All Forum Posts by: Jaysen Medhurst

@Matt Suchoski, my understanding is that keeping the title in the LLC won't be a problem, but a conventional bank will expect you to personally guarantee the loan. The exception may be if the LLC has a track record of as a successful business.

@Curtis W., short answer is NO. If the LLC has no track record a bank is very unlikely to issue it a loan. That doesn't mean you can't have the title in LLC, but you will probably have to personally guarantee the note.

@Christopher J Lemmon, FHA is out because that requires owner-occupied and up to 4 units. There are Fannie/Freddie loans on apartment complexes, but my understanding is that they are not for the inexperienced/faint-of-heart. They require a lot of due diligence and significant capital reserves. Basically, they will every part of the property, assign expected life, and then back out yearly CapEx requirements.

@Shellie Johnson, have you asked the insurance company what they require to provide coverage? E.g. a signed contract with a roofer to begin work on the day you closed. How many insurance agents have you contacted?

The bank won't budge on the insurance requirement, so you'll have to figure out a way to satisfy the insurance company.

@Joshua Rothchild, 2% and $200 CF/door is very aggressive. Especially, if you're that close to a major city. On a $13k downpayment, you're asking for nearly 75% ROI in CF alone. That ain't gonna happen w/o a whole lot of luck.

For a quadplex with a sales price of $250k, you should be able to CF $200-300/month with all units rented. Remember, your basically doing no-money-down since your taking a loan for the downpayment as well.

Here's how I figure it: 4 Units; 2, 2bd @ $1000/month; 2, 1bd @ $700/month (purposfuly conservative)

• GSR: $3400/month; $40,800/yr
• Expenses: $1700/month (50% rule)
• Debt Service: $1462 Total [$1121 - Primary, $197 - PMI (@ 1%), $144 - 401(k) loan (6% for 10yr)]

Montly CF = $238/month; $2856/yr

Cash on Cash Return = 22% (which is still rockin')

Hope this helps.

Hi @Nicholas Giordano, I'm around the corner from you and understand the situation. I have a friend who has done well with properties in Albany. Ossining and Terrytown are worth a look. Danbury, CT and some areas around Bridgeport and Hartford can be attractive. I've also been looking at the Berkshires, in and around Pittsfield, MA.

An advantage of CT that the laws are (a bit) more landlord friendly than NY and MA.

The key is to have "boots on the ground" if you don't know the area. 

@Ryan Turian, best I can tell duplexes are very difficult to make work as pure investment properties for 3 main reasons:

1. There are only 2 units over which to spread the fixed cost (costs the same to mow the lawn at a duplex as it does a 4-plex)
2. Duplexes are the most desirable to owner-occupiers (non-investors) so they tend to go for higher per-unit prices, but that doesn't necessarily translate into higher rents.
3. Zoning laws mean duplexes are more likely to be in more desirable neighborhoods, increasing sales price and making them less likely to cashflow.

For the analysis I've done, duplexes just don't make sense as a pure investment unless you get a smoking deal on the purchase price.

I think focusing on 3 or 4-plexes, combined with BRRRR is a better way to go.

With regards to your questions about CapEx, etc.: Yes, analyze the deal just like you weren't going to live there and see how the numbers work. You should factor in your "rent" at market rates to make sure it works. If both units would rent for $800/month, then you figure $19,200/ year Gross Scheduled Rent, minus CapEx, Vacancy, Repairs, Insurance, Management, Utilities, all of the expenses and see where you end up.

@Vika Bha, I have no hesitation about investing in CT. Yes, the state is having a issues (budget, shrinking population), but at the end of the day I think there are still fundamental advantages that the state enjoys. I won't bore you with the details here.

Check out Danbury, Waterbury, and parts of Bridgeport. As long as you stay out of the rough neighborhoods, you can find some good deals. You may not get great appreciation (at least not in the beginning), but you can definitely CF pretty well.

Have you considered student rentals around UConn?

@Cade Ruthardt, most people will qualify for an FHA loan assuming you have okay credit, steady employment, and not too much other debt.

First thing you need to do is talk to someone at a local bank and get prequalified. 

Focus on 3 or 4-unit properties, duplexes are hard to make work as pure investment properties.

@Mike Campi, NOI doesn't take into account financing, because people finance properties differently and having a common base line s important when assessing investments.

While the example you cite is unrealistic (basically says a property worth $500k would only rent for $1000/month), it illustrates an important point. CF is only 1 part of the investment pie. Putting aside depreciation and mortgage pay down for a moment, if the property was appreciating in a very strong market, you could still be making out very well. The property only needs to appreciate at 3%/year (average) to break even.