All Forum Posts by: Dominic Lucarelli

I'm trying to push this deal through. The potential upside is enormous. The short term is challenging. What are your thoughts?

Asking price: $127,000

Triplex, fully rented, owner occupied

Main floor (and full basement): 2 bed, 2 bath. Owner occupied (estimating future rent at $600)

2nd Floor apt: 2 bed, 1 bath, separate entrance. Rented at $550

3rd Floor apt: 2 bed, 1 bath, separate entrance. Rented at $450

**Main floor can support an addition of a small studio apartment. Plumbing in place for a toilet. Need to add dedicated bathroom/shower & kitchen space. Estimated cost to add: $5000 Estimated added rent: $400

**The Main Floor apartment can be separated from the basement area, creating another unit. Basement area could be 1 bed, 1 bath apartment. A dedicated kitchen area would need to be added. This would adjust the rent of the Main Floor apartment to $500. Estimated basement rent: $400.

Now, the catch... the owner is selling the building but still wants to live there. She's lived there for 54 years. I'm trying to get creative with the financing on this one. In the short term, this will be a break-even deal. But once she passes on (morbid, I know...) this will be a smoking hot deal. I'll explain...

My Offer: $60k and allow the owner to live rent-free

This will allow me to buy the building much cheaper than I could otherwise afford. Once she moves on, I can gain an additional $600 in income per MONTH, allowing me to exit as Property Manager if I choose. On top of that, at any point I can add in an additional unit (or two!) for additional income.

Current building income: $1000 + owner + $25 garage rental fee

Expected fixed monthly expenses: $520

Insurance: $115

Property Taxes: $175

Water: $40

Sewer + trash: $130

Lawn Care: $60

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Total: $511.48

7% Vacancy: $71.75

10% Repairs: $102.50

10% CapEx: $102.50

Property Management: Currently $0

Mortgage: $234.73

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What are your thoughts? Am I crazy? Am I risking too much up front? I'm submitting this as an offer by the end of the week.

I've used a 203k loan to purchase/update my primary home, but not in this type of deal. You have to have a contractor present the list of upgrades to the lender prior to receiving the loan, so your lender will have to approve the use of funds. If there is enough equity after renovations, they will approve the loan.

In your scenario, you're hedging the deal on acquiring an easement from the zoning laws of your area. Have you investigated this yet? I'd contact the zoning commission and test the waters to see what they will/won't approve before purchasing.

Good Luck! And as Rich Dad says: "How can I make this happen?"

Rich Dad, Poor Dad

Eat, drink, and breath every word of it. It'll absolutely change your mindset about life and real estate. I wish I had been given this many many years ago.

I think what @Joe Splitrock is referring to is the social brainwashing we all go through when we're young: find a safe secure job, buy a big house, get a good education. Rich Dad, Poor Dad talks about how his rich uneducated Dad masters money and becomes one of the richest men in Hawaii by bucking this common dogma.

The best part is: you've already started! Being able to save $20k+ per year is a fantastic kick start into becoming financially independent.

Think realistically about your home: at this exact moment, does your current kitchen MAKE you money? If you bought real estate, would that investment make you money?

Both have the potential to make you money, depending how you use them.

BP can help you acquire the financial tools to make this happen. Keep educating yourself, ask questions, and learn about real estate from everyone you can.

Oh, and unless your kitchen will be used for business purposes, you'll likely make much more money investing in real estate.

Good luck

Welcome Kevin!

If you're looking for a flip, I've got a potential lead I haven't fleshed out. Message me if you are interested and I'll share the details.

Welcome to BP! I also missed the PGH REI (our new baby is knocking on the door!) but I look forward to attending one in a few months.

Unfortunately for me, I've been in contact with multiple banks for loans but no one will loan this small. I don't have $40k in cash.

I've ran test ads on Craigslist in this area. There's clearly a shortage of available housing in this area. The ads I've ran include no addresses or pictures and the responses have been overwhelming, so I've already got a pool of potential renters.

I've also got a new contact with a local housing program manager who's looking for viable housing in that area.

 Thanks for responding J Scott!

The current renter (his sister-in-law) may or may not stay. She has a 60-day notice agreement from the current owner if she elects to move out which I would allow. I'd run her through tenant screening anyway since the current owner tells me she isn't 100% reliable for the $400 she is currently paying (I know!!!)

The building itself is in great shape structurally. Roof is 5 years old, water heater is 2 years old, HVAC is 9 years old, washer/dryer are ancient so that's probably going to be my first expense once it breaks. Electrical and plumbing are without issue.

The carpeting could use replacing, rooms could use paint, kitchen is straight out of the 1970's but functions. If she decides to move on, I'd do the carpeting and paint. If she stays, I'd do them in a year.

Sorry, I just seen your update.

The majority of the banks I've used in the past have checking & savings accounts on the same account. You can use the savings account to hold the security deposit and the checking to do the business of the property. I could see how this would complicate things once you scale up though since 20 properties = 20 unique checking/savings accounts...

Good luck! Let us know what you ultimately decide to do. I'm eager to know what you do.

So after analyzing deal after deal, podcast after podcast, I've struck a verbal agreement with a family friend to purchase a home he's been renting to his sister-in-law. Please PLEASE check my numbers to see if I'm a fool or a hero:

Agreed price: $40,000 + closing costs

Zillow Estimated Value: $67,000

3 bed, 1 bath, 1399 sq ft, built in 1950

Port Vue, Pa

Taxes: $1683

Estimated Insurance: $600

Zillow Estimated rent: $850

Projected monthly payment (PITI): $346

Projected profit: $79

Thoughts?