All Forum Posts by: Carl Millsap

@John M. portfolio lenders will have the same as your bank / credit union. I’d ask your current bank / credit union if how many properties they’ll finance for you. 

As for requirements they’ll generally be the same. Some may want more down ie. 20-25% vs. 10-15%. 

Whoever you decide to go with ask for lower down because you’ll intend to buy more. 

@Adam White yes same questions apply as a single family house. What are the comps for a similar duplex, how old is the roof, HVAC, hot water heaters, windows etc.? You'll want a copy of each lease, does the landlord pay any utilities? 

As for financing check with your bank, a mortgage broker, or ask the owner if he will carry the note. A duplex will go through the same process as a SF house, you may pay a slightly higher rate for it being an investment as opposed to owner occupied just depends on the bank. 

@John M. When I started out I used a mortgage broker who had access to multiple companies / products. I'd get a pre-approval so when I found a deal I could show proof of funds / ability to close to within 30-45 days. 

As I've grown I have 2 local bankers (portfolio lenders) I work with that I can get better rates with. 

I recommend a new investor find a local portfolio lender to build a relationship with; as you do deals with this person / bank your track record will allow you to make a call / send an email for financing vs. going through the entire application process every time. They will be familiar with your investments, have some ideal of your personal financial statement and can get you a decision quickly.

@Sai Kishore I would have the closing company redo / re-file the deed. As for the closing docs if you used a bank they is usually a document that allows them to correct / fix information w/out you resigning the docs. 

If you ever sell the property you want the deed / title recorded properly now so there isn't an issue when later.

@Philip L. You're welcome

@Philip L. Is this an investment property or primary home? Let's go investment....

The going interest rates for investment property has been 4 -5.5% with 15-20% down depending on the lender and your relationship with them. 

If the owner is going to finance at 7% (1.5 - 3%) premium over the market then I'd put less money down, way less. 

A land contract (contract for deed) is probably the most common arrangement but I'd have my lawyer draw it up so it protects me and the seller. I wouldn't use a contract the seller draws up unless my lawyer reviewed it. I'd also make sure a title company is used. 

So, my ideal situation is $2,500 - $5,000 down at 6% to 6.5%. Again I wouldn't put down $40K with a 7% interest rate. I imagine there are a few lenders who will give you better terms with such a large down payment. 

@ Tony P. based on the information provided yes I'd buy the deal based on the current situation. I wouldn't buy based on speculation (talk) of another school or some other possible development. 

The cashflow is good, and from what I can tell one unit rented should cover the mortgage. As for expenses are you in an area where water is paid for by the landlord?

What I didn't see factored into your expenses was a management fee. If you aren't going to self manage this changes your cashflow by $138 (6%) to $230 (10%) of rent collected. 

When was the last time rents were increased? When was the HVAC, hot water heater replaced? Have you considered making a lower offer? Again, I wouldn't buy on speculation.

@Javier K Perea I would have your contractor write-up the estimate to repair / replace the floor joist and subfloor and do 1 of 2 things:

1. Request the seller give you an allowance at closing for the repair.

2. Offer a lower purchase price to account for this repair.

Now here's the thing....if the floor joist need to be replaced can it be done without tearing out the ceiling below?

@Jon Abadia turnkey depends on the market / company selling. 

Some companies will rehab the house, qualify and place a tenant prior to selling.

For others turnkey is they bought the house and did the rehab so you don't have to do it. All you have to do is find, qualify and place the tenant.

As for the inspection... the owners / tenants may or may not be present. The inspector just needs access.

@Ira Sullivan I would look at each property separately since that's how I would finance them. 

Each should carry its own expenses and provide a cashflow. 

Plus your comps will be based on each SF vs. a multifamily unless the duplex is on 1 deed.

Looking at the asking price vs. income I would imagine you could cover expenses easily but I don't know insurance or property tax #s.