All Forum Posts by: Adam Juodis

I'm looking to tour a 4unit multifamily property in the Naperville, IL area and potentially put in an offer today. I have the pre-approved funding. Any agent near the area available today to tour sometime in the afternoon? I would prefer to walk the property today, but if you're tied up today, the weekday after 5pm works. Message me!

Edit: Agent, not agency in title, a typo.

@Patrick Liska

Seller says approx $1,000, but I'm not really trusting that number. Do you think 1 washer and 1 dryer is suffice for a 4plex, or do I need to add another unit of each?

I'm looking into a 4-plex that has a coin laundry room. I was analyzing the deal, and I was wondering how to estimate how much monthly income would a laundry room bring in for a 4-unit multifamily property. How do you guys estimate this?

Quick search on BiggerPockets pulled up a few similar discussions. I'll just post the link instead of reiterating what was said in the thread :)

https://www.biggerpockets.com/forums/49/topics/114510-fha-owner-occupancy-requirements---less-than-one-year

@Victor Ged I've never heard of a 5% down conventional loan on a multifamily. Unless you're using an FHA that requires 3.5% down, you're going to have to front a lot more money than 5% for a downpayment.

Assuming:

you buy for $175k and rehab costs are a very modest $10k (Loan ammortized at 30 years, 4.5% APR)

Rent is $1360 as you say it is

Property tax as you say it is

8% for Vacancy

8% for Capex

8% for Repairs

Just factoring these things in, you're almost at -$100 cash flow per month. You should always factor in property management fees even if you self manage(You want to pay yourself for your time, right?). You're in texas so you don't have to worry about snow, but who's gonna do the landscaping? Are you sure all utilities are covered?

If I were in your shoes, I would pass on this property.

@Corey Osborn Painting the outside will give the property more life. Adding some bushes/shrubberies/trees in the grass area should also boost curb appeal. Can't see the door, but if its older and rickety, a nice new door will help.

Side rant: I hate those satellite dishes, it definitely makes the appearance of a house less appealing. Get a digital cable box, people!

@Jonathan Hernandez You ask what websites are helpful- Well, you've already found the answer, this one! Don't let duplex(s)-4plexs intimidate you - they're not that different from a SFR.

In regards to funding, 2-4plex can be purchased with the same conventional loans you use to buy your typical 3BR, 2BA SFR. A cool strategy, if you're interested, is house hacking. The quick summary of this is, you live in one of the units of the multifamily property and rent out the others, which can cover your living expenses or even cash flow extra if the deal is good enough. You can get a multiunit with this strategy with a FHA loan with only 3.5% down payment out of pocket.

Some Multifamilies have sub-metering, while others do not. What this means for the investor, you might have to cover utility expenses that you wouldn't in a SFR. If the property is sub-metered for all utilities, that means you can make the tenant responsible for covering their own utility bills.

You also have to account for repairs, Capex, vacancy, and management as you would with an SFR. Other possible expenses that you wouldn't see in a SFR is landscaping and snow removal costs. You're multifamily tenants are not going to cut the lawn like a SFR tenant would.

Vacancy is also generally easier on the landlord with multifamilies. Say you have a triplex and one unit is vacant- you still get the income from the other 2 tenants.

Good article on 2-4 unit investing:

https://www.biggerpockets.com/renewsblog/2013/04/0...

Also I recommend listening to the BiggerPockets podcasts and reading the'Book on Investing In Rental Properties.'

2-4 unit multifamilies are nothing to be intimidated by. There are some differences, but overall they are very similar to a typical SFR, and the scale-ability of your investing naturally comes easier. This is my quick summary of investing in 2-4 units. Let me know if you have any additional questions!

Hi @Aj Wright, welcome to BiggerPockets! I'm focused in the buy and hold/ rehab side of real estate, so I can't give any specific wholesaling books. I advise that you listen to the BiggerPockets podcast- it has great content and there are a good amount of episodes that are focused on wholesaling. BP also made a list of the top 20 recommended books, several of which I have read and would recommend(See link below). You're definitely on the right path by choosing to 'do your homework before you take the test.' Good luck!

https://www.biggerpockets.com/renewsblog/2013/04/14/best-real-estate-books/

@Marquis Ephraim Depends on what type of loan you are using to fund your project. If you are looking at a conventional loan, if the property is in really rough shape, you're gonna have a hard time getting funding for the property in the first place. But in the case the bank approves your deal, they would roll the rehab costs into the mortgage amount, and required down payment/interest would be based on the entire amount.

You would probably have a better shot at getting property loan+rehab funds from a smaller bank or local credit union, since most of them are not tied into Freddie/Fannie Mae loans(Government sponsored, with stricter rules/regulations). Here you'll pay probably a few % higher on interest, but it's more investor friendly of a lending strategy.

Also, there's Hard money and Private money loans, which is funding from either other investors or people you know. With these types of loans, the payback period is typically short, and the interest rates are very high. But if you're rehabbing the property, you're putting in sweat equity to boost the price of the property vs what you bought it for, and refinance 6-12 months later for a conventional loan rate.

You mentioned that you don't have the funds to purchase or rehab. Unless the deal is smoking hot, which you could go the HML route, you're not going to get funding without putting a decent down payment down.

Edit: Forgot to add the route of FHA+203k loans. If you're looking to live in this property for at least a year, this is a great strategy to get in for only 3.5% down for the property+rehab costs, at a pretty standard interest rate.

@Lee Cruz Yes this is possible, and actually is a popular strategy many investors use which has been coined as BRRRR by BiggerPockets. You just have to make sure that the property you are buying is cheap enough so that there is a nice gap between the purchase+rehab costs and the ARV. Otherwise, refinancing won't be an option.

But yes, even as simplistic as you put it, the idea of your plan is viable.