All Forum Posts by: Jason Burton

I kind of like the idea of buying a duplex with an owner occupied loan. I wish I could go back in time and start with that. An owner occupied loan is one way to get into a property with a lot of other people's money and less of your own.

If the duplexes aren't in areas that you want to live then I think you should take Ali's advice and rent, using the money to buy an investment. Is it more worth it for you to live in a great area and "waste"(using your word) your money or can you sacrifice location for a year and live in a duplex and secure a great rental for yourself? Living in a duplex can get you a great rental to start with and you can gain a lot of experience from being the landlord. Something else to think about: If you are single you can live in the less desirable locations. Once you have a wife and/or kids you might not want to live in those same areas. Just my thoughts on it. Good luck. Let us know what you do.

Welcome to BP! I'm fairly new to the RE investing world but this site has been outstanding. Be sure to check out the BiggerPockets beginner's guide. It's awesome! Ask questions in the forums and you'll get lots of help. You've come to the right place to learn and network to further your REI goals.

Gentlemen,

Thank you for all the sound advice and feedback! I didn't even realize that I double charged myself for taxes and insurance. That is great news.

Brandon Turner I definitely agree about your comment about the stock market. I've been stressed out by the stock market for far too long and I'm ready for better returns. The blog post you mentioned about your step by step case study was fabulous. I even "re-tweeted" it. :) The hard money lender option sounds great. I definitely need to learn more about it before I try that method. How would it work in this case? Hypothetical: So let's say I get a hard money loan for six months for $81000. The rehab takes 30-45 days (and I make the payment as necessary). I get it appraised for lets say $100000. Then I do the re-finance. Due to the equity in the property of $19000 I don't have to do a down payment because the loan to value is 80%. Is that correct? I need to jump in the forums and read up on this some more but in theory this sounds great.

Mark Updegraff Filling one unit at a time is a great idea. I will have to implement that for sure. I have reserves in case the budget goes over on the rehab (keeping my fingers crossed). If there is one thing being in the military has taught me its to prepare for the worst and hope for the best!

Sam W. The tenants pay all the utilities so I won't have to worry about that (unless they fail to pay their water bill to the city, etc.).

Will Barnard Never even thought about the 2% rule on this! That makes me even more comfortable going forward.

Ok so I think I finally found an ok deal to get my feet wet. Here are the numbers:

Purchase price: $71,000.
Monthly gross rents using conservative rental rates for the area (potential, currently vacant): $1600.
Rehab costs: $10,000 (I had a general contractor friend of mine check the whole place out and he said at most $10K, maybe closer to $9K)
This is a Fannie Mae foreclosure and they had it appraised before they listed it. Appraised at $90,000 in it's current condition before rehab. I don't know what the ARV would be though.

The lender I'm currently working with is a conventional lender and is requiring 25% down payment which I don't really like but I don't know how to do it any other way (at least right now, hopefully I will gain more experience and get better at using OPM).

Using the 50% rule that would leave me with $800/month to cover PITI which would be $312 ($60,750 for 30 years @ 4.625%). Property taxes last year were ~$900.

So if everything goes according to the numbers I have looked at it should cash flow around $400/month which is $100/door. The only thing I don't like is how much money I have to put down.

Anyone have any ideas on how I could make this a better deal? Is this a decent deal or do I need to keep looking? What am I missing? Brandon Turner, Will Barnard and the other pros, if you are reading this please respond. :-) Any and all feedback is always appreciated.

Thanks everyone for the feedback. After further investigating I've decided to pass on this opportunity. It seems like way too much work for me right now. Due to my situation I'm trying to get stuff that can be more of a hands off property.

Sean Kremer Oh I believe you on the potential of mobile home parks! This place could have been a total cash cow.

Wow. Is that even a legit phobia? I think he should be compensated in some way because of the actual water damage on the land but to get 1.3 million is outrageous IMO.

BP,

I am still on the hunt for my first great buy and a realtor I've been working with mentioned to me that he knows an old guy that owns a trailer park. To make a long story short he basically told me that the owner developed Parkinson's Disease a few years back and it's getting so bad that he can't do much any more so he is kind of desperate to sell it. He originally listed it for $275K but the realtor said he will take $200K (it's currently listed at $250K). This thing brings in gross rents of $5900/month and the realtor said his expenses are around $1000/month. Using the 50% rule this thing seems like a great deal at the $200K price. Does this seem like a great deal or are there more underlying costs associated with trailer parks that I'm missing? Besides accounting for vacancy, maintenance, management, and PITI is there anything else I need to account for? If I decide to move forward on this I would do more due diligence on all the expenses and what not. I just want to know if there are things I'm overlooking. I've never even thought about buying a trailer park before.

Welcome to BP! This is a great place to get started. I'd check in the Marketplace for any lending needs you have to see what kind of options are available. Best of luck to you!

Keep sharing! This is very inspiring for the beginners like me who are making their way into real estate. I haven't completed my first deal yet but I have a couple properties that I'm looking at. Just doing some due diligence on both to see which one I want to move on. Thanks for sharing your stories!

Bill Gulley I can tell you are former military by the way you talk. That's awesome! Yeah the backwards planning is where i need to start. Figure out what my desired end state is and then set the goals from there.

Troy Fisher VA Loans are fabulous and I feel lucky to be able to use them especially now since 100% financing is difficult to find (at least for noobs :))

Thanks for all the great feedback guys and for taking the time to reply. This has helped me get a better picture of what I need to do.