All Forum Posts by: Matthew T.

Hi, so I'm starting to do research on moving into smaller apartment buildings when this one caught my eye. I have a few SFH rentals, but no multi families.

It's a 28 unit row house building. Built in 1889. The exterior of the building is in good condition, all brick, wood in good condition. A small handful of windows that need to be replaced. Only 8 units currently rented and the rest need varying degrees of remodeling. At least 4 more could be ready in a week. All units are 2 bed 1 bath and can rent for $450/month, maybe a little more. The units are all large apartments, some may be able to convert to 3 bedrooms. Only street parking, but it does have an interior courtyard that could potentially be parking for 8-10 cars. It does have a central laundry area as well. 

Asking price is $245,000. So 20 units need remodeling, but a small handful only need paint jobs and some minor work, while 10 of them need completely remodeled.  I've done remodeling before, but for a project on this scale I'd likely contract out much of the work. Do you guys have rough estimates for remodeling 850 sq ft 2 bed 1 bath units. I plan on remodeling them toward the lower end, nothing fancy. 

Income $12,600. 28x$450. Not including laundry income. I could see us getting $495 for the completely remodeled units, especially if we add the additional parking. The location is downtown on a fairly busy main street about 3-4 blocks from major employers. 

Annual taxes $6,000

Insurance $7,000 ($250/unit)

Maintenance $28,000 ($1,000/unit)

Utilities $16,800. Water and trash. 

Vacancy $7,560 (5%)

Capex $15,120 (10%)

Contract services $4,000 (pest control)

Management $7,560. I will self manage, but saw that most people recommend calculating this anyway. 

I based my numbers on research done through bigger pockets. The taxes are based on the sales price. Due to the age of the building I put maintence at $1000/unit. 

I try to be fairly conservative, I hope to get higher rents and hopefully maintence will be lower. It will all be personally financed. I may have to take out an equity loan for the remodeling. 

 Who offers no income verification loans? I'm in Kansas and haven't seen any banks do this.

 Yes, our current bank counts 75% of the current rental income. 

The details on our first rental purchase, not the best, but we don't want to fix things up and don't have time (right now anyway) to do BRRRR. We do plan on doing that in the future, but not right now.

Ok, back to the house. We purchased for $59K from Fannie Mae, appraised for $60K, but an identical house 1 block down just sold for $72K in slightly better condition. Rent is $895, 1 year lease, tenants pay all utilities. We spent about $150 on repairs, but the water heater will likely need to be replaced fairly soon. Taxes $1100, Insurance $788. After maintenance, vacancy, mortgage, etc. cash flows about $323. NOI $593. The loan was approximately $47K at 5.5% with 20% downpayment.

Thanks, but I'm pretty sure if we can't get a traditional loan, I don't think we can refinance on our home. So thats the main reason I was considering a HELOC.

We have talked about renting our current home and then purchasing a new home as owner occupied. My wife has stipulated that she doesn't want to move into fixer uppers though. We are going to do this in the future, but using it as a way to "upgrade" to a nicer (more expensive and smaller downpayment) home, or if we find a great deal on a good multifamily.

So I recently purchased my first investor property (single family home) which was really exciting, we got it rented quickly and the numbers are all where we want. When we had been talking to the bank originally they made it sound like we could do 4-5 investor loans, but now we ran into a wall after our first purchase. We have enough money to do a 20% downpayment on a $40K property, but our income to debt ratio is too high. About 53% and the bank wants it to be around 45% or less. Our income is not very high, around $20K a year, we are self employed and deducted everything we could. We have no debt except our rental property, even our residence is paid off with about $150K in equity. Next year we are going to deduct less, plus our income will be higher in general. We were hoping to buy 1, maybe 2 more properties this year and 2-3 again next year. My business takes a lot of time and I didn't really want to do fixer uppers or flips, I had been planning on only doing ready to go houses or homes that need little repairs, but I suppose I can change my mind on that if thats the best option.

What advice do you guys have for getting financing? Perhaps a HELOC on our personal house, or will that also fall into the income to debt problem. Id really like to buy a second rental property this year, but it seems like traditional financing isn't going to be an option.

Thanks

HI all, I am buying a duplex (my first investment property). I have a LLC for my restaurant which has been in business for about 4-5 years. I'm considering putting the property under this business name. First, I would enjoy the protections that a LLC provide. Second, and I'm not certain on this and this is the basis of my question. Whenever I talk to bankers and other property investors, they say rental properties income can not be used for the first 2 years for getting approved for future loans. (I believe that is true for any type of new business, not just rental properties). If I put my rental property in the existing business LLC, Im thinking I could use that income immediately to help get approved for future property purchases. Is that true? Does that question make sense? What are other pros and cons? Thanks.

 Thanks for the link. I'm going to take some time, fill it out, and I'll probably have some more questions!

Hi everyone, this is my first post after reading the forums for quite some time. I've been trying to get into the rental business for a couple years, but I've never been able to get approved for a loan. I'm self employed with a restaurant. My business is in it's 5th year operating as a LLC. The first 4 years my AGI had been around $12,000-18,000. Basically I was deducting everything I legally could, which never mattered until I started looking into the rental business a couple years ago and realized I wasn't going to get approved for any loan at that income level. This year I decided I want to make a lot less deductions and get my income and AGI increased. My income for 2017 is currently at $42,000 and my AGI at $35,000. My taxable income is about $15,000. When applying for a mortgage or loan, which of those numbers is the most important? I'm currently looking at buying a duplex or other multifamily in the $80-120K range. My home is paid off and was appraised by Discover Bank at $180,000 when I applied for a home equity loan, which was denied, the person I talked to said my income (not sure what they meant) really should be at least $30K to get approved for anything. A local bank appraised it for $150,000.

Thanks