Hi all. Somewhat new to bigger pockets as well as rei. I currently house hack a duplex in the Ft Worth area and it is going great! I'm currently in negotiations on a fourplex that is also on the Ft Wortg area and would like hear what other thought of the deal. Here's in the info.
Current Rents: 3200
Market Rents: 3600
20% down ($70k)
Closing costs: $7k (paying more points for better interest rate)
Interest Rate: 4%
Estimated Mortgage: 2030
Property is built in 80's and would likely need new ac and heating equipment installed. I have access to an inspection and I estimate it would cost $40k in eventual repairs.
Been tossing and turning this one for a while now. Seller won't go any lower than $350. Any help is much appreciated!!
@Zack Wengert what kind of loan are you getting on a 4 pled that only requires 20% down and allows for it not to be repaired?
@Nicholas Covington it's a conventional load under an owner occupy.
@Zack Wengert would the home not pass an appraisal as in work needs to be done? I can't imagine you being able to close on a conventional loan that wasnt geared towards renovations if it need 40k in work done.
Bulk of repairs are heating/AC
So I look at the deal a little different:
I don’t focus on repairs over time or vacancy... I keep it real simple: I take what it brings in gross monthly now, then take out debt, insurance and taxes... what am I then left with... I take that number and divide it into my downstroke and look for a number of 36 or less... meaning I get my downstroke back in 36 months or less... I know there will be repairs and I know there will be vacancies so my Return on cash will not be 33% but by doing deals that perfectly show this I have room for repairs and so forth and still make over 20% return on cash
Under my system this place would not work BUT I only look at cash flow not appreciation and Ft Worth would certainly have that
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