All Forum Posts by: David Algava

I am considering purchasing a 2/1 property with a 1/1 detached in law suite (living in the 2/1 for a couple years). The insurance company told me that I would need homeowners insurance with an endorsement to add on to the other structure.

Not sure how this works when you have a duplex where both units are connected. 

Brian - Thanks for your comment. If nothing else, you've convinced me to lower my offer (or perhaps not offer at all).

When you mention finding people in dire straights, how often are you able to use traditional financing those kinds of deals? I would imagine most of them need a bit of work. I was told I cannot qualify for a mortgage unless Roof / AC / Electric / Plumbing all pass inspection.

On the brighter side, I suppose you only need to find one deal in 100 for it to work. Perhaps there is one out there that doesn't require much work and qualifies for traditional.

Michael, The property is in North St. Pete in the historic Kenwood district just west of 275 - any thoughts on location? I've found that this to be a decent area and would be comfortable living there. 

I agree with your comment on market status - and I know they are in the process of building a lot of luxury condos downtown.  It does point to rents going down with the extra supply.

Ryan - Appreciate the response. 

The comps are a bit wacky as it is a mixed use street. There are businesses, a church, a school, a lot of SFRs and 2/3/4plexes that do not seem to conform to a particular size, shape, or condition. I see a triplex across the street that sold for 150k last year (worse condition / same sqft). There is also a single family 900 sqft that sold for $70k in 2014. St Pete has appreciated significantly since 2014 somewhere in the realm of 20-50% in most areas.

I have not been seeking deals outside of the MLS. It may be worth a shot - thank you. Homes without central AC / roof problems / etc do not qualify for typical mortgage and not comfortable finding hard money on a first deal. Will have to find a way around that - or find a house in good enough condition.

Considering putting in an offer for a 2/1 and 1/1 inlaw suite at a total of 1500sqft in the Tampa area. Asking price is $150k. I am fairly confident I can rent the 2/1 for $1200 and the 1/1 for $700.  It is on a busy road. Comps nearby sell at 25% - 30% more, but are shielded by a block or two from the busy street. This house does have alley access, so you can get to it from the back. Also, to me the noise is fairly unnoticeable from the inside.

Here are my estimated monthly expenses:

My estimated cap rate is at 4.35% at asking price. Trying to be realistic with expenses - hope I am not killing the deal by accounting for too much.

This property was listed 2 days ago and there are already multiple offers.

I am eager to gain experience as this would be the first home purchase. Have viewed about 20 other houses in the area. This is the best deal I have found so far. Is it crazy to bid higher than asking? Am considering going higher (maybe to $160k), which puts my cap rate at 3.98%.

I do notice we are in a bit of a sellers market in the Tampa area - so my main concern would be buying a house that breaks even on cashflow, and then having the home value depreciate. I will be in good shape if the home value remains the same or increases.

What do you guys think? Am I too eager to find a deal that I'm forcing this one? Should I just offer a couple grand over ask and be comfortable losing the deal if I'm outbid?

Thanks in advance for any feedback.

Here are the expenses I have been using when budgeting:

I think this deal would be highly contingent upon you being able to successfully sublet for $3500 a month. Otherwise, you will find it very difficult to cash flow. You would have to determine a probability on your ability to sublet.

Also, if it is zoned as a commercial property, you may want to speak with the local municipality to make sure you can you can do what you'd like with the property.

Lastly, I think it is a bit of red flag that it's been sitting on the MLS for 3+ months and it hasn't been scooped up. My gut would tell me to hold out for something a little better, because this deal seems ok at best.

A popular piece of advice given in the stock and bond market world is that however old you are, you should keep (your age)% of your portfolio in bonds and (1 - (your age))% in stocks. The idea is that you can afford to take on more risk while you are younger in stocks, and as you get closer to retirement, you want more steady income.

I think you can follow similar advice when thinking about paying down mortgage vs. reinvesting. When you are young, I would dump a majority of the money into more properties. As you get closer to retirement, I would dump the majority of the money into paying off the mortgage. 

And remember, you don't have to do one or the other.... I think a bit of both is healthy.

@Jeffrey Kops

@John Thedford

...I apparently needed to learn how to use the tags property

@Jordan Moorhead thanks for the advice. I've certainly noticed St. Pete to be an oddly zoned market. I have seen blocks that will have an SFR right next to a 6 unit building, only to be followed by an auto repair shop. Seems like a challenging market to become proficient in because of the way areas vary from block to block.

@Jeffrey Kops and @John Thedford - Thanks for the welcome.