All Forum Posts by: Account Closed

@Tom Donnelly

The expenses you provided don't include repairs or capex. If you're holding the property for awhile you should probably allocate some of the income for those items.

Hi @Brian Blatz, your expense estimates look a bit light. As this is a 14 unit, what kind of services does your PM provide? 8% - 11% is normal for SFH and small MFH. What is the cost of replacing a tenant? Normally, it's 1/2 first month's rent.

Also, how old are the major components (e.g., roof, hvac, electricity, parking lot)? If they're a bit older, you'll need to increase to capex reserves. Also, if/when you get it under contract, you'll need to determine which components need to be replaced immediately and increase your initial reserves (additional to your downpayment) to handle those issues.

Is the tax number based on the seller's information or based on the new price of $450k? Closing costs might be a bit higher as well.

@Jim K.

A taste of the good life :)

@Sam Chance -- there's a lot of negative cash flow on this property. Also your expenses seem very low. The vacancy is currently at 1%. I think the NOI might be much lower when you factor in the increased expenses. The rental income to purchase ratio seems low also. Are the rents at market rate or can they be increased?

The loan amount and ARV are both listed at $60k -- is this correct? Usually you'll get 75% LTV when you refinance. So if the ARV is really $60k, the most you'll get back is $45k, so that will get you back your down payment, CCs, some of your rehab money. You'll still have ~$15k left in the deal.

I think a quick analysis is ARV * 75% - (all in costs) = profit/loss. If this equation yields 0 or a profit, it should be a good BRRRR deal.

On the flip side, leaving *some* money in a BRRRR deal is okay also. Just depends on the deal. I left $10k in a BRRRR deal and I have $65k of equity and it cash flows nicely.

This recent post might be helpful to see both sides of the house hack scenario: https://www.biggerpockets.com/blog/house-hack-cons

I think the pros of house hacking are living for free (potentially) and learning the management side (landlording).

You might be able to get a house and just rent out the other room(s). This depends on your family size. Another option is to Airbnb the other rooms. Overall this might be easier in CA than finding a home with an ADU. I think the differences between a duplex and home w/ ADU are minimal (if you're going to live in either one as a primary residence).

Hi @Cheri Castro -- sooooo happy that you mentioned you have money for investing in addition to 6 months of savings!

I have a family also, so house hacking is not the easiest thing to accomplish under normal circumstances. The way to get around that is a separate dwelling unit that you can rent out. For example, try to find a SFH for you and the family that has a garage studio, converted garage, or studio in the backyard with a separate entrance. They might be referred to as ADU on listings.

Once you figure out your target property/market, I think BRRRR might be a good choice. With your personal savings, you're hedging off some risk.

Hi @Zach Cooper -- I had a similar dilemma wrt SFH vs MFH. I really enjoy the multi-unit aspect of MFHs, but think appreciation is somewhat easier (in my market) with SFH. Ultimately I chose small MFHs as my property choice. If we dive a bit deeper, I look for those properties that need work and have a potential to increase rents and/or reduce expenses.

@Shayne Hastings -- courses are great, but I'm not sure what you're trying to obtain via the course. Is there some specific you're looking for? Since you have a few duplexes, it seems you are well-versed in the analysis, acquisition, and management process. Are you trying to expand to larger MFHs or something like that?