Need help analyzing 1st deal for house hacking

Renter · Philadelphia, PA · Member since 2015 · 29 posts · 4 votes

hi everyone, I am in a rough situation right now. I'm have had to leave my apartment and need a home (currently staying with mom.) I have tossed around the idea of house hacking because I really need the income and a place to live. I have been looking at what looks like a great deal and may have a lender on board but i just don't think I'm ready to analyze this deal by myself yet.

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Aleksandar Popivoda

Investor · NW Indiana · Member since 2015 · 98 posts · 99 votes

11y

"i just don't think I'm ready to analyze this deal by myself yet." Nicole, I would wholeheartedly suggest to you to stay away from RE investing until you acquire more knowledge - practical and theoretical, and become comfortable with it. You will save yourself from a potential disaster.

Thanks,

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Cal C.
Investor · Peachtree Corners, GA · Member since 2014 · 1k+ posts · 1k+ votes
11y
Post the numbers and tell us about the condition of the house and neighborhood. Give us a general idea of the address.
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Nicole F.
OP
Renter · Philadelphia, PA · Member since 2015 · 29 posts · 4 votes
11y
sorry I had to take my son to speech therapy. I'm back now, here is the link to the agent's listing for the property
http://www.accessphilly.com/homes/PA/PHILADELPHIA/19139/253_S_46TH_ST/AGT-1156562922-648247/index.html
I have been listening to podcasts and reading up on analyzing a deal but it still looks really daunting
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Cal C.
Investor · Peachtree Corners, GA · Member since 2014 · 1k+ posts · 1k+ votes
11y
@Nicole F.
That doesn't seem like a very good deal but I know nothing of the neighborhood or the condition of the house beyond the pictures in the listing.
Zillow says it is worth about $200k less than the asking price. Zillow is often wrong sometimes substantially so, but it does provide comps and I'm seeing a lot of recent sales in the $200-300K range.
I'm pretty sure this is not a good deal.
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Michael R.

Rental Property Investor · Woodbridge, VA · Member since 2014 · 249 posts · 81 votes

11y

Beyond the price, the crime report within one mile of that listing is concerning:

(Source:http://www.trulia.com/property/3200380771-253-S-46...)

Keep listening to the podcasts, keep looking and keep learning. I Hope that helps.

