Pay $930/M as first time investor? Help me analyze this property

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Pay $930/M as first time investor? Help me analyze this property

Alejandro Obando
New to Real Estate · Queens, NY · Member since 2019 · 16 posts · 5 votes

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*This link comes directly from our calculators, based on information input by the member who posted.

Hellow Investors, 

I'm looking to purchase my first property in NYC/NJ utilizing an FHA loan (currently renting in Queens NYC). 

I have not visited the property in person but by the pictures, it seems like it does not need much repair, so I accounted for $10k towards any repairs that do come up. I should also mention that I am an Electrician by trade, so any renovations needed I would be able to accomplish. 

Since I do not have the 20% DP, I do understand that PMI plays a big factor when looking at "Cashflow" or breaking even. When thinking long term, I'm curious to know whether there is a formula or strategy I should consider in order to get rid of the PMI which is $606/M. or how long will it take me to build the 20% equity on the property in order to remove the PMI?  

I do not mind living in a basement ($930/M) for 2 years while renting out the rest of the property, as I build up more capital to purchase my next investment (did not include rental income if basement were to be rented out). 

Any advice or knowledge on how to better analyze properties will be much appreciated. I am constantly learning more about RE and networking in order to become a great investor. 

Thank you all for your input. STAY SAFE AND PROTECT YOURSELF!! 

Alejandro. 

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Guifre Mora
Lender · San Diego, CA · Member since 2019 · 874 posts · 355 votes
6y
Originally posted by @Alejandro Obando:

@Guifre Mora ahh I see, thanks for clarification.. How could a new investor that does not have the 20% to put down calculate the time it will take to remove PMI??

Calculate when your investment reached 78% LTV. BY traditional payment or appreciation of the property.

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  • Guifre Mora
    Lender · San Diego, CA · Member since 2019 · 874 posts · 355 votes
    6y
    Originally posted by @Alejandro Obando:

    View report

    *This link comes directly from our calculators, based on information input by the member who posted.

    Hellow Investors, 

    I'm looking to purchase my first property in NYC/NJ utilizing an FHA loan (currently renting in Queens NYC). 

    I have not visited the property in person but by the pictures, it seems like it does not need much repair, so I accounted for $10k towards any repairs that do come up. I should also mention that I am an Electrician by trade, so any renovations needed I would be able to accomplish. 

    Since I do not have the 20% DP, I do understand that PMI plays a big factor when looking at "Cashflow" or breaking even. When thinking long term, I'm curious to know whether there is a formula or strategy I should consider in order to get rid of the PMI which is $606/M. or how long will it take me to build the 20% equity on the property in order to remove the PMI?  

    I do not mind living in a basement ($930/M) for 2 years while renting out the rest of the property, as I build up more capital to purchase my next investment (did not include rental income if basement were to be rented out). 

    Any advice or knowledge on how to better analyze properties will be much appreciated. I am constantly learning more about RE and networking in order to become a great investor. 

    Thank you all for your input. STAY SAFE AND PROTECT YOURSELF!! 

    Alejandro. 

    1) You are missing the closing costs on the loan you duplicated the downpayment. I analyzed it for a 3% average FHA.

    2) Today's FHA is 4.750%, not 3.6%. So you should have a credit score of 740 to get the bottom rate.

    3) The tax calculation Hudson County average tax assessment is 1.67%. (MLS has the property taxes as $15,626 or 1.79%)

    Results at a 4.75%

    Tax rate 1.67%

    ROI is negative -12.20%

    Cashflow negative $813.10 per month. Annual negative $9,757.24. With you living in the basement.

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  • Alejandro Obando
    OP
    New to Real Estate · Queens, NY · Member since 2019 · 16 posts · 5 votes
    6y

    Thank you for reviewing the report. @Guifre Mora from your experience, do investors calculate how long it will take for them to remove PMI from their investments (when applied) or is it typical to just refinance out of that initial Mortgage loan in order to then remove PMI? 

    0Reply
  • Guifre Mora
    Lender · San Diego, CA · Member since 2019 · 874 posts · 355 votes
    6y
    Originally posted by @Alejandro Obando:

    Thank you for reviewing the report. @Guifre Mora from your experience, do investors calculate how long it will take for them to remove PMI from their investments (when applied) or is it typical to just refinance out of that initial Mortgage loan in order to then remove PMI? 

    The PMI is a cost with the kind of loan you got. Just like paying points. If you need to cash flow by removing the PMI you are better off paying 20% down.

    You don't refi to remove PMI. If you look at how much is PMI it's more expensive to refinance when you add the closing costs.

    The reasons you refinance a loan for investment are: Lower your rate (significantly), and cash-out to buy more RE.

    0Reply
  • Alejandro Obando
    OP
    New to Real Estate · Queens, NY · Member since 2019 · 16 posts · 5 votes
    6y

    @Guifre Mora ahh I see, thanks for clarification.. How could a new investor that does not have the 20% to put down calculate the time it will take to remove PMI??

    0Reply
  • Guifre Mora
    Lender · San Diego, CA · Member since 2019 · 874 posts · 355 votes
    6y
    Originally posted by @Alejandro Obando:

    @Guifre Mora ahh I see, thanks for clarification.. How could a new investor that does not have the 20% to put down calculate the time it will take to remove PMI??

    Calculate when your investment reached 78% LTV. BY traditional payment or appreciation of the property.

    1Reply
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