All Forum Posts by: Ben M.
Ben M. has started 144 posts and replied 298 times.
Post: Contractor start timeframe
- Houston, TX
- Posts 303
- Votes 47
How long after closing on a home does your contractor start?
Trying to determine what the reasonable expectation would be
Post: What is the best option?
- Houston, TX
- Posts 303
- Votes 47
Quote from @Noelle Stecher:
Hi. I am new to investing and looking for where to start. I have read "Rental Property Investing" and am debating my first step. I am currently renting and have about 50,000 for down payments, closing costs and rehab.
1. Buy a single family in a desirable area with an FHA loan and live in it for a year while rehabbing it. Then, rent it out.
2. Buy a multifamily in a less desirable area ( expensive in my area) and live in one unit and rent the other unit.
3. Buy an investment property with 20 % down and rent it right away. Not necessarily in my area.
They seem to all have their pros and cons. I am leaning toward number 1, but want to know if there is a clear upside or downside to these choices that I am not seeing. I know each choice would have to come with property analysis, just looking for guidance. Thanks!
Hi Noelle, I like options 1 and 2 but if you’re not familiar with brrrr it might be worth looking into as another option. Using the brrrr process you can minimize your out of pocket cost and not use up all of your 50k, possibly even get 2 properties depending on the deal
Post: My biggest deal - allow me to brag a little bit
- Houston, TX
- Posts 303
- Votes 47
Wow! Congratulations!!
Post: Newbie Investor Seeking Wisdom/Advice On His First Property
- Houston, TX
- Posts 303
- Votes 47
Quote from @Lucas Hunt:
Hello BP Family - I am looking for some of your wisdom and/or opinions on my current investment situation. I will not take any of your responses as investment advice!
I have made two aggressive offers on a couple of single-family homes in the northern suburbs of Houston, TX. At this point, both offers have a strong likelihood of getting accepted. This will be my first long-term hold investment property and I am only able to choose one property. They are both turnkey. My current goals are that I am looking to get a base hit so that I can get into the game and build some wealth. I am struggling with choosing between the property that has average cash flow in a class B neighborhood [PROPERTY A] versus a property that has below average cash flow in a class A neighborhood [PROPERTY B]. I have provided some info on both properties below. I can imagine that some of you were in my shoes some time ago. Is there any wisdom/insights that you would be willing share that could help me make a decision? I appreciate all of you!
Property A
Year Built: 2013
Estimated Home Value: $233,000
Offer: $210,000 w/ a $10k credit to the investor (me)
Year 1 Estimated Cash on Cash Return: $150 / mo
Neighborhood: Class B
Nearby School Rating: 2/10
YoY Appreciation: 3%
Home Layout: 3 bed, 2.5 bath, 2 car attached garage
Property B
Year Built: 2009
Estimated Home Value: $226,000
Offer: $215,000
Year 1 Estimated Cash on Cash Return: $50 / mo
Neighborhood: Class A-
Nearby School Rating: 7/10
YoY Appreciation: 3%
Home Layout: 3 bed, 2 bath, 2 car *de-attached* garage
Hi Lucas, great efforts, below are the numbers I'm getting for property A after running in the BP calculator. This does not take into account if there's an HOA and I did not include management fees in case you are managing yourself. It seems tight on the cash flow, you could recoup on the loss after the appreciation, mortgage paydown, etc but it might be several years. I am curious how you are calculating the expenses, etc as well. It would definitely help to work with investor friendly realtors, and the properties don't have to be on the mls, you could still have a realtor represent you with off market properties as long as the numbers make sense after commission fees etc
---------------------------
Purchase price: $210k.. the $10k credit will probably cover the closing costs
Loan amount 20% down: $168,000 at 7.125% rate
Total cash needed for 20% down payment: $42,000
Rent income: $1700/month
Mortgage: $1132/month
Taxes: $3500/yr
Insurance: $1800/yr
Vacancy 5% of rent: $85/month
Maintenance 5% of rent: $85/month
Capex 5% of rent: $85/month
-----------------------------
Total cash flow: -$127/month for the first year
Post: Closing costs in a wholesale transaction
- Houston, TX
- Posts 303
- Votes 47
Quote from @Erik Estrada:
Quote from @Ben M.:
Quote from @Erik Estrada:
Quote from @Ben M.:
Quote from @Erik Estrada:
Quote from @Ben M.:
Quote from @Erik Estrada:
Hey Ben,
Are you working with a lender or are you planning to buy all cash?
Hi Erik! I am using a hard money lender
Also since you aren't using a realtor, did you draft a purchase contract yourself? Are you using a title and escrow company?
I didn’t draft a purchase contract. I believe the lender will coordinate all of that and get a title and escrow company
Got it. And your lender didn't provide you with a closing cost estimate? Are they using an appraisal?
Nope I’m just wondering what the common items are for closing costs and which one’s for the buyer and which one’s for the seller
Seller wouldn't have fees to pay. You would be responsible for the cost which could include Title and Escrow Fees, Lender points, appraisal (if any). If I were in your shoes I would request a fee estimate from your lender
Awesome! Thank you Erik!
Post: Closing costs in a wholesale transaction
- Houston, TX
- Posts 303
- Votes 47
Quote from @Erik Estrada:
Quote from @Ben M.:
Quote from @Erik Estrada:
Quote from @Ben M.:
Quote from @Erik Estrada:
Hey Ben,
Are you working with a lender or are you planning to buy all cash?
Hi Erik! I am using a hard money lender
Also since you aren't using a realtor, did you draft a purchase contract yourself? Are you using a title and escrow company?
I didn’t draft a purchase contract. I believe the lender will coordinate all of that and get a title and escrow company
Got it. And your lender didn't provide you with a closing cost estimate? Are they using an appraisal?
Nope I’m just wondering what the common items are for closing costs and which one’s for the buyer and which one’s for the seller
Post: Closing costs in a wholesale transaction
- Houston, TX
- Posts 303
- Votes 47
Quote from @Erik Estrada:
Quote from @Ben M.:
Quote from @Erik Estrada:
Hey Ben,
Are you working with a lender or are you planning to buy all cash?
Hi Erik! I am using a hard money lender
Also since you aren't using a realtor, did you draft a purchase contract yourself? Are you using a title and escrow company?
I didn’t draft a purchase contract. I believe the lender will coordinate all of that and get a title and escrow company
Post: Closing costs in a wholesale transaction
- Houston, TX
- Posts 303
- Votes 47
Quote from @Erik Estrada:
Hey Ben,
Are you working with a lender or are you planning to buy all cash?
Hi Erik! I am using a hard money lender
Post: Closing costs in a wholesale transaction
- Houston, TX
- Posts 303
- Votes 47
What all are common items included in closing costs on a wholesale transaction? Which items are usually the seller's closing costs and which items are the buyers even though in most cases the buyer pays both closing costs...?
There would usually be no realtor commissions to pay on both ends is that right?
Post: Selling the property and taxes
- Houston, TX
- Posts 303
- Votes 47
My rental property is getting sold before end of this year. Would I still be able to do a tax deduction on the repair and operational expenses that I spent on the property before it was sold?