All Forum Posts by: Huong T Nguyen
Huong T Nguyen has started 3 posts and replied 79 times.
Post: J Scott - Author of Flipping/Estimating Book - Ask Me Anything!
- Posts 80
- Votes 32
Originally posted by @Russell Brazil:
Originally posted by @Huong T Nguyen:
Sorry if I bore everyone to death here.
I have just checked with MoCo, and they sent me this piece of information, and told me this is the only rule they go by.
Description: The size of the dwelling is used to determine whether it is overcrowded. There must be 150 square feet for the 1st person and 100 square feet for each additional person. Please note that if the dwelling has been inspected within the last 6 months and found to be in compliance with regard to overcrowding standards, a case will not be opened. See Section 26-5(a) on attached link for the Code reference.
So looks like we are back to a projection of $4000/mo in rents for a $370,000 property.
Rockville and Gaithersburg have their own rule, i.e no more than 5 unrelated people staying at a single property.
The person who gave you the information is wrong. The problem with that, is that even when a government employee gives you the wrong information, you are still liable.
I go through these housing inspections at least once per year, and they count the beds, they count the cars etc.
Below is a link to the MoCo Housing Code book. Page 5. No more than 5 unrelated people may live together in a dwelling unit.
Id also suggest reading the MoCo Landlord Tenant Handbook.
housing code - Montgomery County
PDFMontgomery County MD (.gov) › code
You are correct! I saw that provision now.
Thanks so much!
Well, in that case, I will pass!
Post: J Scott - Author of Flipping/Estimating Book - Ask Me Anything!
- Posts 80
- Votes 32
Sorry if I bore everyone to death here.
I have just checked with MoCo, and they sent me this piece of information, and told me this is the only rule they go by.
Description: The size of the dwelling is used to determine whether it is overcrowded. There must be 150 square feet for the 1st person and 100 square feet for each additional person. Please note that if the dwelling has been inspected within the last 6 months and found to be in compliance with regard to overcrowding standards, a case will not be opened. See Section 26-5(a) on attached link for the Code reference.
So looks like we are back to a projection of $4000/mo in rents for a $370,000 property.
Rockville and Gaithersburg have their own rule, i.e no more than 5 unrelated people staying at a single property.
Post: J Scott - Author of Flipping/Estimating Book - Ask Me Anything!
- Posts 80
- Votes 32
Originally posted by @Russell Brazil:
Originally posted by @J Scott:
Originally posted by @Huong T Nguyen:
Scott, I don't know if you discuss this in one of your newer books, but I would really appreciate your advice on how I can finance a deal.
Recently the owner of a property in Wheaton MD about 15 minutes of brisk walk to the metro station is trying to sell me his house and he wants to sell it quick this Spring. The house was built in the '60s with 8 rooms, 3 baths this house but one of the room is not a legal bedroom i.e. no egress. IN the property's current condition, each room brings $500 to $600 so the total rents I could get is around $4000/month. The for-sell-by-owner guy is asking for $370,000 and since he will not need to pay any commission fees there could be some more room for the price to go down. Property tax is $3500 for 2019. This is a solid, split foyer house with good drainage but the kitchen is dated and bathrooms look old. A good renovated house with 4 beds 3 baths in this neighborhood was sold for close to $460,000.
1. Do you think this could be a candidate for wholesaling?
2. If not, should I buy it as a rental property? BTW, in general, does the 2% rule apply in the DC Metro area? Maybe Russell Brazil and others familiar with this market can chime in here?
I can come up with $170,000 in cash (that is by taking a home equity loan on my residence home), but don't know how to finance the rest.
Thanks so much, Scott and everyone in advance!
First, are you confident that it's legal to rent the property by the room? This will be location dependent -- in some areas, there is a cap on the number of non-related people who can share a house. You should verify this before moving forward, as it could impact your strategy and the value of the property to an investor.
Regarding your specific questions:
1. If it's generating $4000/month and can be acquired for $370,000 in that area, it's probably a wholesale candidate. I imagine there are investors around there who are willing to buy properties that exceed 1% in income. I could be wrong, but Wheaton is a popular area for investors.
2. You won't find too many 2% properties in the DC metro area these days. 1% is still pretty good for around here. As for whether you should buy it, it depends on whether it helps you get closer to your goals or not. This is going to be a personal question that only you can answer.
As for financing, does the seller have any equity? Can they provide some seller financing? Subject to?
Can you get a bank loan?
Can you get a private loan?
Do you know anyone who may be interested in partnering and can provide cash?
Only 5 unrelated adults can live together in that location. (Montgomery County, PG County...DC allows 6).
Based on the desription of the house, I would expect 2300/2350 a month in rent. I own 2 rentals fairly close to there just a little bit north on Georgia and on the east side. One is up for rent right now, $2800 a month, and its completely updated and much larger than a split foyer. I can tell you from experience, occupancy limits are one of the few things you can actually get in trouble for in MoCo. Certain cultural backgrounds are going to have multigenerational families, thus more adults. My rentals with people of those cultures, the neighbors call the county on me, and I have to go meet the housing inspector for them to check the place out. Its happened to me a variety of neighborhoods, Rockville, Gaithersburg, Silver Spring, Burtonsville. It is the extra cars that bother the neighbors.
