All Forum Posts by: Mike Bean

@Sean Liszka I admit it's not the cleanest analysis. I'm still working out the kinks on my spreadsheet and I only just got access to the MLS so my insurance costs have just been an blanket estimate to this point and now I have more accurate numbers. If the property only needed cosmetic fixes like paint, new flooring, and minor updates (assuming this is a C+ or B- property) would you expect $10k to get 3 units to rent-ready condition? I haven't looked at rehab costs in depth but that is next on my list of to-do's real estate wise.

 Thanks for your advice!

@Matt McGuire I'm in over my head on this one so take my advice with a grain of salt. If rehab costs are covered 100% then the total loan would be for $79,000 which is 80% of purchase price plus rehab costs. In total you end up paying your lender about $86,000 I believe so the margin for profit is somewhere around $57k assuming you've done your homework and know the ARV confidently. My question is how will you afford to pay 5-6k+ in monthly holding costs? are you going to be paying interest only? Now that you explained it the calculator makes more sense.

I'm going to keep following this thread because I'm interested in BRRR deals and would need to use a hard money lender if I was to try and execute.

@Matthew Thomas Wow. what a cool way to set up that partnership. As I said before, if there is an owner occupant involved, I'd consider using the FHA loan. FHA loans usually aren't granted for properties with major problems but if you do your research and find a property that is 203k eligible then you can have your rehab costs tied right into the loan while still reaping the benefits of that low down payment.

Low down payment means lower cash flow because your P&I payment and PMI on top will be much higher than if you were to get a traditional loan. I'm not sure this extra cost matters much in your case considering you'll be rehabbing then renting it and refinancing out of that loan BUT if the higher holding costs is something you and your partner can handle. I'd say go for it!

As previously mentioned though, don't rush into something just because you want to get started. I'm eager to get involved as well but I've set myself a timeline and If I can achieve certain milestones ahead of my planned time then that's great but I will not make an investment until I'm 100% confident in my numbers and comfortable with the scenario.

Good Luck!

@Matthew Thomas tell us more about your strategy. what is your goal with your first deal? fix and flip, buy and hold, etc..

Is this going to be owner occupied? If so, an FHA loan only requires 3.5% down but with closing costs it's probably closer to 5%?? If 5% is accurate then your 15k could get you into a $300k house with nothing left over like you said. Without knowing what you plan to do with your first acquisition its hard to advise.

As an example, I'm planning on either using an FHA loan or a similar loan specific to Massachusetts. Regardless of which I choose, I know my barrier of entry is at least that 5% maybe a little higher. I want to get a multi-family property and rent out the additional units. Those costs in my market are anywhere from $250k on the low end to $375k+. Based on those numbers I want to get something between 300-350k so that I don't have to do a ton of rehab but still don't have to pay top dollar. SO even if I do get that 17.5k for the acquisition, I'm in the same boat as you and need to figure out where to pull cash to rehab and get it rent-ready.

@Account Closed any updates? I'm saving up capital and currently around $7k. In MA we have something similar to FHA called massLoan and I'd be able to appraise out of PMI instead of having to refinance. I'm curious to know how things are going for you.

@Matt McGuire Your original loan is being amortized over 1 year so your P&I payment is through the roof. If it was a 15 or 30 year loan then your expenses would be much lower pre-refinance.

Make sure you have enough cash to make the down payment and do the full rehab. Look at other properties in the area that you want your property to look like and use that to estimate your ARV and, if you bought it right, you should have no problem getting your cash back out after refinancing.

Good Luck.

@Jaysen Medhurst I had so many issues when posting this. Here's a link to a clearer version:

https://www.biggerpockets.com/forums/88/topics/668502-multifamily-deal-analysis-criticize-this

I don't have the calc but to answer your question, I'm assuming $1200 rent per unit plus $500x2 beds in my unit. Reply back on the other thread and thanks for your help.

Hi BP! Below is analysis of a property that's no longer on the market but is one I think I probably would have offered on if I had the money for it. I think my estimates for rent are average for the area. For context, I'm planning to use an FHA loan and house hack for my first deal. Tenants will pay utilities except for water. I'm assuming this place would only need cosmetic repairs at maybe $10k, let me know if that is too low. I think the water estimate is low and if it was higher would bring down the CoC but let me know what you think.

Don't be nice! tell me what I'm way off on and tell me what I've done right.

Hi BP! Below is my analysis of a property that I could see myself investing in. If I had the funds I think I would have at least offered on it. Although this property is no longer on the market, I'd love to get some feedback on my analysis. Just so you have some context, I'm planning on using an FHA loan to house-hack and I believe the rental estimate to be fairly conservative. Tenants will pay utilities besides water. Assuming this place only needs cosmetic repairs, is 10k a fair estimate for rehab costs?

At 10k rehab costs, CoC ROI would be around 15.5%. In my head I'm thinking I could get total rent of close to $4,600 but I think my water estimate might be too low.

Don't be nice! tell me what I'm way off on and tell me what I've done right.