All Forum Posts by: Michael K.

If the deal wasn't agreed to "as-is" you might be able to make back your inspection money and then some. If problem areas are identified in the inspection report you can use them as a bargaining chip to ask the seller for concessions. They don't have to agree but typically will agree to at least some demands to keep the deal together. Also, know that the inspector will look at more than just the appliances. If you are on the top floor you will want to get your inspector up on the roof to make sure that there are no issues there. 

Hi Benjamin. One thing to keep in mind is that cap rates are not constant throughout a city - meaning you will have variation from neighborhood to neighborhood. Typically this will be linked to risk and reward, so as you go from A to B to C to D properties the cap rate should rise accordingly. Cap rates are also linked to the potential for appreciation. So if a property is in an area that is appreciating rapidly you will tend to see lower cap rates. In general, I see cap rates between 4-12%. Also, look for properties that need some work, with a modest rehab budget you may be able to turn an average investment into an excellent investment. Hope this helps!  

@Sam Tomar based on my own experience (and looking at macro data) It looks like we’re experiencing a slow down. Higher rates have caused prices to stop rising - but have yet to send them in the other direction. We’re still at historically low inventory, so it’s hard for prices to drop all that much with such limited supply.

@Sam Tomar does the property have some sort or defect that would make it difficult to get conventional financing? Or are you already maxed out on conventional loans? I think right now might be a good time to keep some cash reserves. Stock valuations are looking better and may fall even further, and it doesn’t appear that real estate valuations will be making any large downwards moves in the foreseeable future.

@Francheska Viejon, consider how much rent money you are saving by living in the property. Can you find an apartment for cheaper than the $1100 out of pocket you will be paying? How much would the second unit rent for currently? and after rehab? would it be more, or less than $1100? these are the questions to consider. I'm assuming that you are buying the property based on it being owner-occupied so you will have to live there for the next couple of years regardless. But once you have improved the unit and are able to move out you may want to consider whether occupying the unit or renting somewhere else is more cost-efficient. Obviously living with family is the most frugal choice, but most choose not to (for obvious reasons). Best of luck, you will do great!

@Eric La Pratt I covered it with a heavy planter so that people won't try to mess with it.

@Eric La Pratt had the exact same problem. Manhole cover was rusted through. Just bought this one. It fits the opening. https://www.amazon.com/gp/prod...

@Vanessa Hammonds Meet contractors and architects now. Get a few quotes with plans for the build before you go about buying any land. Know that vacant lots will cost more to get water and sewers hooked up. Overestimate your costs like crazy. Prepare a massive war chest in case of delays and market shifts. If you go forward with this you are braver than me. I own a few buildings and have done some rehabs but see lots of risks that I can't control if I were to build new. Personally, I would suggest buying a real beater house and fixing it up before trying to build new. You might find that the ROI is similar or even better. Find the cheapest thing on the market that can be salvaged and take your shot. Best of luck!

 Looks reasonable at first glance. What kind of financing are you bringing?