All Forum Posts by: Chris Platis

Hi BP Community! 

Pursuing my first home purchase, a charming 2-family farmhouse with strong short-term rental potential in an area with reliable full-time renters. I will be hacking the house and enjoying a change of pace from NYC in the meantime. Before I dig into a few specific concerns, please allow me to present the numbers:

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---THE NUMBERS---

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• Asking Price: $295,000
• Hopeful to Close At: $260,000

• Reno Costs: ~$90,000 

• Price After Reno: ~$430,000 

• Monthly Income: $1800 (with me occupying 1 of 2 units)

• PITI (Principal + Interest, Taxes, Insurance): $1900 
• Vacancy: $60 
• Repairs: $50
• Garbage: $50 
• Electric: $250 

Cash Flow: -510 / month 

$510 to live in a beautiful home + build equity...not too shabby (I hope!). I will be able to short-term rent my side to potentially break even and maybe even profit Year 1. 

By Year 2 I aim to rent both sides, which would put my cash flow in the positive between $1200-$1300. 

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---THE SITUATION---

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Mold

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The home is riddled with mold in the basement. The story is that the homeowner removed the tenants to show the home better. Winter came, the house sat on the market, the homeowner winterized the home which shut down the dehumidifiers and the basement sat in cold, wet conditions which let mold survive and thrive.

I've already begun spiraling down the rabbit-hole of assessors and remediators, many of whom bring up $20,000-$40,000 type numbers off the bat. 

The homeowner claims she "will fix it" with the dixie cups and bleach I saw on the kitchen counters. I obviously do not want to buy a home infested with mold and potentially incur major remediation costs. 

Does anybody have any thoughts or experience in this situation? 

Any general advice, words of wisdom/caution on how I should proceed? 

My initial thinking is to potentially present two offers: One in which she takes care of the mold, contingent upon my hiring a licensed assessor afterward to inspect and sample the entire home and everything being clear, or her further doing whatever necessary to bring the home to that safe condition. The other offer would be significantly less (in the realm of a reduction of $30,000) in which I simply say that I will buy the home and take responsibility for the mold. 

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Renovations

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The home is actually in fairly decent shape considering its age, but will certainly  require the following immediately: 

• New Windows: ($15,000) 
• Scraping and Painting Inside/Out: ($15,000) 
• A new boiler or electric heat conversion: ($6,000-$9,000)
• Minor Kitchen and Bathroom Updating: ($10,000)
• Several Doors and General Carpentry work: ($10,000)

This roughly brings Immediate Renovation Costs to $60,000 (to my best knowledge)

Other work which can be sidelined but will need to be done within 3 years: 

• New Roof: ($25,000) 
• Tree and Shrub Removal: ($5,000)

I'd like to bundle a renovation loan into my mortgage via FHA's 203(k) program. This would increase my monthly mortgage by about $400, but allow me the funds to bring this property to an amazing potential, increase rents, and greatly raise the value of the property for a potential sale. Some lenders have shied me away from the 203K, another I just spoke with seems to be a big fan, though she mentioned loans above $35,000 can be very tedious and time-consuming for FHA Borrowers.

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---CLOSING THOUGHTS---

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• Does anybody have any experience with FHA and/or 203K renovation loans?
• Experience or advice on mold in basement, in any scenario or my presented one?
• Renovation costs – one idea I've had is to borrow via 203K for the allotted $35,000 to "fast-track" the loan, and spread out costs myself over the coming 2-3 years (which is financially feasible). Any thoughts on this? Would rather stay liquid for a potential next investment, but just exploring all possibilities. 
• Am I trying too hard to revive a beautiful home and make this work? I've looked at so many properties and finally feel I had found something flexible enough to meet my needs of owner-occupy, short-term AND full-time rent, not overpriced, with potential to force appreciation (mold removal initially, and creation of additional bedroom in owner unit would bring rent/resale up). I sort of love the home and property, and am just being cautious, trying to explore options and see if this thing works. 

Thank you all so much for your time, support, and input. Love BiggerPockets, and so greatly look forward to hearing from you! 

Cheers, 

Chris 

@Diana Muresan thank you for the incredibly thoughtful reply. I had heard briefly about the 203K renovation loan but did not dig deep enough into it. It seems like that may be the most viable option for me

@Brandon Sturgill love these ideas. Do you know where to reliably source HUD FHA foreclosures? Currently I have found HUD Home Store which seems reliable, but inventory is incredibly low (which is understandably a good thing). Just wondering if there is anywhere else worth looking. Thank you again 

Hi BP! Thanks for reading my post. Looking for any thoughts, opinions, guidance on my first purchase and subsequent path: 

I have a decent chunk of money reserved, enough to buy and renovate a true fixer-upper. 

I'm looking for a 3-4 unit building and will be financing with FHA, probably 3% down.

I was just about ready to pull the trigger on a property, but started thinking that AFTER the renovation, my newly depleted liquid funds will keep me sidelined. I am now thinking it would be better strategy to buy a home in better condition, even if it is priced considerably higher, to leverage the FHA money at a friendly 4% rate, stay liquid, and fast-track the next purchase within 1 year.

