All Forum Posts by: Brian Levredge

Depends on how you are acquiring the property. If using cash then expect it to run about 1 point between title and closing.  If financed then you have appraisal, loan doc prep, origination, etc.  That could take the cost upwards of 3 pts, depending.  

When selling I generally use 8% of sales price between commissions, closing, title, seller paid fees, etc. It can go higher though if you sell to an FHA or VA buyer. For instance, FHA had (think they still do) a seasoning requirement where if the house was sold twice within a certain number of months then they require two appraisals, which the buyer generally want the seller to pay for one of them.

All of this is negotiable of course. 

There has been no drop in demand from our perspective.  Anything priced well, in a decent location, and in attractive condition does not last long.  That's what makes the situation with respect to evictions here all the more frustrating. We have a handful of people we'd like gone and not much you can (legally) do about it.

What is the overall sq ft of the house?  Are all the bedrooms small, or just that one?  We have typically not had any issues renting our mid range 4 beds.  Not to make it any more complex for you but also consider who lives in a four bed vs a three bed: More kids (usually), which means more wear and tear long term.  

Don't worry too much about what you personally would like.  There is huge demand in Chatt for four bed units.  It's a rental, after all.  Yes, you want it to be attractive, but most people are going to look at what fits their needs best.  You take yourself out of consideration for most everyone looking for a four bed.  

Do both units have central HVAC, W/D hookups, and are separately metered for all utilities? If so then no need to try and rezone. If not you will take a hit on rent compared to a duplex that has those.  

We mange units similar to what you initially describe.  Shared water is easy to deal with.  Electric less so.  

Of importance is that both units meet full egress to avoid liability.  If you are determined to buy and rezone you'll also want to make sure you meet minimum lot size for Hamilton County which takes into account road frontage and depth.  

Are you in the City of Red Bank or Chattanooga (they have the same zip code)? If it's Red Bank you're chances are zero, just about. Red Bank has tons of multi family, and the city has been trying to decrease density for years so getting a variance will be a huge challenge.

Chatt isn't a whole lot better.  If there's other multi family in proximity you make be able to get it rezoned, but will still have an uphill battle.

@Allan Smith, Might I suggest looking at a lender with a presence in both Nashville and Chattanooga.  Pinnacle and Reliant are two that fit that bill.  Pinnacle (this was true when they were CapitalMark) has had a policy of not lending to out of market investors here in Chattanooga, so not sure if that will help much at all.  

That being said, as someone who banks with a number of different local banks here they are all relationship-driven. They want a deposit relationship, not just a one way street with their money going out the front door. That is especially true in the current environment where lenders have a lot of exposure suddenly. Cash-outs in this climate are going to be viewed as an even larger risk. You may want to consider doing HML firsts that you can refi into, without pulling the equity out. Might be viewed a little more favorably, but yes, you'll still want to have your take out lined up. If you want to PM me I can give you a name of another bank that might work with you.

It shouldn't matter what the seller has invested in a particular project.  The math works or it doesn't.  I wouldn't want to own a mobile home because they are not the easiest to sell, especially if it's on the same parcel as the house.  I own a PM company here in town and we manage all kinds of assets all over town and N GA.  The one certainty I can tell you is that all my clients evaluate purchases in their own way.  If you're not comfortable moving forward then you have your answer, but what doesn't make sense (or does) to you might make sense to someone else.  

Your expenses on duplexes here will run 30-40% on average of gross.  You'll want to verify things such as separate water meters so make sure you account for that.  We typically will also have the lawn care and pest control included in the rent to maintain a higher degree of control on the property but that's obviously an expense.  Insurance could be more as well.  

As far as property taxes go, yes, everything in this town duplex and up has a 40% mil rate that the tax rates are applied to.  When you look at is as a percentage of the property's actual value and not just the assessed value it's often 1.25-1.5% which is not bad overall.  

Depends somewhat on what you're looking for.  The lower income neighborhoods with higher crime are East Chatt, Alton Park, East Lake, and parts of Highland Park.  Those are closer to downtown and will probably gentrify in time but go in with your eyes open.  

Almost every other part of town is good, imo, but there are neighborhoods where appreciation has outstripped cash flow.  Those would be Signal Mountain, Lookout Mountain, North Chatt,much of Ooltewah, and part of East Brainerd.

Tweeners would be East Ridge, Hixson, Red Bank, Soddy Daisy.  NGA (Ringgold, Ft O, parts of Rossville) is also worth looking at as the schools are better there top to bottom.  Lots of investors in these sub markets and we manage in all of them.