All Forum Posts by: Gerardo Hernandez

Hello Everyone,

I want to start my real estate portfolio. I want to start with a house hack But can't find a duplex. I found a fourplex that is 419k but its been in the market for a long time. I did the number for 400k and this is what I got. 

Price:400k

Taxes 2019- $7631

Rents for 3 of the units-currently 800 but raising it to 900 = 2700

Down payment 3%

Home insurance- 828 annually (used the number the calculator gave me)

Repair and maintenance- 10%

Vacancy- 5%

Mortgage Insurance- 350 per month? I used what the calculator came up with not sure its accurate 

All in all I should be paying around 500 out of pocket till that PMI comes off. Is this a decent deal? I know It doesn't make the 1% rule but I hear those are hard to come by now and my area is very hot overall to find anything ATM. Am I missing something? My hope is to stay in the apartment for 1-2 years and than try to another duplex or fourplex to do it again. I am currently driving 2.5 hours a day to get to work and it's getting to the point where I get a single family home or rent an apartment. I am barely paying any rent there but the drive totally sucks and the savings are going out the window when I think of gas and the time wasted.

@Matt Groth Yeah if it was just the morgage but you have to add taxes, home insurance, mortgage insurance and any work on the property. That Equals to over 1600 a month. Plus let’s say you save 200 a month for vacancy and fixes you break even. Even once I move out it will be about the same thing. The only gains I see is paying down part of my mortgage. I feel like there is so much room for error that’s why I don’t see what everyone is talking about. Yea my time is important but I have to get into deals that make sense and maybe this one did. I just need to understand how so I don’t make the same mistake again

@James Hamling @Greg M. - I understand what you guys are saying and I am truly learning. I was going off of what I knew at the moment( not much at all) I still can’t seem to get how it makes sense. I get you get tax breaks and appreciation but is all that really worth it at the end? After further research here is the deal in further detail. Please analyze and help me understand how is it a good deal.

Price: 214,900

Closing cost: 3500

Taxes: $4500

Home insurance: 1900/year

Morgage insurance: 1900 (could be more )

I am doing 3% down

Interest rate: 3.25

The house does need some repairs but current rent is 800 could increase it to 900 and maybe 950 if I remodel to compete with similar apartments.

@Greg M. YES, that was with mortgage insurance, taxes and home insurance. But it was a very rough estimate. I didn’t know how the vacancy worked tbh so for future i should be going with 3-5% ?

@Reuben L. That's what I was thinking also unless we are missing something. The mortgage payment would actually be higher since 1300 was for a property worth 205 that was about half of taxes. My rough estimate is around 1450-1600. I didn't take percentage for management but I did 10% for repairs since I seen some future expenses or things that needed to be fixed. I did 8% vacancy to be in conservative. The rent currently is 795 but I can raise it to 900 and maybe just maybe 950 but not sure since the area around the duplex isn't the greatest and the apartment needs some updating for it to be in the higher end of rents. I would be living for cheaper once I am there but I don't think once I am out of the property that it will be profitable. Specially considering the extra money I need to put into it. I placed a new offer on the property for 207k today. I don't think I will get it but if I do I will make it work. I was going to pay 1round 220k for the property after closing cost and it just didn't make sense. Best of luck to you in your journey BTW!

@Greg M. Yes, I understood that. My mortgage would be around 1350 a month depending on how much home insurance and M. Insurance would be. I would be living there for cheaper than rent but once I move out and saving money for vacancy and repairs that will be needed than I wont be getting enough to save for the big repairs. It just doesn't make sense for my goals that's it. RIght now I am car pulling and house hacking so its saving me money that way. I am tired of the drive but I would rather wait for a deal that makes sense for me long term. If that was a great deal well it's done now. On to the next one. Thanks for your input!

@Bruce C. @Shiloh Lundahl @Clint Galliano and Everyone else. I am aware of the cost of the driving and the toll its taking on me. I just don't want to rent from someone else anymore but I also don't want to get into a deal that might weight me down and that I might have to stay in for a long time for it to make sense. I want to start something so eventually I can have a decent passive income to be able to quit my job. Paying 215k plus closing cost was a horrible deal for my goals. I Will learn from those mistakes and be ready for the next deal that comes my way. I appreciate all of your inputs and I promise you guys I am learning and putting in the time to educate myself. I use those 2.5 hours to listen to books and podcast. 

@Brad L. Thank you so much! Yeah the numbers didn’t make sense and got carried away. I was able to call my realtor and they were literally about to accept my offer. It all worked out thank you! Lesson learned.

@Brad L. My plan was to live there for a year and half or so than get another duplex to house hack  and rent the current one. I feel like I am just desperate to move because I truly hate driving 2:30 Hours daily. 

Hello everyone, 

I have to say I am freaking out!! I got a new job over an hour away and I have been driving for over a month and I hate it! I have been trying to find a duplex to house hack but there isn't much in the market at the moment. Well yesterday I put an offer on a new duplex that came in the market. The asking price was 215k and I offered 190k to start the negotiations. My real estate agent came back and said someone else had an offer in already. So she said that houses are selling 10% above asking price and that if I truly wanted to get it to not ask them to pay closing cost. Under pressure I put an offer of 215k. Now that I am running the numbers. It just doesn't make sense. I am still waiting for an answer but I am super scared that I get it because I feel like that wasn't smart at all. Taxes were 4300 in 2019, current tenant pays 795. I feel like I can raise that to 900 or 950. I got a 3.25 percent interest with 3% down. Any advise? I feel like I really screwed up my first deal.