All Forum Posts by: Dan Inness

@Jason Bohling looks like DTI is good. Things are coming together.

So another twist to this deal... there are more of the same duplexes on the market now so reconsidering even with the 25% down. I can get approved fir a 50k line of credit from my bank. Thinking about putting 15-20% down cash and the additional 5-10% down from the line of credit. So I keep some cash on hand. The duplex will cash flow 1160 per month before repair and vacancy expenses and using the line of credit costs $95 or $165 per month in interest, lowering my cash flow to 1064 or 995 respectively. 

I’m leaning towards this option so I can keep some cash. And having the line of credit available could be good for future deals. 

Any thoughts or feedback would be appreciated. 

@Jason Bohling that helps, I appreciate it.  Good insight into the process.

@Jason Bohling I am good for 15% down on a SFH. So I assumed that would be the same for a duplex but he said for a duplex it would be 25% down. Is there usually no difference?

@Theresa Harris thanks I agree.  Upon further running the numbers, it would not be too bad especially due to its location and the fact that its new.  

But after talking to my lender, I need to put 25% down for a duplex and therefore cannot move forward with this property at this time.  This was a great discussion though, and I appreciate everyone's input.  I'm sure i'll be posting again with questions about another property in the near future.

@Mark Beeson thanks for the insight, I would be putting 15% down which affects it slightly but great point about the HOA, I would be sure to read all the HOA details to ensure something like that doesn't happen. I'll need to see what, if any, services the HOA provides as well. Wichita seems tough right now because anything underpriced is there for a reason and has been on the market for a while at this point. Anything worthwhile (1% rule) goes quick to cash offers. And others, like this, are priced just high enough that you can't get 1% and add in the potential of a downside in Real Estate in the next year or two, it seems like it could get a little risky.

@Theresa Harris thanks for the input. The only reason I say $330k is too high is because they are renting for $2600 so it does not adhere to the 1% rule. But I have also seen properties that follow the 1% rule that I want no part of due to the area, age of house, maintenance requirements, etc. I will look into the HOA more.

@Joe Splitrock I like your point about attracting A Class tenants and lower repair costs, that was exactly my reason for the post.  I'm thinking if I can "cashflow" $1000 per month (if I could raise rent to 1400 so mortgate, taxes, hoa, insuranace at 1800 and rent at 2800), it could work well.  That should be enough to set aside for repair costs.  I do not plan on spending any of this money, it will sit in an account until I buy my next property.

@Justin Sullivan thanks, I need to look a little more at the appreciation, my only concern is that the appreciation over the last year will potentially lead to less appreciation over the next few years.  As I said above, I think the deal becomes a little more attractive if I can bring in $1000 per month over mortgage costs.  Houses in the area have averaged 3% per year for the last 10.  If I conservatively assume 2%, in 5 years I would have made $60k in appreciation and mortgage paydown and an additional $60k in cashflow over that time period minus any repair costs along the way.  I probably need to get into some more detail on the appreciation, but what are your thoughts on those numbers?

@Chris Pasternak thanks, I will definitely obtain all documentation to include screening info, lease, etc.  

@Mark Beeson I know, tenants make or break the entire real estate deal.  Hoping I can have good tenants for all of my future endeavors!

@Rod Hanks thanks for the response, I appreciate it and agree that this is marginal and doesn’t seem worth the risk even though it is newer. 

Good evening Bigger Pockets community! First post here. 

I’m just starting out and live in Wichita KS. I’ve evaluated over 700-800 properties so far and been beat out by cash offers on the few I have been interested in. My realtor just suggested a duplex. 

The duplex is $330k and each side rents for $1300 (2600 total or 0.8%). But they are brand new (2020) and currently both occupied. Here are my thoughts:

1.  $330k is too high and doesn’t get close to 1% rule.  Maybe I could get in the 315-320 range but still high.

2.  Rent probably can’t be raised since all or most in that area are the same and rented for the same amount. 

3.  I would manage so I would save fees there. 

4.  With it being new I would not foresee big repairs for at least 5 years conservatively (hopefully closer to 10) so repair budget could be lower  

5. Mortgage, HOA, specials, taxes, insurance would be 1800 with 2600 income per month.

Overall my thoughts are that the price is high for the rental value but it’s new and is currently rented which provides some stability and risk reduction since I can almost definitely count on rental income until the leases are up before I have to be concerned about vacancy or repairs (hopefully).  If they have 6 months left on the lease (working to find out details now) it would provide a $4800 of income in addition to rent over that time period to provide a cushion due to lower margins.

on its face it seems like a not so great deal but the fact that it’s new so won’t have any major repairs soon makes me wonder how important the 1% rule is in this case. 

Open to any thoughts or feedback. Thank you!!

Dan