[Calc Review] Help me analyze another Arlington, TX deal
McDonough, GA · Member since 2018 · 29 posts · 4 votes
*This link comes directly from our calculators, based on information input by the member who posted.
Good evening BP,
If I were to buy this property, I'd use a 203K loan. I checked rentometer and saw that I could comfortably get $1,000 per door here. All things considered, I wouldn't call it a great deal. I'd get a $170 discount on my rent though. It's in a good location. Near markets and restaurants. It's also 3 miles from UTA.
I'm hoping you can give me some feedback and tell me if I fudged on the numbers somewhere. The owner is asking $305,000 for the property so I doubt he'd accept $210,000 due to its good condition. The only place I could imagine adding value is the landscaping. Maybe update the cabinets and paint, but I don't know how much value that would really add.
I'd appreciate any feedback or suggestions. Thanks!
*This link comes directly from our calculators, based on information input by the member who posted.
Good evening BP,
If I were to buy this property, I'd use a 203K loan. I checked rentometer and saw that I could comfortably get $1,000 per door here. All things considered, I wouldn't call it a great deal. I'd get a $170 discount on my rent though. It's in a good location. Near markets and restaurants. It's also 3 miles from UTA.
I'm hoping you can give me some feedback and tell me if I fudged on the numbers somewhere. The owner is asking $305,000 for the property so I doubt he'd accept $210,000 due to its good condition. The only place I could imagine adding value is the landscaping. Maybe update the cabinets and paint, but I don't know how much value that would really add.
I'd appreciate any feedback or suggestions. Thanks!
As a house hack, its fine. I agree with others that getting in for $210K might be optimistic.
But the deal as presented would be ok.
Here is the thing, don't worry about if there is something "off-Market" as a first time buyer. Almost all of the off market deals that are out there would require, either an all cash purchase, short closing date, and/or the house would need substantial rehab.
I suspect an MLS deal might be your best scenario, it will allow you get to get a move in ready property that you can finance.
Others may have a slightly different take, but imo for a house hack, (and I have done several of them). Find a property that you are willing to live in. A bonus if it is in an appreciating market/neighborhood.
I believe with a house hack that you look at your budget to buy a house. And what you would pay in rent (say 1,500). If your house hack is less than what you would otherwise spend, then any rent is positive. Plus you get tax write offs, capital appreciation, mortgage paydown.
The classic return doesn't have to be that great, you are learning about being a landlord, and learning the process. Once you get the blocking and tackling down, its pretty easy to scale up and look for off market properties.
@Anthony Heatley, as a house hack, this may work. You'll still be paying something to live each month. The trouble is that it certainly needs some updating and you're unlikely to recapture that in increased rent. Hopefully you see good appreciation over time. I know Dallas is a pretty strong market.
@Anthony Heatley Unfortunately the way DFW is - you're likely not going to get a MFH MLS property at a significant discount. I actually know the listing agent on this particular property - and can't speak for the agent, but you're likely not to get that much of a discount.
Multi-families are often owned by investors, such as ourselves, and aren't in a position where they absolutely desperate to sell like some individuals who own SFH's are. You are able to get SFH's at a much bigger discount because they are owned by regular people - and not investors with deep pockets.
That's how people are able to wholesale SFH's for such a discounted rate - because they are helping people in need. You could always direct mail owners of MFH's or even door knock them - to see if they'd be interested, which I've personally done, but often times they will want next to - or close to market value anyways for their property.
@Kenneth McKeown I see. So did you end up paying retail for your MFH when you househacked?
@Anthony Heatley I bought it off market - as I was lucky to run across a pre-listing duplex and had a few variables that were able to win the offer over. It ultimately appraised for $5k more than what I purchased it for - so by no means did I have substantial equity in it - as you would if you were able to get this property and your desired price. However the interest rate, area it's in, and rental comps - really make it an investment that I will keep for a very long time. It will be cash flowing forever.
Hi Anthony,
I agree with Kenneth. You most likely will not get this tri-plex for this price. Its been on the market for what 21 days. Seller hasn't even tested the market at $280k, 260k, 240k, 220k and you want to get it for $210k. Honestly, it won't happen and you are wasting your time.
Its great to analyze deals and learn but as you get busier you will need to manage your time better instead of wasting it on a deal that won't come together on price. Even though you may think its worth X the seller has to agree with you and sell it at that price. Now if the property is on the market for 180 days and the comparable sales support your idea then I can understand.
*This link comes directly from our calculators, based on information input by the member who posted.
