All Forum Posts by: Dominic Lucarelli

I've got to echo what Ryan stated above. This is the route I'm taking (soon!). I'm able to borrow 50% as a low interest loan (2.5-ish%) with up to a 5yr payback. But you've got to decide up front the length of the term.

 You're going to want cash to enjoy retirement, correct? The only question is: how much?

@Brandon Turner had this same debate on an #AskBP podcast: if you had 100k, do you buy one property? Or buy 5 with 20k down? Brandon responded that he would buy 5, netting the same cash flow but having the possibility for appreciation growth on 5 properties instead of one. Cash flow will be the same, but when you sell you stand to gain more from 5 than only 1.

When grandma's home goes up for sale, all children want/need to have a say in it, for better or worse. Feelings will get hurt no matter what happens. Be aware of that.

Run the numbers just like it's a property on the MLS, add in your estimated repair costs, and make an offer. Of course you should use seller financing on this one. Interest-free loan from the family would be amazing

Good luck, and keep us posted on the outcome!

Place a futon or sleeper couch in the living room. Bam! There's your bedroom. Keep your stuff in the garage or wherever you want!

Closing costs, Realtor fees, and other fixed costs will always show up if not accounted for. 

Others have quoted aiming around 70% FMV to be the sweet spot all in. Or lower, of course. If your goal is to get $5k out of the deal, you'll need to price in your fee before offering it up to wholesell.

In your example, if you wholesell this to an investor 70% FMV is $54k (including your fee). So you'd need the seller to agree to sell to you at $49k, giving you the $5k you seek.

Good Luck, and keep us posted!

Just using your raw data you provided, you'd cash flow only if occupied. What happens when it's vacant? Does your mortgage include the taxes? What happens if the HVAC blows out? When does the roof need replaced? What if you get a bad tenant and they trash your place and punch holes in every wall?

If you decide to go this route, I'd recommend posting of the mortgage free and clear. Then have a blast renting it out for $1200/mo :)

Everyone wants their first deal to be a flip. The lure of big money, all at once, is very sexy. I'm not saying you can't do this deal, but there are SO many mistakes that can be made that you might not even know you are making!

What will be your total costs to the lender?

Is your rehab budget enough/accurate?

How long will it take? What are your holding costs until it sells? How long do properties like this sit on the market until sold?

Do your renovations compete with other sold properties in the area?

Do you need permits/water testing/Flood insurance/mine subsidence insurance/[insert random unheard cost here]?

Do you KNOW enough yet to pull this off without making too many mistakes?

If you can answer that last question as YES, then by all means GO FOR IT. If not, I'd recommend trying to wholesell it for a quicker, smaller profit and learn from your buyer what's needed to make this deal work. You don't make much on the deal, but you don't risk it all on your first deal yet either...

Good luck, and keep us posted!

On a duplex that's 100 years old, I'd bump up my repairs to 10% at least, nudge up my CapEx to 12%. That conservative approach should cover you well, barring something catastrophic.

Run your numbers again after that, and shoot for 25% ROI. The seller will negotiate you down no matter what. You'll settle closer to your 20% ROI in the end.

Also, run your numbers with 20% down payment and compare.

Good luck, and keep us posted!

Welcome to BP! Feel free to jump into the forums and dig in. Lots going on in here!

Welcome to BP! Love the Squirrel Hill area