All Forum Posts by: Mehran K.

Where does the vacancy reserve, and future property management fees get calculated into the expenses? I see a reserve amount of $250/year, which is only about 2.3% of the rent. I typically factor in at least 8.3% for reserves, 10% for maintenance/repairs, 10% for PM fees. This would cut into the advertised 53% ROI quite heavily.

I've paid $1500 to replace quite a few furnaces in the area, and I do not own a HVAC dealership. I still don't see how the bad furnace justifies the $8k difference from list price (on MLS) compared to your "project".

I also buy 4 bedroom SFH's in that area all the time. I'd say your ARV is inflated to say the least. With the level of detail done on that remodel (new roof, new windows, new plumbing etc.), I'd find it hard to believe they would have left out the furnace if it would make a $20k difference in price.

Last few 4 bedrooms in that same exact area we purchased were between $45k-$55k.

This property is listed on the MLS for $59.9k and appears ready for a retail buyer.

MLS Listing

How can the ARV be $80k? What rehab works needs to be done that will cost $5k? It appears I can be all in for $59.9k and I'm just wondering because this doesn't add up for me.

@Kevin Kim Found this while google searching. 

FHA down payment gift rules and requirements can be found in Chapter 5, Section B of HUD Handbook 4155.1. This handbook can be found online, and it's worth reading for anyone who is considering an FHA-insured mortgage loan.

Chapter 5 of this handbook provides a list of approved sources for down-payment funds. According to that chapter, an “outright gift of the cash investment is acceptable if the donor is” one of the following:

• The borrower’s relative / family member
• The borrower’s employer or labor union
• A close friend who has a “clearly defined and documented interest” in the borrower
• An approved charity organization
• A public entity or government agency that offers assistance to (A) first-time home buyers or (B) families with low to moderate income

This just handles the down payment funds. You'll still need to be approved for the loan based on income/credit. From what you've mentioned about the business income having a hard time to be qualified for a loan, you need to look into that as well.

There need to be studies done on how much BP is/is going to be changing the world :)

Thanks so much for a quick response Albert. That makes me happy!

Hi all!

I'm selling my primary residence soon and it has me thinking. I now am well above the 10 property limit when it comes to conventional guidelines on investment properties. I've been using portfolio loans for my investments for a long time now. 

After I sell my house I plan on renting for a while, but I eventually might want to purchase another primary residence in the future. Am I going to have a hard time getting a 30 year conventional loan for a PRIMARY RESIDENCE now though? Does this 10 property limit apply in this situation as well?

My DTI should be okay as I've been investing longer than 2 years now and my cash flow (as long as it's all accounted for) keeps my DTI low.

Thanks so much in advance!

@Albert Bui? 

This is the book you're looking for, trust me :)

What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures by Frank Gallinelli

He was also a guest on the BP Podcast, one of the first few episodes. Studying that book taught me everything you're asking about in this post. Hope it helps!

@Patrick Rowe

 Even a brand new home needs to have capex/maintenence built in as costs. Roofs need to be replaced in 30 years, water heaters in around 10, etc. Figure those numbers in now and keep them as reserves.

Either way that's an amazing deal. 

1.  Under contract for MUCH less than actual appraised value.

2. Lender will lend BEYOND purchase price.

I am a bit perplexed on how that's happening with a 30 year loan. But hey, if you can get that, take it! What kind of loan is this, conventional?

Hey there @Dev Why, there have been probably hundreds of threads on these two subjects talked about previously on the forums. Use the search tool on the top right hand corner to uncover them.

With that said, here's a cool video on the 50% rule :)