All Forum Posts by: David Hald

hi everyone, i am in the process of analyzing a duplex, and I've just learned some new info about and I'm wondering what I'm missing about the implications of the following details: -duplex is tenanted already; duplex is priced quite low for the neighborhood, so interior condition is unknown -property is a duplex via an addition. it was originally built as a sfh. I know it depends on what it looks like inside, but does this spell disaster or extra future expense? -regarding tenants, what are my options? can I simply raise their rent as I slowly renovate? terminate lease? they are paying far under market and cash flow would depend entirely on raising the rent. I'm sure I'm forgetting something, but I was hoping the collective BP hivemind might be able to shed some light on the further risks or implications of thus newfound info on my prospective duplex. thanks in advance!

Thanks a lot for your replies, guys! Gives me very helpful intel from you locals! 

Thanks again!

Thank you all for the replies. I'd like to dig deeper into why the naysayers are opposed, and what details you supporters specifically refer to.

 Thank you for your insight into the possibility of uninvited input on the part of the investor parent. I hadn't thought of that, and I wouldn't expect it, but it's a good point to note and perhaps worthy of adding a clause into the agreement/proposal regarding the investors' roles and abilities to influence decisions.

@Frankie Woods Thanks so much for the vote of confidence! I really appreciate the encouragement!

@Caleb Heimsoth I appreciate your caution. Could you please elaborate on your warning that "you better be 100 percent sure you know what you are doing"? I understand that they will get paid regardless of what is happening with the property. To give you some support for that, in the theoretical deal, down payment from me will be 20K, loan amount from dad/brother will be 70K, and my own cash reserves will be 15K. I understand that any holding or vacancy costs will be my own. I'm sure I am missing something-I would graciously accept any further and more specific advice on this deal. Thanks for your reply!

@Account Closed Thanks for your helpful info! I will definitely put it all into writing before anything happens! Also thanks for the specific figures-it gives me perspective on what's happening with my own deal!

Thanks again to all for replying!

Hey everyone,

I am analyzing a property just north of the Village East of Davenport area east of downtown. 

It "looks" acceptable, maybe C class, via google streetview, and the crime stats are acceptable to my risk tolerance. 

Does anyone have any general or specific comments about this area, or perhaps any experience with properties there? Really any personal experience you have with this area would be useful for me!

Thanks in advance!

Dave

Hi everyone,

So, I have been reading, listening, and asking questions on BP for a while now. I've started looking at various properties in my potential areas (although I am a long distance first time investor), and I finally had the conversation to iron out some of the finer points of the financing with my father.

He is an experienced, if not terribly savvy investor. He is in his late 60s, and looking for income rather than growth in his investments. He is partially surviving on T-Bills at around 3% and some reliably paying dividend stocks, so he was receptive when I first presented him with the idea of investing in the beginnings of my would-be real estate empire. Months ago, he asked me to find out what kind of rate I could get with my bank on a 30-year fixed mortgage, which was about 5.5%. As a response to that, during our recent conversation, he said that he would invest with me up to $50,000, at 4% simple interest, for up to 10 years, with interest only payments. I suggested points, an origination fee, and an early termination fee, all of which he turned down. He "wants to help me" he says.

What's the problem, you say? It sounds great, I know, but the problem is my conscious and my potential to receive his support again in the future, I fear. Given what I have read here on BP about how much this amount of money via a family-lender should be worth, I worry that later he may feel he could be making more, or simply not get what he needs out of the deal. Also, I want it to be a great deal for him, not just something acceptably better than a T-Bill, especially given that there will be markedly more risk than from a T-Bill. 

As a side note, and completely unforeseeable development, my older brother was also in the room while discussing this with my father. All I know about his finances is that he has some savings in a savings account and is almost entirely risk-averse; despite that, at the end of discussing it with my father, my brother blurts out that he was willing to invest in my venture as well! Unbelievable! 

Now I have even more incentive to do all this in the most equitable and mutually beneficial way possible, since I am dealing with two possible future investors.

Thanks in advance for your responses. 

Hi Des Moines community!

I've been absent from the forums due to finishing my master's thesis, which interrupted me in the start of my search several months back in the Des Moines area for a cash-flowing rental possibility.

Now that I've turned in the thesis (yaaaay!!!), I've hit the listings again and come upon a duplex that is included in the Urban Revitalization Plan (4A specifically); I understand there is some tax abatement on improvements up to $20,000 in 5 years on multi-families under 4 units. This would be a 2 unit building that probably needs more than 20k in rehab. Does anyone have any experience with the Urban Revitalization Plan areas and investing there? I am sure there are more details I'm missing but I would love to hear anyone's contributions on this. 

Also, the rental certificate is expired, so I was wondering where/how one renews this and how much it generally runs-please post links/phone numbers if you know!

Final question is beyond trulia and zillow's numbers, how do we find definitive property tax numbers for Des Moines properties? I spent about an hour today poking around Polk County tax assessor and other websites, and managed to locate this property but I couldn't find any specific numbers for taxes/tax history on the properties. Any ideas?

Thanks a lot, in advance! You guys were very helpful before, and I'm excited to hear more from you and possibly make it out to a meet-up while I'm in Iowa this summer!

Dave

Thanks everyone for the replies. In general, I am looking at the lower end of renovated/non-distressed properties and shooting conservatively.

@john thedford

You said get a bid from a GC. I wasn't aware that they also can estimate after repair values of renovated houses. Is that what you meant? Or simply get a GC to make an estimate of the total renovations cost?

Thanks again for your helpful replies, all!

I am looking at a duplex that needs a full rehab in a midwest city. 

My real estate agent sent me a list of comps, and by what I can tell from recent sales, the ARV could be about $85,000.

However, I asked her for her estimated ARV number, since this is my first deal, and she came up with $165k-170k.

Now I'm a bit stuck, because this is my first comps calculation and now I'm doubting if I did it right/wrong/too conservatively. 

Any help would be greatly appreciated.

Thanks!

Des Moines

Hi,

I am looking for my first rent-and-hold property.

I am analyzing a duplex in the midwest, and it needs a full rehab, down to the studs, plumbing, and electrical. 

Obviously the price is commensurate with the work it needs, but I'm wondering if I should look at this intitial expense (which, over time, would be considered CapEx, and averaged across years of durability) as part of the purchase price, or if I should indeed average it out over the life of the work being done.

Option A:

Property: $25000 estd.

Full Rehab: $80000 estd.

Total Purchase Price: $105000

*In this case, if I look at the purchase price as 105k, it will affect the cap rate, if I can clear the 1% (or even 1.5%!) rule, but this may not reflect the possible resale value of the property (awaiting comp numbers from agent currently).

Option B:

Property: $25000 estd.

Full Rehab as CapEx: $80000 estd.

Total Purchase Price: $25000

CapEx (as part of operating costs): 80000 / x

X = number of years of durability of each given CapEx item

I don't want to fool myself in this analysis that I can sell the property for more than I paid for it/put into it, I will await comps for that judgement.

As extra food for though the probable rent will be in the range of $1200-1500 per month.

Thanks in advance for your help!