All Forum Posts by: Luke Mccandless

This "investment" property just went pending at 643,000 here in Oakland. It's a 2 unit each 1 bed 1 bath. Realistic rent on each unit is max $1800.  $43200 gross - taxes of $9452 (actual tax for this house) insurance of ~$1500. Maintenance, capex, utilities, and vacancy of ~ $9000 (napkin math ).

Net : $23248 for a cap rate of 3.61%. Assuming max market rents and low Maintenance, capex, utilities, and vacancy. 

Someone help me understand how these numbers work out for the buyer?

Update : Probate attorney says 50K minimum earnest money ... 

Thank you J.M. I will keep trying with FHA unit I find a fit. I have thought about the "love letter" and will probably try it. The market for these multi units seems a lot less crowded than the single family houses, so hopefully FHA will be ok for at least one seller.

@Franklin Romine Can you elaborate on why it sounds crazy? I am happy to get your feedback. I know the prices are very high in the bay area, but this is where I live and the owner occupied path gives me access to better financing options. As well as the ability to bring rents up to market. 

@Jonathan Payne thanks for the comment / info on closing costs. Yeah, the multi units seem like they are being keep at reasonable prices since it's generally investors who are looking.  For a sense of how out of touch prices are getting, this house in Oakland just went for $1000 per square foot : 5597 Lawton Ave Oakland CA. 

@Dina Eisenberg I will keep you updated,  thank you!

@Arlen Chou Do these fees looks correct? $500,000 purchase price:

All Closing costs : 

Underwriting $1485 

Home inspection $600

Appraisal $510

Title $2485

Notary $250

City transfer $3750 

County transfer $550

FHA UFMIP $8750

INS impound $265 

Tax impound $3125 

Total $21170

@Patrick Quinn 3% of the purchase price as ernest money in order for the offer to be considered ! I am working with a lender that has taken me through the full underwriting process so we are comfortable removing the financing contingency ( keeping the appraisal and inspection contingency )  Other units are 3/1 and 2/1.

@Arlen Chou Very helpful information thank you so much! Offer ( with contingencies ) submitted! 

I am fully underwritten for an FHA loan to buy a 2-4 unit property in the bay area up to $550,000 ( possible higher depending on the income of the other units).

I am considering a place in West Oakland, currently a slightly high crime area, but strong rental rates and low vacancies. The property is a 3 unit place. There will be very little work required at move in. I will live in the 1/1 and rent the other units. My agent and I feel it will go for ~500k. I am committed to buying a 2-4 unit property and want to be sure I have thought of everything.  My commute will not be great, however, I only have to live in the property for 1 year, 2 if I want to avoid taxes. 

Mortgage with taxes and insurance and PMI is $2800 utilities are $300. No capital improvements needed for some 5 years + I will live in one unit and the rent on the other units will total (currently ) $2300 (market) $3700. As some people may know it's difficult to get market rents due to rent controls tenant's rights etc in California. Over the next year after move in I will work on getting rents up to market.

Questions:

1: If you you know of another property that better fits my needs let me know! 

2: Does anyone else own property in West Oakland? I am very interested in your thoughts.  

Thanks everyone, after your help, and reviewing the numbers, we made an offer at 85k the bank originally gave us a flat "no" then today we heard from them and they are willing to accept it. It just goes to shoe, you need to make an offer you are comfortable with as an investment, based on numbers not emotion, and be ready to let it go if the numbers were not right - we let it go and it came back. We hope to close in the next two weeks.