The market I am looking in seems pretty fast but stable – I had just always had it in my head to NOT buy move-in or close to move-in ready condition homes, but given this scenario I'm sort of thinking paying a premium on the house at the benefit of staying liquid to purchase (and renovate) a subsequent second home may be a better strategy. 

I'm happy to provide more details, home costs, etc. if that helps better paint the picture. Essentially the question boils down to whether or not tbe community feels that leveraging an FHA loan as much as possible (by buying an expensive, close to move-in ready home) in order to keep liquid funds (which would have been used to renovate a more moderately priced home) ready for another purchase in the short term is a wise strategy. Any thoughts? Any comments or feedback is very greatly appreciated. Thanks again for reading. Best of luck and success to all.

Chris 

@William Coet Not entirely sure as Poughkeepsie is fairly new to my radar, but largely I would reckon the trio of colleges nearby: Vassar, Marist, and Culinary Institute of America. 

@Mike P. Was following that listing on Albany pretty intently as well. Those units were proven AirBnB machines which definitely helped fuel the bidding war. Not a whole lot of house but a high-traffic area, efficient enough to garner a lot of attention. 

Hey Jared @Jared Gettinger – thanks for the welcome! Indeed, I've still got to hone in more specifically. I have a good chunk of savings and am looking to dive in, but of course need to be there to better understand the market and where I feel I fit into it or this first investment. Looking forward to returning to the area early next month. Will most definitely be joining the UCREIG November meetup (thanks for the info!), as long as it's rerouted around Thanksgiving. Cheers, and looking forward to meeting! 

Thanks for the welcomes, everybody! 

@Chris Szepessy – that's great to hear! Admittedly I have yet to visit Catskill, though it's high on my radar. Seems like still a great time to get in – I'm really fond of the entire area and can't wait to get back over there. How long since you made the move over the bridge? 

@Raymond Reyes – glad to hear you've moved in on Kingston. Curious what areas specifically you're around. I visited and followed the more typical weekender route, strolling Uptown and Downtown. Of course, once I dove into house hunting, Midtown is where the opportunity is, and probably all the excitement at least investor-wise. Thanks for the welcome. 

@Arthur P. – Admittedly I'm drawn upstate because I love the land. It definitely seems like an increasingly growing NYC/Brooklynite mentality to swap the urban grind for a better pace of living, while still retaining proximity to NYC. Years ago while I was saving I was considering the East End of Long Island, out on the North Fork. Pretty much missed that boat, but probably for the best as I'd rather buy somewhere with a more year-round community (maybe in a place that benefits from visitors but doesn't solely rely on them). I certainly could cash flow better elsewhere, but thinking of my own quality of living (aiming to house hack this first residence) and home appreciation (obviously in certain towns more than others) has led me upstate. 

I love Greece and consider myself very fortunate to have been able to spend a few lengthy seasons here operating, but for where I am in my life I'd rather be parking money in the states. If you're willing to navigate or maybe have family that can help, there is definitely money to be made in villa rentals. Certain hot markets (like Santorini) have a pretty tough barrier to entry –– I've been tossing out respectable offers to try and keep this going ball rolling here, but big money has already moved in and locals aren't as easily bought as they were even 5 years ago. Bit of a wild west. That's my isolated experience on this island though, can't speak for the whole country. Other islands (which are receiving overflow from hotspots like Santorini/Mykonos) could still be opportunous, and I'd love to add an Athens apartment to the portfolio (that rental market is beyond saturated, but properties still very approachable). 

How long have you been in Poughkeepsie? I have not yet visited, but certainly intend to. 

Hi, Bigger Pockets! My name is Chris Platis, and I'm thrilled to be here. I will be a first-time investor, from Brooklyn, NY, and am primarily focused on small multifamilies throughout Upstate, NY for buy and hold and/or BRRRR. I haven't spent as much time as I plan to, but so far I have high interest everywhere from Columbia County to Sullivan County and in between. I am aiming to house hack this first investment and would love to connect with other Upstate, NY investors and realtors.

I fell in love after a few visits with Hudson (which completely reshaped my prior image of Upstate) and rather like the idea of an accessible town/city within the region. Kingston also has my interest, I have friends that are moving in on Sullivan County which intrigues me in a different capacity, and I've even seriously toyed with the idea of rehabbing and operating a 7500 Sq Ft. inn in the middle of Tannersville (NY).  

I am a bit all over the board in terms of an area because my work has kept me away from NY the past 7 months. Currently, I am operating a large seasonal vacation rental in Santorini, Greece, and have similar experience in other vacation markets across the Northeast. The upside to such a schedule is that it also allows me to enjoy a frugal "off-season," where I'm free to hunt full-time for my first property. 

After nearly a decade of moving wherever work has taken me, I'm ready to make my own work and move along with it, and am aiming for real estate to be that vehicle that both grounds me and propels me forward. I'm excited to jump into the market when I return to New York in the coming weeks. In the meantime, I plan to continue absorbing BP content, analyzing properties, and hopefully connecting with some of you fine people. Thanks for being here and for reading my introduction – I wish us all nothing but the best of success.