All Forum Posts by: Dan K.

Welcome to BP.

I can't give you Philadelphia specific information, but happy to address your questions:

SF vs MF -- Totally depends on your short-term and long-term goals. You can certainly buy a single family or a condo and rent out the spare rooms. Alternatively, depending on local regulations, you could Airbnb out rooms (short term rentals). If you're up for it, many people go for a multifamily for an investment. You can live in one unit and rent out the others. There are many options with an MF, for example you move into the worst unit, fix it up, then rent out that unit and move into another unit that needs to be updated.

Partnering with friend -- That is a personal decision, however if he is not going to live in the property, but you both apply for a mortgage, you won't be able to get favorable owner-occupant mortgage rates. If you can get traditional financing on your own, you should pursue it in my opinion. A loan from family for the downpayment or to help with rehab is worth it versus partnering with a friend.

Pre-approval -- I'm not sure what you mean about going through an agent. To get a pre-approval, you'll need to talk to a lender. Some lenders will require you to fill out a formal application and do a full credit check, while others will accept proof of income and some other basic information along with a credit report that you can obtain for free. There are online services for a pre-approval, but my preference is to work with somebody who won't pull a "hard credit" report until it's actually necessary.

Hi @Account Closed,

You can absolutely do a cash out refinance on an investment property. The process is lengthier than a line of credit because they will go through the entire underwriting process. In addition, you will incur various fees.

You'll need to weigh the pros and cons. With a cash out refi you'll have the cash right away, which also means you'll be paying interest on it on day 1, rather than a line of credit where you only pay as you spend the money. That being said, with the refinance, you can lock in a fixed rate for 30 years, or various other terms depending on your circumstances.

Put together a list of 15-20 local banks and just spend time calling them tomorrow. It is a competitive lending market right now.

Thank you @Eric Rosiello for summarizing my thoughts so eloquently! I couldn't agree more.

What we are both saying, is leverage is one of the most important tools in real estate investing. If you area going to "lever up," do it all the way so long as you can put your cash to "work," at a rate that beats your mortgage rate.

Hi @Jacob Higginbottom -- Good thoughts that others have added. My thought is you might want to pull more money out. If your loan allows "recasting," you can always reduce your monthly payments by making a large payment and ask the bank to recast. The reason I make this suggestion is that going through refinancing is a bit of a pain, and you're not going to want to do it again.

Also, always shop around and make sure you're getting the best rate and the least amount of closing costs.

Hi @Paul Cullen, @Jaysen Medhurst and @Jessica Stevenson bring up good point about landlord-tenant law in Massachusetts. You should also think about property taxes in various municipalities.

Personally, I think you also need to look at demographics, and job growth. I personally like to own property where people want to live -- rather than where they need to live because of various life events.

Hi @Matt Cutler,

You've received some good tips. I've structured similar deals for clients, and typically the partner bringing cash into the deal recoups his or her initial investment before any profits are split. Depending on the deal, a waterfall model might make sense to motivate the non equity partner to over deliver (and hence receive a large portion of the profits). 

Hi @Gustavo Costa, as @Jonathan Bombaci mentioned, going to in-person real estate meet-ups is invaluable in my opinion. 

Obtaining a license isn't a huge barrier, and if you're motivated, there is plenty of work in the Boston area for people looking to show units to students and young professionals.

That ballpark figure is for closer to Boston. As you move further from the city, costs will decrease. If you're giving a figure to a client I'd use a high figure just to be safe. Connecting your client to a builder or architect would be a great idea.

This is just from my experience, so it is anecdotal. 

Depends on the GC, but a variety contractors work on a 12-15%(ish) price on top of materials. So if HVAC is 15,000, the GC would charge an additional $2,250 for their management of the process. The hope of course is that the GC can get some discounts from sub contractors. Of course each contractor works differently. If the contractor has their own crews, the cost structure would look different.

Site conditions, finishes and other considerations will make the costs vary drastically. A ballpark figure is around $200 a square foot. Keep in mind, there are also architectural fees, potential zoning legal issues, city permits, etc.

@Ricky Beliveau -- I have seen it done both ways actually in Massachusetts. The condo docs would of course need to be amended after the work based on new floor plans. It really depends on the work being done. 

For "classic" triple deckers, I have seen many sellers go through the conversion as a value-add before selling. As you know, converting a building to condos in places like Boston and Somerville can be time consuming.