All Forum Posts by: Matt Charette

@Aj Parikh - I actually did not. I didn’t have anyone refer me to them unfortunately!

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Mishawaka.

Purchase price: $87,000
Cash invested: $24,000

Made my first investment in a duplex in Mishawaka, IN. This is an out of state investment being from Massachusetts.

What made you interested in investing in this type of deal?

Met my minimum cash flow of $200/mo and was close to an 8% cap rate even before the price decreased from $93.5k to $87k.

How did you find this deal and how did you negotiate it?

Found the property on Roofstock listed for $97,000, had an offer accepted at $93.5k but it only appraised at $87k. Negotiated the price down to the appraised value.

How did you finance this deal?

25% down payment with a 30yr loan at 3.875% interest. Closing costs were ~$3000.

What was the outcome?

Cash flow is now expected at $300/mo!

Lessons learned? Challenges?

Spent 3 years waiting, analyzing deals and was priced out of my local market in Providence and Worcester. With all of the podcasts I've listened to over the years I opened up to the idea of out of state properties with management. It was hard to let go, but I feel like I've made great local connections putting my mind at ease with running my business this way!

I'm interested in a multi family that's FSBO. This would just be my second property and this seems daunting. It's a cash only purchase of ~$80k that on paper would be a 12% Cap if their numbers are accurate/truthful.

What questions can and should I ask them?

I want to ask them why they’re selling if the money is so good. Is this wrong, too personal?

Also, how do I even go about doing this? It’s out of state already and I’m not sure if I should have a buyer’s agent.

Should I make an offer with contingencies included in the offer? For example proof of rental income, inspection, appraisal. If its cash only should I even have it appraised if the numbers are great and the price looks fair?

The seller’s response to my initial email:

"Currently we have apts rented for $600, $600 and $900 a month with utilities included. The $900 unit is actually the larger 2nd floor apt that we connected to one of the vacant efficiency apts through an adjoining door. One of the $600 units has a history of renting for $800 but needs flooring and paint. I moved a tenant in at $600 in the current condition on a month to month basis. He would like to stay and is willing to increase to $800 when updated. There is another small functioning apt that we currently allow a handyman to live in rent free. It would rent for $400. The total utilities avg $500-$600/month for gas, water and electric. Property tax is $2400 annually. I don't have square footage info"

I initially posted this in  the in the Real Estate Rookie Facebook group, but realizing it's probably not the best place.

@Steffie Marthasari I’m in the process of closing on a duplex off of Roofstock. I can let you know how it all goes in a couple months. On paper everything is checking out as solid cash flow.

@Grace Yuen I’m a Stoughton resident. If you’re looking to house hack and live here for free, I don’t think you’ll find numbers that will work. Brockton IMO would be the most likely area that you could meet that criteria, if not darn near close. I don’t know how familiar you are with area, but Brockton isn’t the nicest community probably class C rating. Nothing wrong with that of course, but most people will raise their nose at it. I think it’s a great area that will always have a high volume of renters.  

@Matt M. I don’t disagree. The lawn is virtually non existent it’s about 4ft x 15ft next to the driveway. Could probably hit it with a weedwhacker or just convert it to gravel and put up some arborvitaes and call it a day. 

Luckily the closing won’t be until mid-March so hopefully I’ll beat the last snowfall. I do want to find a snow plow company, but not sure yet how to find someone who is on retainer in a sense and comes by automatically. 

@Scott Passman the taxes look accurate as the non owner occupied rate is 3.31% and the assessment was around $108k. I’m sure that will increase though and bring my taxes closer to $5k on the next assessment. For vacancy I’m accounting 8%, do you think that’s sufficient?

@Collette Douglas as @Colleen F. has said this should only impact you when you sell if you’re not a RI resident when selling. It doesn’t matter if you buy out of state, it’s only if sell as a non-resident. 

It also looks like this can be waived if your doing a 1031 exchange even as a non-resident. Check section G. of the link Colleen provided. 

@Colleen F. thanks! The unit which is getting delivered vacant will have the rug replaced. Either vinyl throughout or up to the bedroom and then carpet there. 

@Lien Vuong It is small, no question there. They're both 1 bedroom units. They've been renting for $900/mo each, but I want to see the financials and proof of income. 

My insurance quote came back last night at $1260/yr, I put the $1500 as a safe high number. I wouldn't be surprised if the taxes do go up, so I'm keeping some numbers higher as a buffer.

I had considered the South Coast, but for two reasons it doesn't make sense. I grew up in Tiverton, RI - I'm familiar with the area, but the neighborhoods aren't as nice and the economy, job market, and rents don't compare. I feel better about the long term outlook of Providence. Secondly, the distance would change for me. The drive to this unit vs. south coast is nearly the same depending on traffic driving from Stoughton ~45-55 minutes