All Forum Posts by: Evan Licht

Hi Alester,

I would account for water sewer garbage and see what your numbers come in at. I don’t think it would cash flow after accounting for that and I don’t think you can just pencil tenants in to paying that for you and still getting 1500+ in rent. 

On a more positive note, if you plan on house hacking it could still be a worthwhile property to purchase. Rent out the other room on your side it could be a great property for you. It’s better than renting imo

@Jordan Stavrev no problem...For the sake of the forum, lets focus on square footage (which I previously referred to as GLA- gross living area). A good appraisal should include comps that are slightly smaller in square footage and need to be adjusted upward as well as comps that are slightly larger in square footage and need to be adjusted downward. This is what is referred to as "bracketing." Bracketing allows for the subject property to fit into a range of values that is derived directly from market data. 

When the subject property isn't bracketed, as is the case with your example that started this thread, there is no direct market evidence that sets a range of values. Therefore, a "straight-line adjustment" occurs where all of the comps are smaller and there is no indicator of value that is setting the upper limit of value due to it being larger than the subject.

Its not uncommon to have limited comps that don't allow you to bracket, but the appraisal is not as reliable when this is the case. 

@Jordan Stavrev A lot of the previous posts hit the nail on the head. Ideally, you find comps that have a smaller GLA as well as larger GLA in order to "bracket" the square footage of the subject property. You may have to expand your search radius or your time frame and if so be sure to adjust for it. You want to avoid making "straight line" adjustments by making sure that the most important characteristics (GLA, date of sale, etc) are bracketed. Best of luck

@Pati Tanielu Check out this blog post recently written by Joshua Dorkin about FHA loans....should clarify some things for you https://www.biggerpockets.com/renewsblog/fha-guidelines/

@Matt Hintzke I am starting out as well and in the same boat as you, just graduated college and looking to develop a strategy to obtain financial freedom...Cutting expenses has been a big focus, I have found that tracking my expenses month by month has help me cut costs across the board. Most importantly, I try to get onto BP at least once a day to read a few articles and check out the forums..its crazy how much you can learn from this website.

Take a look at this article I came across on the BP blog...it should clarify a few things as far as your financing questions...if you get an FHA first time home buyer loan at 3.5% down you have to live in the residence for 1 year. https://www.biggerpockets.com/renewsblog/2015/03/25/fha-financed-duplex-ideal-first-investment-property/