Good evening BP,
If I were to buy this property, I'd use a 203K loan. I checked rentometer and saw that I could comfortably get $1,000 per door here. All things considered, I wouldn't call it a great deal. I'd get a $170 discount on my rent though. It's in a good location. Near markets and restaurants. It's also 3 miles from UTA.
I'm hoping you can give me some feedback and tell me if I fudged on the numbers somewhere. The owner is asking $305,000 for the property so I doubt he'd accept $210,000 due to its good condition. The only place I could imagine adding value is the landscaping. Maybe update the cabinets and paint, but I don't know how much value that would really add.
I'd appreciate any feedback or suggestions. Thanks!
As a house hack, its fine. I agree with others that getting in for $210K might be optimistic.
But the deal as presented would be ok.
Here is the thing, don't worry about if there is something "off-Market" as a first time buyer. Almost all of the off market deals that are out there would require, either an all cash purchase, short closing date, and/or the house would need substantial rehab.
I suspect an MLS deal might be your best scenario, it will allow you get to get a move in ready property that you can finance.
Others may have a slightly different take, but imo for a house hack, (and I have done several of them). Find a property that you are willing to live in. A bonus if it is in an appreciating market/neighborhood.
I believe with a house hack that you look at your budget to buy a house. And what you would pay in rent (say 1,500). If your house hack is less than what you would otherwise spend, then any rent is positive. Plus you get tax write offs, capital appreciation, mortgage paydown.
The classic return doesn't have to be that great, you are learning about being a landlord, and learning the process. Once you get the blocking and tackling down, its pretty easy to scale up and look for off market properties.
Hey @Frank Wong thanks for the feedback! You're right, I highly doubt I would get the property for that price. I was just practicing my analyzation skills and trying to see what number would make this a good deal. It sounds like you're saying that even when learning, I should only focus on realistic deals so I don't waste my time, right?
@Bart H. I really appreciate your point of view. I was really focused on buying at a discount and being to add value. But you're saying that it could be more advantageous to pay closer to market value if that means that I don't have to pay cash or spend the time and money on a rehab. In this case, I may not get the greatest monetary return, but the learning experience and possible appreciation could make up for that.
Is this what some people would call an "appreciation play"?
Hey @Frank Wong thanks for the feedback! You're right, I highly doubt I would get the property for that price. I was just practicing my analyzation skills and trying to see what number would make this a good deal. It sounds like you're saying that even when learning, I should only focus on realistic deals so I don't waste my time, right?
I think you should practice and learn on things that are close to translating into the real world. It's like practicing a bad golf swing. It's still practice but is it good for you? I think it trains the mind into bad habits and unrealistic goals. The key to practice and learning is to master the correct methods that can be applied to the real world. This way you truly know what a good deal is. This is just my point of view. There is no right or wrong here.
@Bart H. I really appreciate your point of view. I was really focused on buying at a discount and being to add value. But you're saying that it could be more advantageous to pay closer to market value if that means that I don't have to pay cash or spend the time and money on a rehab. In this case, I may not get the greatest monetary return, but the learning experience and possible appreciation could make up for that.
Is this what some people would call an "appreciation play"?
Here is the thing, and its a question you would know individually. What are your skill sets? What kind of capital do you have access to?
If you are a contractor, and have some money in the bank, then starting off with a full gut job rehab is no big deal. But if you dont have construction experience, I can tell you that your first rehab will likely take twice as long and cost twice as much as you expected. If your budget it tight going into the project, a bad rehab with no other funds available could literally bankrupt you.
As an example, on our first "house hack", we bought a duplex, anticipating one tenant would move out, and we would sell our condo that we had under contract. Within 30 days, our condo fell out of contract, and both tenants at the duplex had given notice. Oh and we got sued by an unethical Real Estate agent who wanted a commission that they literally didnt do anything.
Now eventually we got everything all worked out, and luckily we went into the situation with a solid W-2 income. But it was a little stressful. I cant imagine trying to do everything right off the bat with no experience. Just patching, painting, refinishing floors etc is plenty of value add on the first project.
As far as an appreciation play, yes it would be to some extent, but I think its also better to view it as 1) a learning experience, 2) a cost avoidance play. If you were paying $1,500/M in rent, then after tenants pay you you are covering $500/M in mortgage (tenants paying the rest), then you will have a nice return.
I am not saying that you ignore the normal return metrics, just that you can go with a slightly lower return than on a property you wont live in.
Thanks for the solid advice guys I really appreciate it. @Jaysen Medhurst @Kenneth McKeown @Frank Wong @Bart H.