By and large expect rents to come no where close to 2%, or even 1%. 0.67% is the ratio to be expected in Montgomery County on SFH. On very cheap condos, you can get close to 1%. In DC, on something very expensive, large, in a primo area and rented by the room, you could push 1% if you ignore occupancy limits, which I know people who do, but by and large you will be looking at 0.5% in DC. PG County, 0.75%. Southern part of PG ratio will be a little higher on the cheaper properties. The only place close by you will get 2% would be in parts of Baltimore. You can get to 3 or 4% in parts of Baltimore. Yield though is a measure of risk in the asset or market. So these properties that rent for 4% of the properties value, should be viewed as some of the riskiest assets perhaps in the country.
The house is filled up with tenants, including one in the illegal bedroom. Up to this point, the owner's parents stay in 2 of the 8 rooms and they manage the property on behalf of the owner who resides in FL, so it brings around $3000 a month but unlike them, I do not have any plan to go against the occupancy limits. I used to rent one room in that house many years ago when I first moved to Wheaton and paid $600/mo back then. The owner's father is getting very sick so he wants to sell the house and move his parents to FL so that he can take care of them.
Post: J Scott - Author of Flipping/Estimating Book - Ask Me Anything!
- Posts 80
- Votes 32
Scott and Russell:
Thanks so much for your replies, both are highly educational and informative about financing.
Now the occupancy limits changes the whole equation. Hmmmm....
Scott and Russell: your replies are both highly educational and informative, NOT just about financing.
Post: J Scott - Author of Flipping/Estimating Book - Ask Me Anything!
- Posts 80
- Votes 32
Scott, I don't know if you discuss this in one of your newer books, but I would really appreciate your advice on how I can finance a deal.
Recently the owner of a property in Wheaton MD about 15 minutes of brisk walk to the metro station is trying to sell me his house and he wants to sell it quick this Spring. The house was built in the '60s with 8 rooms, 3 baths this house but one of the room is not a legal bedroom i.e. no egress. IN the property's current condition, each room brings $500 to $600 so the total rents I could get is around $4000/month. The for-sell-by-owner guy is asking for $370,000 and since he will not need to pay any commission fees there could be some more room for the price to go down. Property tax is $3500 for 2019. This is a solid, split foyer house with good drainage but the kitchen is dated and bathrooms look old. A good renovated house with 4 beds 3 baths in this neighborhood was sold for close to $460,000.
1. Do you think this could be a candidate for wholesaling?
2. If not, should I buy it as a rental property? BTW, in general, does the 2% rule apply in the DC Metro area? Maybe Russell Brazil and others familiar with this market can chime in here?
I can come up with $170,000 in cash (that is by taking a home equity loan on my residence home), but don't know how to finance the rest.
Thanks so much, Scott and everyone in advance!
Post: J Scott - Author of Flipping/Estimating Book - Ask Me Anything!
- Posts 80
- Votes 32
Originally posted by @J Scott:
Originally posted by @Huong T Nguyen:
Russeel Brazil: Thanks so much! Great info!
As long as the work is done inside my home, without any change to the footprint of my house, which is not known as vacant property to the city, and no sign of my roof getting raised, I guess there is no reason for the city inspector to pop his head in and ask me what is going on.
Again, can't speak for Russell's area, but in my county (and in one or two other places I've invested), it's not crazy for inspectors to see a 30 yard dumpster and knock on the door to see what's going on or to put up a stop work order if there are no permits. Certainly not common (never happened to me), but it happened to another BP member I know here (I won't mention his name here)...
Thanks. I don't have a dumpster in my driveway. I can call the city trash collector to come and collect bulk trash 6 times a year for free, each time no more than 500 lbs in theory. i know that quota is not a lot but my kitchen is small so that is what I am doing now. I know the city might give me a warning if my neighbor complains about construction debris lying in my backyard as part of it is still visible from the street.
As a government contractor being affected by the shutdown for almost the entire month of January, I am not taking in any income at the time when I need to spend a lot of money on my kitchen, I am counting every penny I have in my pocket right now.
Post: J Scott - Author of Flipping/Estimating Book - Ask Me Anything!
- Posts 80
- Votes 32
Russeel Brazil: Thanks so much! Great info!
As long as the work is done inside my home, without any change to the footprint of my house, which is not known as vacant property to the city, and no sign of my roof getting raised, I guess there is no reason for the city inspector to pop his head in and ask me what is going on.
Post: J Scott - Author of Flipping/Estimating Book - Ask Me Anything!
- Posts 80
- Votes 32
Thanks so much for your quick reply and insightful advice. I have just found out that in Rockville MD, homeowner can apply for a permit and then do the work him/herself, so I will let you know if I would be able to pull the permit myself.
Now that you live in Maryland, could you please give me an idea how much labor costs for a gut reno of a 9'x12' kitchen in the DC Metro area, and the cost of roof architectural shingle replacement (both materials and labor) for a 12 -square roof?
I bought your 2 books in 2015 under a different moniker. Extremely helpful and I think I will buy the new books soon.
Post: J Scott - Author of Flipping/Estimating Book - Ask Me Anything!
- Posts 80
- Votes 32
Scott: My sister's boyfriend is remodeling my kitchen right now. My plan is, after a family reunion in early August, I will rent my entire house out and find another, smaller property to live in. This is the first and only one property that I have for now.
I did not have this guy pull any permit. This guy has been a sub to his GC for the last 14 years doing everything you could imagine: roofing, electrical, plumbing, HVAC, exterior waterproofing and he also takes on jobs on referrals. I expect the remodeling to be done in 3 weeks max. He has an electrical license but not one for plumbing, but he did a beautiful plumbing job in my kitchen.
My question is: Could there be any problem down the road when I need to apply for a rental permit with the city, due to the fact that no permit has been pulled/granted? My house is located in the city of Rockville, MD.