All Forum Posts by: Ben Fernandez

...spend half buying performing multifamily and the other half buying value-add multifamily (fast and slow churn).

Give me a call when you can. (717)945-7040. I have several of those right now. Central PA is a great market. I'm a licensed realtor with 18 years experience in several investment strategies.

Since that is a basement, you might consider epoxy. It could really give you a great look, it is highly durable and you should not need to tear out the ceramic. 

With the insert, maybe you add shelves. I recommend you look up its original use first and then brainstorm from there. It's something you will need to be creative with. But maybe you get an outlet placed accordingly and it could be a place for a wall anchored television. If not, you can gut it and have drywall added there so the wall is flush.

You can use census.gov or city-data.com

You might want to hire a virtual assistant to complete the data entry for you.

This a good article to help guide you in what you want to look for and where to find it. https://investingte.com/an-easy-way-to-find-trending-locatio...

Do it! You likely deserve more credit then you're giving yourself.

With things being unfamiliar, they seem more difficult than they are.

You will need to base your decisions on forward projections like the ARV, rent rates and renovation costs. Those being the most important. But you can get help with that.

A good real estate professional and a GC is all you need. Let's go Olivia!

- Depends on the ARV after value-add and your expectations for this asset.
- Cash flow is too low.
- Not a good return on your cash invested.

I'll take it that you aren't re-leveraging after the value-add...?

Your all-in is about $140k ($40k for closing, $90k for reno and about $10k for holding - 6 months reno and then occupied)... Ballpark numbers...

At the current income and expenses, cash flow is $81/mo.

- Gross $37,800

- EGI $35,910

- Operating Expenses $20,262 (56.42%)

- NOI $15,648

- Debt Service - $14,668

- Break Even Point Occupancy 97.27% 

- Break even point on cash invested - ~1,728 months

- DSCR 1.07

- COC ~0.70%

The entrance isn't bad if the commercial units aren't subject to occupancy issues and the asset class is C+ or better. 

But, you need to increase the income, consider extending the term and possibly consider leveraging the rehab...So your cash flow gets to $400/mo, COC gets to about 9.5% and reduces the break even point occupancy to 86%. Also review your expenses. Your maintenance is awfully high for post renovation. However, you're missing accounting, advertising, legal, common electric, extermination, water, sewer, trash, inspections (if applicable) and snow/lawn so...

Good plan. Feel free to connect if I can help you absorb all this. (717)945-7040

If you house hack, your payment toward your mortgage would be about $1,140/mo. This is what would be left to be paid, being that the other side is rented for $1,000. 

As you mentioned this doesn't include any operating expense for maintenance, capex, vacancy, turnover costs, accounting, snow/lawncare, extermination, common electric, water, sewer and trash (or property manager).

Excluding all operating expenses, except for taxes and insurance, when or if you move and rent the other side achieving $1,200 per side, you are then cash flow positive at ~$260/mo. However, you need to run a cash flow analysis so you are not leaving out any eligible expenses.

Only then can you determine what you should put down for everything to pencil. Feel free to DM me if you need a free tool for this cash flow analysis.

Don't use the 50% rule. Use the real numbers.

It appears your taxes and insurance is not apart of your stated mortgage note.

You likely could self manage. My motto is, if you know nothing is mechanically wrong and condition of the property is really good, why have someone else collecting your rent only to charge you 7-10% and nothing is being managed...This sounds like a nice property. You may just need a local agent you can pay a flat fee to for showings while you screen tenants yourself by way of a Zillow/Facebook Marketplace listings. Otherwise, plan the 10% PM fee. But I don't think you can afford it unless you're prepared to come out of pocket each month for holding the asset.

In regard to operating expenses, consider PM, maintenance, true capex based upon the actual life-left of the components and upgrade timelines, vacancy, common electric and accounting. DM me if you need a tool for the CapEx calculations.

Overall, at (roughly) anything over 6% in expenses, your cash flow goes negative at the current gross income stated. If you can get to $3,000 GI, your expense ratio can rise to about 22% before you go negative in cash flow.

Provided your taxes and insurance are at or below 1.4% ($5,200), you self-manage, and you achieve the $3,000 GI, you can break even each month or better if your CapEx is below $130/month.

I always advise my clients to pencil the exit strategy of any investment even if its their personal residence. 

I don't want you to become discouraged. You did a great job house hacking and you're on the right path. Good job. You just need to clear as much air over this hurdle as possible in your next steps. Being that this duplex was almost $400k, I'd bet you're in an area that appreciates well. So, this is another positive. What you don't achieve in cash flow, could be made up in the appreciation. Although, an unrealized gain, you can determine your next action plan based upon this metric. So, think of the equity you'll gain even if you're only breaking even (or close).

The only way this one would have penciled, at its entrance price-to-rent ratio of 0.68%, is if a down payment of 25% was put down and it would then cash flow $25/month at the stated figures.

The balance is always little-to-no cash flow and high appreciation, high cash flow and little-to-no appreciation or a combination of the two. This is based upon asset class. Sounds like you have a B class asset here. 

Your backyard isn't a bad idea. What are there like 4-5 new Amazon plants within 30 minutes of Plainfield? Plainfield is rising. You can do well there with rentals. You also have North Lawndale, Woodlawn and Southeast where many new data centers are going in. Depends on your preferred barrier of entry...

Otherwise, Arizona, Texas, North Carolina and Ohio all come to mind in regards to emerging markets. Other locations in Utah, Idaho, South Carolina and Montana have also shown much emergence.

Overall, using the proper zip code research, you can find pockets everywhere. So, you don't need to invest far away for everything. But, it just depends on your comfort level. 

Overall, finding the zip codes that are growing in population is recommended.