All Forum Posts by: Daniel O.

Be careful you don't get out too far ahead of your shoes. Most low down payment programs require owner occupancy. Also, it may be difficult to refinance the loan until you have built up equity to where the loan to value ratio can be less than 80%.

Multi-families are pretty expensive now, pretty much everywhere you look. Yes, there are still deals to be had, but they are harder to find than they were even a year ago. Too many people on BP getting up to speed and snapping them up!  If you've been preparing to do this for the past couple of years and you haven't pulled the trigger yet, it sounds like you are stuck in Analysis Paralysis. 

I would be much more focused on getting a really solid 4 unit with little or no deferred maintenance in an area where you can get great tenants and maybe increase the rents regularly than I would on whether it generates a little positive cash flow with only 3 units rented.

How much have you spent in rent while searching for the perfect deal? Even if you eventually do find a place that will generate $100 a months while you live there, that is only $1200 per year (before taxes!). How many months does it take you now to pay $1200 in rent?  The math is clear. You are letting the perfect be the enemy of the very very good. Use the money you are saving to build up your cash hoard or pay down the mortgage that much quicker (or both), then lather, rinse, repeat.

Good luck!

A couple of additional thoughts. First, I agree with @Katie Neason. It really depends on what your goals are. Are you trying to build wealth? Preserve wealth? Have a passive income? What do you hope to pass on to your kids or grand kids? Will you be helping anyone with college? Taking that monthly income and putting it into a 529 account for a grand child could be one option. Before deciding to sell, give some thought to the question of your overall goals and talk to your financial advisor about what the best way to achieve them is. You shouldn't look at this property in a vacuum -- what you do should be part of your overall strategy. Holding the house could be part of that strategy. Or exchanging for another property with a 1031 after the 5 year window for capital gains. Is your pension secure? I mean REALLY secure?  Good luck. A lot of people would love to be in your position at your age!

An unfortunate situation all around. You don't know why the tenant has stopped paying rent. Nobody likes to be evicted, so it could well have been something beyond her control. That said, you are not running a charity, and you need a paying tenant in your place. I don't believe it would be prudent to give her a heads-up, and the advice above about changing locks, putting her stuff out immediately and covering it with plastic is all solid. But you can make the whole thing easier on everyone, including yourself, by treating her with respect and allowing her to maintain some semblance of dignity in what has to be an incredibly unhappy situation for her.  Kindness is not weakness, and it doesn't cost you a thing. She is already having a much shittier day than you.  Dan

I agree, you do not have recourse here. This situation is little different than a scenario not involving a short sale where your title company did a search prior to closing and discovered there is a lien on the place.  But on the bright side, if it does go to auction, you might pick it up for less than you previously offered.

Do not let the seller do the repairs. Let me say that again. Do not let the seller do the repairs. Anyone who uses jumper cables to steal electricity should not be allowed anywhere near power tools or even a hammer and nails. Seriously. Would you trust what was behind the wall after the drywall was replaced?  Stipulate that ALL work needs to be done by a licensed contractor and that you need to see the receipts.  Better still, you handle the project so you have control. The seller's only incentive is to do it cheap. 

The seller may be anchored on price, but the value of the property just took a big hit. Lucky for you, it happened before you closed.  You might also mention to the agent there are other properties in the area without all these hassles....  Good Luck!

Sounds to me like you have some serious leverage to renegotiate IF you want to. It is important to distinguish between a sketchy seller (for example, someone who uses jumper cables to steal electricity) and a sketchy house. If it were me, I would seriously consider backing out of the deal. But before I did so, I would look at whether this situation can work to your advantage. You do need the plumbing tested, and obviously you need to know where the water is coming from. Consider renegotiating your offer based on material changes to the property. Figure out what it would cost to do full remediation of mold and water issues including testing plumbing, repairing any issues with plumbing, ripping out drywall and flooring and replacing as necessary, etc. Add in the cost of installing a sump pump. Then add 30% to your cost estimate, which is a standard uncertainty factor in the construction industry. Factor in a period of vacancy while this work is being done. Figure out what all of that would cost, and ask the seller to reduce the sale price by that much. But if all of this sounds like more trouble than it is worth, I think you are well within your rights to back out of the deal and get your EMD back.

We often see properties listed for far below than what we know they will sell for. It is a strategy that sellers use to get people interested. Depending on the location and the type of property, we don't even bother putting in an offer unless we are willing to go much higher than asking price. This may be what is happening here, as it is pretty typical to see the place be on the market for a week or two (seldom longer in a hot market), then anyone who has offered is asked for best and final. Remember, the seller can sell to whomever they choose, even if it isn't the highest offer.

I agree with @Ned Carey's characterization of Baltimore neighborhoods and triplexes. Lots of duplexes available, though it is getting harder to find good deals in Charm City than it was a couple of years ago. You might look at Reservoir Hill. That area is very much up-and-coming, and we do see triplexes there once in a while. There are some great places in the inner harbor area too, but they are pretty spendy. Bottom line: You have to get out and see stuff! As you start to refine the area(s) that look good to you, be sure to check them out at different times of day and night.

I'm not an accountant and I don't play one on TV but...  I think you also need to figure in the tax advantages of continuing to own your current home. These include mortgage deductions on your income taxes, depreciation, etc. 

You could also go with a mortgage that requires a smaller down payment.