All Forum Posts by: Henry Lazerow

Appraisers almost always make deals appraise out right at contract price even if they are over priced a little the only exception is when deals way overpriced so I'd be very cautious if move forward.

Just keep pushing seller to reduce contract down to the appraisal price. If two appraisals say no it's unlikely they will be able to sell it to anyone else for more. 

Low end would be if last 6 month comps $400-500k you buy at $425k or lower.

Look at what similar for example 3 units around same SQ footage in a .5 mile radius sold for in last 6 months. You can do this on redfin, zillow or just have your realtor pull comps from MLS data.

The delta between value add and ARV has reduced significantly since about 2017.

I brokered 10 million in 2-4 units last year so have a lot of experience in niche. For your first deal would recommend focusing on properties that need light value add these are deals the experienced big rehabbers pass on as too small project. For example just doing 1) paint 2) new countertop/tile backdrops 3) adding in unit laundry. For price I always tell people find a deal in bottom 25% of prices for comps. I have had one or two clients insist on finding "under market" and they both ended up doing mailings, cold calls, etc. Neither ever bought and now properties are even more expensive then when they were originally looking. By just buying low end of comps and doing a light value add + raising rents you are creating forced appreciation on a milder level but it works and is scalable when you want to do a second house hack in a year repeat.

VA loans can be an awesome tool for zero down but be sure to note they are strict on inspection and if this property needs work and owner won't make repairs it will not pass underwriter. I have had VA flag very minor things before that even FHA doesn't normally care about.

I wouldn't say you don't have enough money especially if willing to live in the house but would recomend you at the very least have a credit card in case an emergency repair is needed while you save up for a reserve account. It may also help to do a closing cost credit if tight on funds. For example offer $155k with $5000 credit vs $150k it nets out same for seller but lets you spend less money at close. 

Congrats and awesome post thanks for sharing!

I have had this done three times now for clients deals. You need to find an old water bill like back in the 1950's old and if the water bill says "3 unit building" the city will give you a new zoning doc that says legal 3 unit and the city will not even come to the building or look at exits, modern code, etc. all they are doing is "correcting the zoning doc" grandfathering it in. Have an attorney pull these old water bills with FOIA from the city. One of the deals this happened quick enough that it was during close the other two after closing. 

If the old water bill says it's a 2 unit it's going to be a lot harder and I wouldn't bet on it ever changing. 

Both. The mix of cashflow+rent growth+appreciation is what builds real wealth. 

What software is your favorite? 

Thanks. Yes, the 4th unit is where owner lived so I am going to live in that one.