All Forum Posts by: Kyle Gregg

@Jeff G. 

I would agree and would definitely have spoken to tenants...but the house has been vacant for awhile now. 

I was interested in this exact house and have been in and out of it house for the past two weeks. Finally got my contractor in there last night and it wasnt good news. PM me if you want some details. 

@Ned Carey 

Yeah I understand. For the cost of rehabbing this place, it would make more sense to tear down and rebuild...yeah might work for someone but its not what im looking to get into. 

Have you filled a basement with concrete before? 

@Ned Carey 

Are you thinking i should use the caving in foundation and grading issues as my way into this property? Offering an amount that is drastically low?

I have been discovering the true essence of Due Diligence the past two weeks with the hunt for my first multi family property. I have picked up on figuring out all the numbers, researching potential rents, tenant demographics, location, and many other things that can be done behind a computer. As for a newbie, I think im catching on pretty quick but today i learned by first huge lesson. 

I have been hunting for my first multi family property financed though a 203k, and i thought i found a diamond in the rough! Located in Baltimore County, side by side duplex both a 3/1, potential rents of $1200 each, seller owns free and clear, one side rehabbed the other not...sounds good right?

I did all the numbers, reached out to my agent to get be in and to my lender to get the ball rolling on the 203k. I visited the property twice and everything seemed to jive. So, I brought in a contractor and a HUD consultant to walk the property with me. Rehabbed side only needed to be dressed up. We walk over to the unrehabbed side and into the basement. Right then and there, we knew it was time to run for the hills.

A solid 8" of water in the basement from a large crack in the foundation. The basement was bone dry during my last visit but it has been raining a LOT ever since. 

Afterwards, i ran into the net door neighbor who had the inside scoop on the sellers situation. She told me the owner only bought the property less than 6 months ago and was an investor himself. The house has also been listed for sale for several of those months. I WONDER WHY. 

I guess a long story long, DUE YOUR DUE DILIGENCE, get off the computer and get in these properties. Get out and talk to neighbors, make multiple visits to any potential properties, and just be active. Seeing this property has opened my eyes and made me realize how important it is do your due diligence. If you dont, it WILL cost you money in some way or another. 

The 203k loan is a GREAT tool to get into real estate investing. Make sure you do your due diligence regarding this loan because there are a lot of different rules and regulations that you must follow in order to get financing. One being, that the property must be 1-4 units...which is perfect for new investors giving them the opportunity to invest in a multifamily property using residential financing (properties 5+ will need commercial financing). Another is that you must live in the property in which you are financing. So, combine both of those rules and you have an owner occupied multi family property! Live in one unit and rent the others with a potential to be living mortgage free! People on BP love to refer this to 'House Hacking'...look into this since there is a wealth of knowledge available on this site regarding this topic. Welcome and good luck!

I think I would look into evicting. What does the current lease say about late payments? Do you have an attorney you could speak with? Maybe they could advise you on how to move forward on correcting this situation legally. 

try to use the '@' feature @Troy Jordan to keep me updated on your responses. 

You should come to the BWI REI meet up every second weds of the month. Look it up. You'll meet everyone you need to know all in one room. Maybe you'll find your mentor too!

I have a feeling ill be staying from one to two years. Depending on what kind of financing i choose to use for my next property. Refi out of the 203k and use it again for the next multifamily. 

Personally, I wouldn't dump all my money into paying off the loan. If you work the numbers right and cash flow using 30 year financing, i think that's great as is. Let the tenants pay off your mortgage, not yourself. I would use that extra money to save up for other potential investments. 

Welcome @Jay Sechowicz 

I was in your position only several months ago in december, finding biggerpockets and soaking in EVERYTHING. Wow, what an amazing site. I hope you've been listening to the podcasts. I find those to be very helpful. 

Anyways, I am currently working on a 203k for a duplex. In fact, I have contractors coming tomorrow to put together a scope of work! Im very excited. I am hoping this will be my first real estate 'investment' or other know has a 'house hack'. My biggest tip would be to run the numbers, then run the numbers again, then again run the numbers. As your first purchase, you want to make sure that the numbers work! You cant get this wrong.

Numbers such as, potential monthly rent of each unit, vacancy factor, capital expenditure factor, repairs, maintenance, property taxes, insurance, utilities...etc. I typically run the numbers as if i were not living in one of the units, that way i can make sure the property cash flows and makes sense as an investment property. Then run the numbers as if im living there to see what kind of monthly payments i can be expecting. 

A lot of the times, i found that the asking price for the property was too high. The average rents in the area were also too low and didnt provide any cash flow. 

Look under the 'analyze' tab on the blue bar for the 'rental property calculator'. Get familiar with everything on this calculator as it is a very useful tool.

sorry if this post didnt flow well, im sneaking in some BP time while at work...

Feel free to contact me if you have any particular questions!