All Forum Posts by: Anthony Vicino

@Trevor Ewen brings up a killer point, so I just want to reiterate: Everything needs to be viewed through the lens of opportunity cost relative to the context of the individual investor.

Apartment building everyday of the week. Heck, joint venture with a partner bringing an equivalent amount to the table and you wouldn't have much difficulty taking down something in the 20-50 unit range depending on your area.

Somebody else already mentioned it, but the FHA won't be a viable long-distance strategy as you'll have to actually live in the rig while you're repositioning it. That's how I executed my first property and was fortunate it appraised for over $150k more than what I bought it for only 9 months after purchase so I was able to ditch the FHA and refinance, but that's a pretty extreme case. More than likely, you'll be sitting on the loan for awhile, or putting some extra money in if you want to refi.

Still, the FHA can be a great way to get into the game when you're first starting out. I would, however, recommend you talk to a lender and see if they have any products similar to the FHA. You can usually find a lender offering a product that is around 5% down and with the obligator mortgage insurance, but with the caveat that the MIP will drop off once a certain LTV is achieved. That used to be the case with the FHA, but no longer, meaning you will be stuck with the mortgage insurance throghout the life of the FHA, so that can be a pain.

Here's a great, free resource for learning how to vet the viability of different markets and neighborhoods: 

https://www.udemy.com/course/realfocus/

Good luck!

@Ben Wallis Oh, sweet summer child, you're giving me the heart palpitations... :P

Hey Alex! Love the spirit. There's a number of awesome meet-ups in the Twin Cities I would highly recommend. Is there a particular niche or angle you're eager to explore?

Listened to this podcast with Hunter Thompson and Reed Goosen on a plane ride recently and it touches a bit on what sort of person you need to become to attract amazing mentors. Highly recommended.

https://cashflowconnections.com/e153-how-to-attract-investors-establish-credibility-and-fund-deals/

The theory is sound. Success depends on the execution.

As others have already pointed out, what you put those funds towards will ultimately matter most. It sounds as though the refinanced property will hold its own for the most part, so everything comes down to the deal in which you put those funds.

Put that money into a solid cashflow producing asset and you're golden.

Put it into something else and...well... don't. Just don't. :)

A good general rule of thumb is you're going to want around 6 months worth of expenses in savings. This should cover most liquidity issues the bank might have going into a refinance and will cover your butt should some big capex or vacancy issues arise.

As you scale your portfolio, you can get away with locking into a set amount (say $15,000-25,000 total) that you put aside in a bucket account for all the properties, as it's unlikely you'll ever hit multiple huge capex items simultaneously across all properties that would deplete that fund overnight. Just never forget to top it off as quick as possible from cashflow after you tap into it.

I love the mentality of just getting on-base, Michael, so that you can get into the game, but this is looking awhole lot like you're leaning your head into the strike-zone hoping to get hit by a pitch that might do more damage than you realize.

Somebody else mentioned it already, but what you have budgeted for Repairs, Vacancy, and CapEx just won't cut it on a property of this vintage. Couple that with how little cashflow you'll realistically generate per month and this property just isn't looking so attractive at its current price point.

And that's to say nothing of the fairly serious issues you've uncovered.

The plumbing will go bad at some point. It's not a matter of "if", only "when". Maybe you get lucky and it lasts for a couple years until you off-load, but you're always perched on the razors edge and that can lead to a lot of sleepless nights.

The knob-and-tube is pretty much a non-starter unless the seller is willing to make some pretty serious concessions.

Roof leaks are never as cheap as you think they'll be (same for foundation issues). On the foundation side, it sounds like you need a professional to take a look and confirm/deny your suspicions.

All told, Michael, only you can decide how many issues are too many, but from the sounds of it, this has the potential to really go sideways on you quickly.

As others have already pointed out, there's not really enough information to make an informed decision. Without knowing your market, it's had to say if $420k is good for a triplex or incredibly overpriced. If you're in the Bay Area, that's a steal. If you're in Cleveland...not so much.

So the market really matters if you're looking through the lens of appreciation.

If we break it down simply on cashflow, then from the limited information provided, it's highly likely you're going to be bleeding money each month (especially if you're living in one of the units on an FHA).

Side question: Can you actually use an FHA on two separate buildings even if they are on the same lot?