All Forum Posts by: Bryce Y.

That's weird that I never got notified of the earlier replies in May; sorry for not responding earlier.

I have learned a great deal in the past 14 months and my perspective on investing in small multis (and REI in general) has changed a lot since I made this post.

1. For a lot of different reasons, I no longer have any interest in buying a small multi and living in one of the units. In fact, unless the perfect deal comes my way, I have no interest in even owning my primary residence in the short term.

2. The PMI/MIP restrictions which went into effect after the original post have changed the landscape of low down, OO loans. It just doesn't make sense financially anymore. Just my opinion of course.

3. What @John Chapman said in his earlier posts I have found to be absolutely true. The one BIG advantage of small multis is the ability to get fannie mae financing. You can finance a 4plex at 100k or 25k per door, but not for a SFH for 25k. Everything else imo is a disadvantage (management aside, though I don't think it's that big of a factor)

4. It is very hard to find a deal for small multis. Sellers in general are more sophisticated and there seems to be a huge demand for these types of properties, and consequently not enough supply, driving prices way up.

I realize my post may sound very negative towards small multis and I don't mean to come across that way. I think it's still a great way to get started and if the numbers and location made sense, I would absolutely buy one.

I'm looking forward to following this one. A couple questions:

1. In your analysis, you make assumptions about being able to get more rent for adding a 1/2 bath or finishing the basement. While this obviously has an effect in the open market, are you sure it applies to S8? Where I am S8 rent is based on the number of bedrooms and varies by zip code. As far as I know (and I could be wrong), things like sqft, bathrooms, granite counters have no effect.

2. I'll preface this by saying I'm not nearly as experienced as you, but I'm a bit skeptical about the return on replacing the cabinets, countertops, and redoing the bathroom. They look perfectly fine and functional in the pictures.

Good news. Any word on whether or not cash outs will be possible past 4?

Assuming Fannie Mae, you will need to put down 25%

While I agree completely with the above (and your entire post), I think that your perception of the average investor looking to buy turn-key properties may be off. I think that most investors who avidly follow BP will be somewhat jaded; this type of investor is almost certainly the minority imo. I think flashy powerpoint presentations and a convincing sales pitch is more than enough to establish "trust" for many people. How do you think they get their customers in the first place?

Edit: Btw, not insinuating anything about the OP, just wanted to make that clear...

Can you elaborate? Why was this such a big mistake?

Zestimates are garbage. I think we all agree on that. However, even for sold comps zillow can still be inaccurate. The sold price listed on zillow is the last listed price before sold, NOT NECESSARILY the actual sales price. For example, say a property is listed at 125k, gets reduced to 120k, then 115k. 1 year later owner receives an offer of 100k, says 'what the hell' and sells it. The price zillow will show will be 115k, NOT 100k.

Most times the last listed price will be the sales price, or at least pretty close to it, but as you can see there can also be quite a big discrepancy.

Also, zillow does not provide seller concessions. These can go up to 3% of purchase price, so potentially pretty significant.

Bottom line, use MLS if possible.

Thank you, appreciate the help!

Thanks Dion. I don't think adding them to title is feasible since I am looking to refi into a conventional loan, and as far as I understand title must be solely in the borrower's name.

The property is stabilized so none of the 2nd lien amount would go directly into the property via rehab. However, I did kick in 7.5k towards the purchase, all rehab and CC, and proof of that should be no problem. Do you think this would be sufficient for a lender?

So if I use a family member for the 2nd lien (1st lien is family member) would that not be arm's length? I would need to use a HML?