All Forum Posts by: Corey M.

Hello people I'm. Buying my first rental property with a conventional loan in texas, a triplex I'm planning to live in one of them, I have a four year job history and a 700 credit score and the bank gave me the loan estimate, it looks like this  

loan term: 25years,  product: 5.33, adjustable rate,  loan type: conventional. Rate lock: NO  And a 4.75 interest rate.. 

PLZ HELP I NEED ADIVCE TO PROCEED OR NOT? 

 Angeli,

Tenant non-payment is definitely an issue because the eviction moratorium is in place until Jan 31, 2021. So a few things are important when pursuing a property now:

Firslty, you want to get the last six month's payment history for the property, and then you want to verify it with bank documents. If the tenants have been paying this entire time, they're unlikely to suddenly stop because there's a new owner. Tenant who have continued to pay rent have maintained they jobs or care too much about their credit to take advantage of the situation or both.

Secondly, you want to go into the deal with additional reserves. If you househacked this property and moved into the lowest-rent unit, you'd be collecting about $6000/month from the other units. You might want to have 6 months, or $36K, in reserves to cover any unpaid rent that might occur. If all tenants have been paying rent, you might only need 3-4 months reserves. Having reserves insulates you against the risk of non-payment.

I've made a spreadsheet that I called "The Househacker Calculator." Enter the basic info, and the spreadsheet auto-populates the rest with a pro forma and a longterm projection. Here's what the results for this property look like:

Given the price and current rents, I think this is a really good candidate for a househack!

Best,

Jon

I also live in LA, and I have some questions about this deal. That insurance percentage you're using seems significantly undervalued. I pay $1600 yr for house+EQ insurance. If there are four units ($6400), it'll be more than $500/mo. Not sure how a fourplex works, but does the owner need to carry insurance on every unit plus a master policy? That would be even more expensive. 

Why would property management be only 5% once she moves out? 10% is the going rate. 

Are there HOA fees in a fourplex?

I have been looking for LA investments, but almost none of them make sense from a cash flow perspective. It's a pretty expensive endeavor to put 300k down for a fourplex. And then each reno would probably cost 40-60k to make them nice. How does that get factored in? 

@ali boone I seem to keep finding turnkey properties that offer around 6% coc return. Id say from speaking to people on here they are getting 200 to 350 month after paying off debts. But repairs and maint come out of that amount. So I am just wondering if its all its cracked up to be. What is attractive about it to me is the hands off part. So I guess the smaller return would be the trade off to less stress? And higher return=more stress and hands on.

Check out my article about the Cons of BRRR.

https://www.biggerpockets.com/...

Note this is coming from an Accredited investors POV who used to do turnkey rentals.

I personally would not do Remote BRRR as there is just a lot of risk with 1) risk of embezzlement with contractors 2) change orders and 3) bank doing bait and switch doing a lower appraisal and/or LTV on the refinance.

This is especially true for high paid professional or those with a net worth of over $300,000.

@Francis Pena I personally work with a small local property manager. She charges a little bit more , but the quality of service she gives is well worth it. Also I work with Reafco brokerage and we specialize in serving investors with off market deals. I actually have a wide variety of properties I come across from duplex’s to 8 units and more. 

If you’re looking for a flip there are also tons of off market mailing lists that send deals out daily.

I am in Souther Indiana directly across from Louisville, Ky and in the neighborhoods of IUS, IVY TECH & 15 min from University of Louisville. Let me know if you would like me to find you a rental in this area. Counties are Clark & Floyd. We do a variety of wholesale rentals; BRRRR's, turnkey & flips.

@Jung Yi so it sounds like your experience was more or less what I commented about 9 months ago?

The easy days of BRRRing with built in equity are long gone. You took on a lot of rehab and didnt get any additional equity. You actually lost equity compared to simply buying a house at 100k straight up, assuming you had to refinance (due to additional closing costs).

Long distance turnkey investing almost never works and when you add rehabs it gets a lot worse much faster.

Your risk adjusted returns are much less then simply buying an index fund.

 Hi Alex,

I haven't really just because I only really know of Vegas there and the market is very wishy washy there. Although I do notice Henderson and Summerlin are exploding in home buying. I guess my concern was I saw many homes that weren't being rented quickly and the appreciation hasn't been good.

Hey Corey,

I went through the same dilemma. I live in California so I need to invest OOS for obvious reasons. I too work a full time job and did tons of research about BRRRRing in other states. I researched markets and talked to wholesalers. I analyzed tons of properties and got close on a couple. Eventually I decided that I wasn't comfortable with the risk of BRRRRing on my first OOS property so I am planning to go turnkey (sort of). There's a great company I really like in the Kansas City and Dallas markets that will help you find and buy great properties then master lease them back from you. They are using a rent by the room model so they pay you market rent then they rent the rooms out individually. There are no property management fees and no headaches for you as the owner because they handle all the dealings with the tenants. Also they sign 3 year leases. It's a pretty great system. Something to consider if you decide to go the turnkey route. Good luck!