Date	Type	Description
05/12/2015	Assault	Shooting/Stabbing. PD o/s of a founded stabbing. No suspect info. Victim transported by PD to Presbyterian Hospital
05/10/2015	Assault	Aggravated Assault No Firearm
05/10/2015	Theft	Motor Vehicle Theft
05/10/2015	Theft	Theft from Vehicle
05/10/2015	Assault	Aggravated Assault No Firearm
05/10/2015	Theft	Motor Vehicle Theft
05/10/2015	Theft	Thefts
05/10/2015	Robbery	Robbery No Firearm
05/10/2015	Burglary	Burglary Residential
05/10/2015	Assault	Homicide - Criminal
05/10/2015	Theft	Thefts
05/10/2015	Robbery	Robbery No Firearm
05/10/2015	Robbery	Robbery No Firearm
05/10/2015	Assault	Aggravated Assault No Firearm
05/09/2015	Robbery	Robbery No Firearm
05/09/2015	Theft	Thefts
05/09/2015	Theft	Thefts
05/09/2015	Theft	Theft from Vehicle
05/09/2015	Theft	Thefts
05/09/2015	Robbery	Robbery No Firearm
05/09/2015	Theft	Thefts
05/09/2015	Assault	Aggravated Assault No Firearm
05/09/2015	Theft	Thefts
05/09/2015	Theft	Theft from Vehicle
05/09/2015	Assault	Aggravated Assault No Firearm
05/08/2015	Theft	Thefts
05/08/2015	Burglary	Burglary Residential
05/08/2015	Burglary	Burglary Residential
05/08/2015	Assault	Aggravated Assault Firearm
05/08/2015	Theft	Thefts
05/08/2015	Robbery	Robbery Firearm
05/08/2015	Theft	Thefts
05/08/2015	Theft	Thefts
05/08/2015	Assault	Aggravated Assault No Firearm
05/08/2015	Theft	Theft from Vehicle
05/08/2015	Theft	Thefts
05/08/2015	Theft	Thefts
05/08/2015	Theft	Thefts
05/08/2015	Theft	Thefts
05/08/2015	Theft	Thefts
05/08/2015	Theft	Thefts
05/08/2015	Burglary	Burglary Residential
05/08/2015	Assault	Aggravated Assault No Firearm
05/07/2015	Theft	Thefts
05/07/2015	Theft	Theft from Vehicle
05/07/2015	Burglary	Burglary Residential
05/07/2015	Theft	Theft from Vehicle
05/07/2015	Theft	Thefts
05/07/2015	Theft	Theft from Vehicle
05/07/2015	Assault	Aggravated Assault Firearm
05/07/2015	Theft	Motor Vehicle Theft
05/07/2015	Theft	Thefts
05/07/2015	Theft	Thefts
05/07/2015	Theft	Thefts
05/07/2015	Assault	Aggravated Assault No Firearm
05/06/2015	Theft	Thefts
05/04/2015	Theft	Thefts
05/04/2015	Assault	Aggravated Assault Firearm
05/04/2015	Assault	Aggravated Assault No Firearm
05/04/2015	Theft	Theft from Vehicle
05/04/2015	Assault	Aggravated Assault Firearm
05/04/2015	Theft	Thefts
05/04/2015	Assault	Aggravated Assault Firearm
05/04/2015	Theft	Theft from Vehicle
05/04/2015	Theft	Thefts
05/04/2015	Theft	Thefts
05/04/2015	Theft	Thefts
05/04/2015	Theft	Thefts
05/04/2015	Theft	Thefts
05/04/2015	Assault	Rape
05/04/2015	Theft	Thefts
05/04/2015	Robbery	Robbery No Firearm
05/04/2015	Theft	Motor Vehicle Theft
05/04/2015	Theft	Theft from Vehicle
05/04/2015	Theft	Thefts
05/03/2015	Robbery	Robbery No Firearm
05/01/2015	Assault	Aggravated Assault No Firearm

0 Reply

Aleksandar Popivoda
Investor · NW Indiana · Member since 2015 · 98 posts · 99 votes
11y
"i just don't think I'm ready to analyze this deal by myself yet." Nicole, I would wholeheartedly suggest to you to stay away from RE investing until you acquire more knowledge - practical and theoretical, and become comfortable with it. You will save yourself from a potential disaster.
Thanks,
1 Reply
Chukwudi Motanya
Investor · Lithonia, GA · Member since 2012 · 231 posts · 43 votes
11y
@Michael R To be fair Michael, University City and Philly in general is a very block to block case in terms of crime. A one mile general radius search is very deceptive. You have an Ivy League institution (Alma mater! Go Penn!) about 6-8 blocks away. You would really have to take a good walk around the area to get an accurate gauge on the safety.
But echoing Aleksandar's point, I would do a little more diligence number wise Nicole. Looking at the place, the price is very elevated. If you put down 20% down payment you would still be facing a mortgage of about ~3,000 a month (5% interest and other assumptions) the other side of the duplex is a 3 bedroom and would need to pull in about ~1,000 a month per bedroom to cover your expenses. Doable but give the area from past experience, to get kids to go that far off campus, it might be hard to attract them with those prices (especially with just one full bathroom). Could maybe get away with $700 per bedroom which would not put you in a terrible spot. (~$900 out of pocket, unless you rent out the other 2 rooms on your side, then you could possibly make money)
The main problem with this assumption is that this is assuming 20% down. If you are currently in a rough spot, then you will most likely be looking into FHA options, where now your monthly all in come to around ~3,600.
It will be hard at that monthly all in to get renters to cover that expense and for you to not have a financial burden.
You're on the right track and keep looking into options, I just don't think this particular house is your solution (unless you get it for a steep discount. If you do we can run the numbers again)
Keep us updated,
Chudi
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Nicole F.
OP
Renter · Philadelphia, PA · Member since 2015 · 29 posts · 4 votes
11y
@Cal C. thanks I will use zillow for comps on other properties
@Michael R. I am looking for FHA financing but if I can't qualify I'm considering hard money
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Michael R.
Rental Property Investor · Woodbridge, VA · Member since 2014 · 249 posts · 81 votes
11y
Originally posted by @Nicole F.:

@Cal C. thanks I will use zillow for comps on other properties
@Michael R. , @Chukwudi Motanya is right about philly's crime being a block by block case. My grandmother lives a few blocks away from the property further into southwest and my church is in the "bottom" as most Philadelphians call this part of west philly.
@Aleksandar Popivoda, you're right I do need to become more comfortable and knowledgeable about REI, I am considering going for a real estate license for that reason.
@Chukwudi Motanya I am looking for FHA financing but if I can't qualify I'm considering hard money
Sounds like you know your market well. With that said -- what would be your plan for going after hard money?
I just met with some investors at a BP meetup -- a hard money term loan one investor had was 6 months @ 14%.
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Nicole F.

Renter · Philadelphia, PA · Member since 2015 · 29 posts · 4 votes

11y

this is the first direct offer I got from one of the lenders i have been checking out

DoHardMoney.com - Every Good Deal Gets Funded... Guaranteed | 1.800.284.0076

Nicole,
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Nicole F.
OP
Renter · Philadelphia, PA · Member since 2015 · 29 posts · 4 votes
11y
@Michael R. As far as my market, I've been listening to Grant Cardone and starting in my own backyard
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Michael R.
Rental Property Investor · Woodbridge, VA · Member since 2014 · 249 posts · 81 votes
11y
@Nicole F. Sell or Be Sold girl!!! I am a big fan of GC!!!
So - with regard to the hard money loan (disclaimer - this is all from podcasts / books and conversations with hard money borrowers - no actual experience so take it as is) -- hard money is typically, as advertised above, short term (6 months to 5 years in some cases from what I have heard/read). This also translates to expensive (as 10-14%). So hard money is typically used to finance a flip with the intent of refinancing out of that hard money loan after 6 months or so depending on terms.
So my question is - from the folks that have advertised the hard money to you, what are their terms? Can you afford their terms? What is your exit strategy to go from their hard money to cheaper terms if that is part of your plan?
Another option you may consider is looking for a lease option that is a duplex. Again, I don't know your market, but you may look to that as another option.
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Michael R.
Rental Property Investor · Woodbridge, VA · Member since 2014 · 249 posts · 81 votes
11y
Podcast 41 has some great examples of lease options.
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Nicole F.
OP
Renter · Philadelphia, PA · Member since 2015 · 29 posts · 4 votes
11y
@Account Closed i just clicked on your logolink, could you explain "soft money" lending?
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Nicole F.
OP
Renter · Philadelphia, PA · Member since 2015 · 29 posts · 4 votes
11y
hi all, thanks for the great feedback and advice.
hows this deal look?
http://www.mlsfinder.com/nj_trend/kw_772/index.cfm?action=listing_detail&property_id=6557419&searchkey=5a73a73d-a0e0-2fa1-ba8d-6d71c910b895
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Nicole F.
OP
Renter · Philadelphia, PA · Member since 2015 · 29 posts · 4 votes
11y
thats really interesting, i havent heard of that before. Thanks . Also @Account Closed have u heard of a company based in philadelphia called ABC Capital? They are a sort of hybrid rental turnkey/ property management company with realtors and renovators. I have been checking them out for a couple years but am unsure of how trustworthy they are and if their deals are sound, as i am still learning how to analyze. Deals. Any opinion or advice would be greatly appreciated.
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Barbara G.
Hartsdale, NY · Member since 2015 · 874 posts · 218 votes
11y
I think this might end up just being a good learning experience. You can learn to run alll the numbers on this one. You need a place to live so there is a certain amount of rent that you must be able to handle as your rent so figure that into the mix and treat your self like a regular tenant to figure the deal.
Use the selling agent as a resource. You can ask him/her to figure the numbers. You can at the same time ask them to come up with other duplexes triplexes that are less money. Its a good learning start for you and even if you pass it up you will know so much more for the next one, Its an old house so you need information on what they have done with the electric plumbing heat/ roof etc.
You are on the right track. Join a real estate club and a Real Estate Meet Up Group in your area. You will learn a lot more there
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Che Chiu Wong
Jersey City, NJ · Member since 2015 · 280 posts · 98 votes
11y
@Nicole F., what do you mean by "house hacking"?
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Barbara G.
Hartsdale, NY · Member since 2015 · 874 posts · 218 votes
11y
Originally posted by @Che Chiu Wong:

@Nicole F., what do you mean by "house hacking"?
House Hacking is when you need a place to live and buy a duplex, or Triplex or Quad. You then live in one apartment and have the ability to have the rent from the other apartments's rent cover your rent and maybe also be cash flowing
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Che Chiu Wong
Jersey City, NJ · Member since 2015 · 280 posts · 98 votes
11y
Originally posted by @Barbara G.:

Originally posted by @Che Chiu Wong:
@Nicole F., what do you mean by "house hacking"?
House Hacking is when you need a place to live and buy a duplex, or Triplex or Quad. You then live in one apartment and have the ability to have the rent from the other apartments's rent cover your rent and maybe also be cash flowing
Thanks Barbara. Now got it. This strategy is great at the beginning (so long as you are comfortable living at where you are buying). For 1) you are always your best tenant, and 2) you get to save up by doing your small little fixes yourself and 3) quickest to learn how to deal with tenants.
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Barbara G.
Hartsdale, NY · Member since 2015 · 874 posts · 218 votes
11y
Che says re Houe Hacking:
Thanks Barbara. Now got it. This strategy is great at the beginning (so long as you are comfortable living at where you are buying). For 1) you are always your best tenant, and 2) you get to save up by doing your small little fixes yourself and 3) quickest to learn how to deal with tenants.
Well Che not only gets it but he has figured out what is good/better about House Hacking. Yes you get all kinds of managment experience by living in your own investment. You also develop Tenant knowledge, you also sharpen your handi man skills. It's the perfect all around Landlord experience.
In addition you ar eligible for an FHA 3 1/2% loan if you House hack so you can start with very little money down.
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Nicole F.
OP
Renter · Philadelphia, PA · Member since 2015 · 29 posts · 4 votes
11y
thanks @Barbara G. I couldn't have put it better
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Nicole F.
OP
Renter · Philadelphia, PA · Member since 2015 · 29 posts · 4 votes
11y
I just read a good article on house-hacking
http://www.biggerpockets.com/renewsblog/?p=66104
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Nicole F.
OP
Renter · Philadelphia, PA · Member since 2015 · 29 posts · 4 votes
11y
here's another deal I'm looking at
http://philadelphia.craigslist.org/reo/4961397113....
What does everyone think about fsbo's?
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Barbara G.
Hartsdale, NY · Member since 2015 · 874 posts · 218 votes
11y
Originally posted by @Nicole F.:

here's another deal I'm looking at

http://philadelphia.craigslist.org/reo/4961397113....

What does everyone think about fsbo's?

Nicole what is fsbo?
This is CASH. This doesn't go beyond that word.
We can't do this one
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Barbara G.
Hartsdale, NY · Member since 2015 · 874 posts · 218 votes
11y
Originally posted by @Nicole F.:

@Michael R. As far as my market, I've been listening to Grant Cardone and starting in my own backyard
I think Nicole your own backyard is probably good advise. This is where your family lives and this is where your church is so this might be the best idea. You are however all over the lot money wise. I don't know this state or this area but it look.s like an area that might become the next up and coming area. Find something where the numbers work for you. How much do you have for a down payment. That is the first thing you have to know. One you have that number then you can look for a house hacking place that fits into your budget. Otherwise you are here and you are there you are everywhere. So what's the number lets all start right there.
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