All Forum Posts by: Lance Nelson

@Michael Tal Thanks for the response. Good point about them only being estimates. Sometimes I think I put too much weight on the zillow estimate. 

@Kuba F. I'm not sure, but in this case I'm wondering if the premium for the other property is that 3 bedrooms are more desirable in this market. I'll work on getting actual values versus the estimate values. Thanks for the "per square foot price" suggestion. That should help. 

@Marcia Maynard My thought process was to attempt to turn this into a cash-flowing rental. Currently, my mortgage is about $1700 and it would rent for around $1800. After expenses I would be losing money on this property. My thought was to add a third BR and rent for $2000, making it cash flow. Bottom line is that I'm not sure if it will fetch the higher rent with such a small third bedroom. My thought was that it would be attractive to a family with two small children. It's in a good school zone and a nice, safe neighborhood with close walking to amenities. 

@Brandon Halley I think you're right. It's pretty damn small. 

I purchased my first property 2 years ago and it's a 1250 sq foot 2BR 2BA townhouse near Portland, Oregon. The master bedroom has a very large walk in closet that's attached to a laundry room. After a little creative inspection I feel that I may be able to add a third bedroom to the townhouse, but it will be very small (around 85 square feet). To put the bedroom in I'd need to move laundry into a large bathroom (there is room), add an egress window, remove a few walls, add a door, and re-carpet. I think I could do it all for under $10,000. I'm trying to decide if this would be worth it or not. My house's zillow estimate is about $307k (2BR, 2BA 1250 square feet) and there are 3 BR's across the street in the same development with more sq feet that zillow estimate about $350-360k (3BR, 2BA 1405 sq ft). I'm a newbie investor and am wondering if anyone can weight in on wether this is worth it to add a 3rd. Thanks!

Thank you so much @Jaysen Medhurst. I really appreciate it

@Jaysen Medhurst I can't tell you how nice it is to hear this type of advice from an experienced investor. I've been mainly talking with my real estate agent and mortgage broker and to them, every property is a good deal. My gut is telling me to step back and stick with conservative numbers. Unfortunately, in my market it seems very difficult to cash flow with those expense percentages and a low down payment FHA loan. The PMI is set at .85% and I was under the impression that this is standard for an FHA loan. No? The asking price on the property is $500K. This analysis was with all units rented out.

Again, I can't thank you enough for the thoughtful responses and time you've offered. 

@Jaysen Medhurst Thanks for the thoughtful response. Here are the numbers posted above. I did 3% repairs, 3% vacancy and 5% cap ex. Is that enough in your opinion? Also, all utilities paid by tenant. 

This is my first potential multi-family deal so I’m understandably a little nervous.

I currently have a townhouse with a mortgage of about 1700 and it would rent for about 1750. It’s in a desirable location (Happy Valley, OR) and I think it has good appreciation potential.

I’d like to house hack a 2-4 unit multi-family and I found a triplex in a more rural area that has the following numbers after all units would be rented (a year after purchase):

FHA 3.5% down loan

Cash flow 250-300

ROI 18%

Cap rate 6.2

I could rent out the other units and live for about 600/mo for the next year. It’s in a more rural area and I feel that the appreciation potential isn’t as good.

Bottom line:

I have enough saved for the down payment and a little more and I’m tying to decide if I...

A) buy the triplex and rent out my townhouse, taking a small loss on the townhouse to hold onto a good property/location.

B) buy the triplex and sell my townhouse, freeing up about 20000 after fees.

C) stay in my townhouse and just sit back and see what happens with the housing market (recession?)

D) sell my townhouse and just sit back and rent for a bit to see what happens.

Experienced real estate investors, what would you do?!?!