All Forum Posts by: John Kent

@Joseph Tipa foreclosures shouldn't effect your ARV unless the condition is close to or comparable to your newly renovated property. Your ARV should be supported by traditional sales, newly renovated properties are even better. Short sale, auction, and REO sales all have a distress factor where a discount off of As Is value is expected.

Look at your agent's comps. Are they using distressed sales for comps? Are there any traditional sales comps available? If there are no traditional sales comps for sale then the market your property in may be distressed/declining. In a declining market foreclosures can definitely bring down the ARV over a short period of time. In a stable or appreciating market foreclosures don't have a large effect on ARV. St Cloud is outside of my market so I cannot speak with specific market knowledge about the conditions there.

Make sure you evaluate the comps yourself and determine an ARV. At a minimum, during your due diligence period take an in-depth look at the comps to very your ARV and to determine the level of finish required of your rehab to meet that ARV.

@Jakari Mayers welcome to Bigger Pockets.

@Maryanne Sweet welcome to BP and of course welcome to Florida as well. 

@James Canavan house hacking a multifamily is challenging here. Not impossible but challenging. We aren't awash in small multifamily properties and there are an over-abundance of eager buyers. I currently have a few customers looking for small multifamily so I search everyday. 

For your original plan, you can convert your FHA loan to a non-owner occupied after 12 months. However, you can only have one FHA loan at a time so if you move to a different purchased home conventional or non-government loans would be your main financing options. There are a few exceptions where you can get a second FHA loan. Refinancing to borrow the equity in the property would be referring to a cash-out refinance. From what I have seen lately most lenders are offering 75%-80% LTV on a cash-out refinance and you have to add in 1.5%-2.0% of the loan amount for closing costs. FHA allows cashout to 85% LTV but has an owner occupancy requirement and you have to make an upfront mortgage insurance payment in addition to closing costs. The amount of equity available via refinance may not be that large if 20% of the value is left in the property.

As for a recommendation, without knowing your end goals it is difficult to give a recommendation. Feel free to PM me with a few more details. 

An investment plan should always have an "and profit" at the end of the plan. Immediately, preceding is the action taken to realize the profit. For example selling a property to liquidate the equity or renting a property for X amount of years with a certain annual rate of return or cashflow. And of course if the plan is to buy a house that you may wish to live in for a long time then happiness is more important than profit.

@James Canavan that sounds like a good plan. Although, 203k is a long term loan what do plan to accomplish with a refinance? I would also ask what happened to the "and profit" part of your plan?

@Chris Colon first thing to do is to figure out what you wish to achieve long term from REI. For example, are you looking for immediate supplementary income, to run a real estate business, long term wealth building, a new hobby. Once you set the goal post the appropriate strategy can be selected.

@Jared S. first make a list of neighbourhoods in which you would like to spend the next 2 years as a resident. Then look for fixer uppers in those neighbourhoods.

If the plan is to sell in 2 years for a profit then you must analyse your deal as if you were selling tomorrow for a profit. Subtract all acquisition and renovation costs, except your holding costs, from the current after repair value of the property.  Then subtract your resale costs. The amount left over is your potential profit. Any appreciation above that is just sprinkles on the cake.

Ditto on Inspectagator. 

@Hae-Yuan Chang here is a BP Blog post that explains CAPEX reserves. https://www.biggerpockets.com/renewsblog/2015/10/13/real-estate-capex-estimate-capital-expenditures/

You should also budget a minimum of $500 per year for routine or emergency maintenance.  This number will likely be more but depends on the condition of the property and type of wear and tear that can be expected from tenants. 

Management fees are calculated monthly. If you hire a property manager they will have a rate schedule. We charge 8% of the monthly rent, however, you may wish to budget up to 10% of the monthly rent.

I took my pre-license course at the Climer School of Real Estate on North OBT. I know taking online courses are popular, however, I recommend taking the pre-license course in the classroom if you can manage it into your schedule. 

IFREC is also a popular real estate school. I have taken continuing ed classes at both IFREC and Climer. Both were good but I prefer Climer.