 2016 · 1k+ posts · 611 votes
7y
@Byron Scott Yeah those are fair numbers then. I know that area fairly well having lived in SC and GA. There are a number of facebook groups as well to connect with local investors in your area.
Real Estate Broker · The Woodlands, TX · Member since 2016 · 63 posts · 28 votes
7y
Hi Byron,
Congratulations! I started in a similar way many years ago.
Regarding developing the additional land. Good idea but keep that on the back-burner for now. Sort out the building first and get it all leased up and running smoothly. You don't want to overload yourself.
Think of things in terms of years. This year... sort out the house. Next year, think about expansion ideas.
Before you know it this year's going to be all over so don't rush it. Rather do things well and you won't believe how fast things are actually going when you look back 3 or 4 years from now at how much you've achieved.
@Byron Scott I'm very happy that you made and successfully got your first deal going on I'm a real estate investor bew to this I was hoping to get some advice on how to start things off