All Forum Posts by: Lukas Katko

Welcome Mark,

I'm also a new investor, currently attending SUNY; just been listening to podcasts, reading, and connecting.

I'm also looking to generate cashflow as a goal, but I'll probably end up using a property manager.

Best of luck to you on your journey,

Lukas Katko

I'm also from Albany, so I'm going to say that Albany is the center of Upstate, since it's just "up" from NYC.

Hey BP,

Recently I posted a deal analysis on a student housing property for sale near my area. I'm a student at the college the property is renting out to, so it's close and convenient.

Here is my question:

Can I use the 3.5% down FHA loan with 6% Seller assist to acquire the property?

I'd assume the main obstacle is that FHA loans are based on actually living in the property, which I probably won't be doing. Any thoughts? (and is it illegal to get an FHA loan and then not live in the property?)

Thank you Alexander,

I know it's really basic but that was what I was looking for.

Lukas.

I see, no I am not working with a realtor, I'm mostly just studying Real Estate investing from the sidelines at the moment, but I'll definitely get in touch with one and ask some questions, thanks for the advice.

Hi BP,

I honestly feel pretty dumb for posting a question like this, but would really appreciate your help.

Basically, what does a real estate deal look like after you know what property you're buying?

I'm looking for a step by step walkthrough about who one would talk to, what he would sign, which entities are involved etc.

If there is an article that addresses these questions, I'd really appreciate a link to it.

Sorry if this is too broad of a question, but thank you in advance for any responses.

Lukas.

Hi Kelly,

I'll definitely look into getting more information from the seller.

The only issue I can think of in this regard is that I probably won't be considered a "serious" buyer and that may interfere with the seller's openness to releasing information. I've only been in contact by email with the seller, would you (or anyone reading this) suggest other methods of communication that may be more effective?

Regarding obtaining the rent roll, checking leases, and payment proof, would I just ask the seller for these or is there a non disclosure agreement I need to sign prior? This would also lead back to my previous question on effective communication.

That said, if anyone knows any good blog/forums on checking property numbers that they could link me to, that would be really helpful.

Lukas

Also, I'm not sure but, is there a way to edit my initial post with updates?

Hi Clinton,

Great response, definitely got me thinking about the details of land lording. 

Any ideas how would I go about verifying the information he has provided? can I request a rent roll or balance sheet/income statement?

Also, I'm in rather dire financial straits to be looking at 35k down properties; While I don't have any debt, I'm not employed and don't have much of a nest egg. I this situation I was thinking about various financing methods, the first that came to mind was to take the seller's offer with an outside entity covering the down payment and closing (Hard money, private money etc.).

Another option may be to ask if he's willing to do seller financing, though I don't know if he has a mortgage on the property that would be due on closing. 

If either of these methods work, then I should be able to stabilize the property by early 2016 and refinance through a credit union or bank using the property itself as collateral. Once I get a 30 year mortgage on it at the expected low interest rates, the property should cashflow and the only debt I'll have is to the credit union/bank rather than a hard money/private lender.

Does this plan sound reasonable? Especially in the light of my being a first time real estate investor, never having done a deal or spoken to an attorney/realtor/banker/lender etc.

I know, woefully under qualified, but interested.

I look forward to any and all responses, thank you for your time,

Lukas Katko

Hey BP,

I've been looking around my area, and found an interesting property listing that I'd like to get your thoughts on.

The seller is claiming 15k cashflow from this property. I inquired as to why anyone would want to be rid of a property like that and he replied saying that he simply had too many properties in his portfolio to manage. 

I'll quote his listing here:

This is a turn-key student rental investment. The charming bungalow style 2-family is in excellent condition and needs no work. It is fully rented through May 2016. Two side by side 3BR apartments, each with a 2nd floor. Security deposit and the final month's rent is paid up front for each unit. This 2-family was completely renovated in 2005 and renovation costs totaled $80k. It has a 4 spot parking lot. Includes all appliances with Washer/Dryer in the basement. Roof (2005), boilers, electric, plumbing, appliances are all in great shape and nothing is needed.


I have a very successful and profitable business in student rentals and will provide the buyer with the information and guidance to make this property an ongoing financial success, including advice after the closing if wanted.
Estimated Financial Information

Price $164,000

Monthly Rent 2,520
Annual Rent 30,240

Utilities (water) ($480)
Current Taxes ($2,640)
Repair / Maint (7.5% rent) ($2,268)
Insurance ($1,000)
Annual Operating Income 23,852

Closing Costs 5,000
Mortgage (80%LTV) 131,200
Total Cash Invested 37,800

Monthly Mortgage Pmt @ 4.5%, 30yr ($665)
Annual Mortgage Pmt ($7,977)
Estim Net annual cash flow 15,875

Cash on Cash Return 42.0%
Gross Rent Multiplier 5.4
Cap Rate (NOI / Price) 14.5%

So here is my question:

Is is reasonable to rent student housing for 12 months a year?

I'd think student housing would have a lot of turn over, so I just want to know how realistic these numbers are in general.

Thanks in advance,

Lukas Katko