Updated about 2 months ago on .
Renovating to get rid of PMI?
Two family sold in Dover in 2025 for low $500’s
(2) 3 bedroom units each
In need of upgrades
250k/unit and $250/sqft> This flew off the market the same day it was listed!
I’m going to assume 75k worth of renovations needed in order to bring units back to market value. Looking at this from an investment standpoint:
If going all in around $600k, a good CoC return would follow the 1%--where monthly rents would be at least 1% of the purchase price. And with market value rents in Dover for 3 bedrooms being no more than 5k total, I can already tell that it won't pencil out to be a great cash flow investment. Now, you can certainly argue that it’s a great asset in an increasing supply market. Without even underwriting, I can tell this will only cash flow a few bucks. So I’m going to guess this might have been purchased by an owner occupier.
PITI and ongoing maintenance + capex is going to put monthly payments at around $5550. I estimate that a 3 bedroom apartment in Dover can rent for $2400/mo. Now I want to pose an idea. What if you and two of your friends bought the property together and you split the rest of the payment. Now that’s $1050 per person. That is opposed to the rent by room strategy which would leave the owner with $1600/mo of expenses. Still, it pencils out to be advantageous if you’re willing to take on the risk of being a landlord. Putting 75k into it will also help increase the value of the property and you could try to get rid of the PMI payment by showing that LTV is at least 80%. Value would have to increase by 15%, which thinking about it now will make the numbers work even better. I usually assume a 1% PMI which in this case is about $450/mo extra. So if you were to get rid of this, it would drastically change your personal living expenses.
Has anyone used this strategy to get rid of PMI? And what % do you usually get charged when putting less than 20% down?