All Forum Posts by: David Marshall

Hi @Andrew Ware, the market in the Augusta, Maine area is familiar to me.  Recently I invested in Harpswell, a small town south of Brunswick.  My wife and I found a triplex  for a decent price that will cash flow when fully occupied.  We are house hacking and living in one of the units.  New investors use this strategy as a way to get property with small down payments.  

Multiunits can make you a lot of money in cash flow even if the appreciation is not growing.  When the economy turns, there will be more people looking to rent apartments.  From what I have seen in the Lewiston-Auburn and Augusta markets, there is great opportunity for cash flow and forced appreciation.  

If you are going to try a flip, then look for distressed properties and find someone who knows construction cost estimation.  Bring in some partners who can help.  Improve the property so you can sell it just below market value for sale that will move somewhat faster.  

The residential market in Portland, especially on the peninsula, has a bubble effect going on.  Properties that sold for hundreds of thousands of dollars a few years ago are now going for millions.  The condo market is on top of the balloon.  The prices bounced back from a small recession dip and ballooned beyond the last peak of 2007.  There is a big demographic shift happening next to the downtown.  Rents increased by 17% last year in Portland, Maine; faster than anywhere else in the country with the exception of one, and passed all of the major metro areas.  The best time to buy in Portland will be when the market turns and opportunities arise.  

There are some opportunities and they go really fast.  Have your resources lined up so you can go for opportunities when they become available to you.  

Welcome Ed! It sounds like you'll be a great resource. Thank you for giving back.

Welcome to BP Carolin! 

There are opportunities a little outside of the hot markets, I've found. The Portland, Maine market is hot and the high prices keep smaller multiunit properties from cash flowing. The equity gains are strong in Portland, though. Just a few towns over the prices are lower and the properties cash flow. Going a few more towns away, the prices are cheaper and the cash flows are stronger, however the equity gains aren't there. 

Hi Malcolm,

Hopefully you are finding success with your search for multiunit properties in Greater Portland.  I have experience with purchasing small multis in Greater Portland.  Recent, my wife and I purchase a multiunit in Harpswell.  We've owned one in Portland for years.  The market in Portland for small multiunits looks overpriced from a cash flow perspective.  Most people buying small multiunits in Portland are either trying to reduce the cost of their mortgage, without the expectation of cash flow even when fully occupied, or they are planning to turn the properties into condos.  Small towns in the region offer multiunits that cash flow.  That is why we purchased a property in Harpswell this time, instead of Portland.

Hi Wayne,

It you have questions about Portland City Hall, then please send me a message.  I served as a City Councilor for 9 years and we overhauled the Planning and Urban Development Department during that time.  The permitting process is better than it was.  We also changed the land use code in pretty much every zone on the Portland Peninsula to encourage the development of housing.  

House hacking is simply living in the multiunit that you bought and are renting out the units you are not living in. The LLC helpful when you have a lot of equity in the property. When a primary residence is first purchased, the equity is often limited.

Definitely talk with other mortgage brokers.  When I was trying to finance a multi-unit recently, I found that each lending institution has a unique set of internal rules in addition to the federal regulations.  The bank I was first working with was not able to process the loan, after being pre-approved.  I was literally handing a check to the inspector when I received the call from the loan officer with the bad news.  The next day, I called dozens of brokers until I found someone who understood the issue and was confident that he could solve the problem.  There is a difference between mortgage brokers and loan officer at a bank.  Brokers have a lot more experience, often have companies that specialize in mortgages, and they have direct connections with appraisal companies.  The broker found the financing for the deal and we closed on the multi-unit.  Spend some time tomorrow calling mortgage brokers and find a solution to your financing challenges.

Hi Matthew, I've used Sebonic Financial through zillow.com and it was a professional group that moved quickly through the process.  

On another note, if you are going for an FHA loan, then try to get a grant for the down payment on the multi-unit. If it is a 2, 3, or 4 unit then the grant is eligible with an FHA loan. You'll need to find a mortgage broker in your area who has been trained to provide the grant. Here is a link http://www.nhfloan.org/

Hi Jerryll, here is a method to get comps without a REA and use the info to calculate after repair value for single family homes.  First, you need to find the sales data on the assessors webpage for the city or town where the property is located.  In some places the county government keeps this info.  If you cannot find it, then call the assessor's office and ask how to get it.  You want the sales data for the most recent six month period. 

Next, you need to search the list for the properties that are most comparable to the prospect. 

1. Location - Find comps that are nearby.  If you live in a city, then you should look within the neighborhood.  If you live in a small town, then you will probably need to look within the whole town for comps.  Here are some other things to look for in comps:

2. Square footage - use comps within 500 square feet more or less than the prospect.

3. Beds and baths - use comps that have a similar number of bedrooms and bathrooms.  Consider properties that have one more or one fewer of either bedrooms or bathrooms.  If you have a 3/2 prospect, then look at properties with 2/2, 4/2, 3/1, and 3/3.

4. Age - use comps that were built around the time as the prospect.

Create a list of 10 properties that have similarities. The more similarities the better.  If you are having a hard time finding 10, then you'll need to be a little more flexible and consider properties that are older and newer and also look into nearby neighborhoods.

Then, calculate the cost per square foot for the list of ten.  Divide the sales price by the square feet.  

Finally, calculate the average cost per square foot.  Add the 10 results for the cost per square foot together and divide by 10.  This number is an estimate for the after repair value.  

For more info, check out the book Flip by Rick Villani and Clay Davis.  They recommend this method in the book.  Audible has an audio book for it.  You can see the figures from the book by going to kellerink.com/flip

Good luck with finding comps.