All Forum Posts by: Aaron Montague

@David K. it looks like a loser to me. I recommend that you pass. 

Here are the numbers as I see them:

@Account Closed How confident are you on the $1100 rental price?

A couple things you need to do:

Get an inspection by a professional inspector.

Get at least 3 estimates from contractors to do the repairs based on the inspection.  $29k vanishes quickly when doing rehab.

All in all a $70k place with $1100 in rent is a good start to a deal.  Now you need to dig deep into your numbers to figure out if this is worth doing.

What are the amounts/percentages you expect to pay for the following items once it is a rental?

http://www.realtor.com/realestateandhomes-detail/1...

That place is a gut rehab. I know nothing about the neighborhood, but for ~175k you could have your own place. Throw a roommate in there and you should have someone that can pay at least your PITI expense. Get 2 roommates and have them pay your to live in your own house :)

http://www.realtor.com/realestateandhomes-detail/1...

Same concept there expect that one is done.  And was done in 1952...

http://www.realtor.com/realestateandhomes-detail/1...

Duplex that screams "FIX ME."  You can chuck 3 other people in that place.  Or fix one unit, then move in with a roommate while you fix the other one.  Again, I know nothing about the neighborhood.

http://www.realtor.com/realestateandhomes-detail/1...

A $400k place that looks done.  It seems to be ready for tenants immediately.  You can have 5 housemates here.  This could also be a good Fix and Flip type house hack.

Happy Hunting!!

@David K. You didn't give us much to go on.  What numbers are you using for the following expenses?

@Spencer Brett I run house hack deals as normal Buy and Hold deals.  Simply insert yourself as a tenant.  I would make the assumption that you are moving out long before the mortgage is paid off.

Remember to be smart with the rental numbers.  Even if you CAN afford to pay 150% of the market rate, don't figure that number into the calculations.  The tenant that you put in there is NOT going to be paying that much.

Post some numbers up here and I'll tell you what I think.

@Adam Dow Pass on this deal if you plan on using it as a Buy and Hold.  Property Management needs to be figure in, even if that cash is going into your pocket.  The money is coming OUT of the business either way.

Plus the aggravation of being a property manager is worth something.  Even if that something is paying some extra against the loan, it needs to be noted.  As @Andrew Johnson mentioned, the next person to buy the place is going to put a number to the PM fees.

Now if you want to do condo conversions that is a whole other avenue to head down :)

1. Does this look like a good deal? No, but I don't have all my information correct.

2. We aren't using RE agents, any trustworthy contract templates I can use? Any advice here? Yes, hire a title company and a lawyer.

3. Who should pay closing costs? What's typical today? Buyer generally.  This, like everything, is open to negotiations.

4. He was asking $75K, and I said I'd rather be at $70K, but that was before any inspections or anything else... and before we agreed to not do agents. I'm considering making an official offer of $65K with the fact that we won't be using agents AND he indicated he wanted to sell as-is.  You will have a great deal more leverage on this once the inspection is complete.  DO NOT BE AFRAID TO WALK AFTER THE INSPECTION.  Make sure that your inspection clause in the P&S allows you to walk with no expenses.

5. Any help on the process including inspections needed, I'd greatly appreciate! I plan to line up a termite, home, and HVAC inspections. Pay for a profession inspection.

6. What else should I consider? Become HIGHLY familiar with the eviction laws in your state/county/town.  Also figure out what the tenants can use against you in terms of unfinished repairs or safety hazards on the site.

I plan to manage the property myself. This is fine, you still need to account for the 10% PM fee.  At some point in your life you are NOT going to want to manage it yourself.

The current renters handle all utilities themselves. Everything, everything? Or just some of the utilites? Electric, Gas, Water, Sewer and Trash are all possible costs.  Do the tenants over ALL of those every month?

Can you get the month to month tenant out?  I recommend this especially if they are the ones with the pets and the room they don't want you to see.  If you can get the whole thing vacant, I'd go with that.

This is a deal I recommend you walking away from. Even if your tenants are paying Sewer/Water and trash the ROI on this only goes up to ~9.75%. The place sounds like a headache already.

Now If you can get it for 60-65k and your tenants are paying Sewer/Water/Trash you should be able to have a property paying you $200+/month with ~13% ROI.

Here are the numbers as I see them:

@Walter Milam

Yeah, this one looks like a deal that will just barely keep its head above water.  The major calculation you didn't make is vacancy.  Is there a PM/Master/Owner's electric box?

Here is how I see your deal:

@Clark Dickenscheidt This place doesn't look awesome.  Here are the numbers as I see them.  Please correct anything and I'll readjust the numbers.

@Jim Hartmann The numbers on the place certainly look good given what you've mentioned.  

The things that stand out to me:

Your water bill looks too low.  I pay about 2x that on my 4 family in VT.  

With the looming repairs I would take a serious look at your Cap Ex math for this property.  "Ok roof" tells me that it will need patching for a decade and then replacement in year ~11.  You obviously have electrical work.  Even if that is up to code, at some point in the near future either your insurance company or your mortgage company is going to force some changes.  I would address that now.  Conservatively the rewiring of a 4 family house is going to run $16,000.

I made up the trash number, $150, below.  You didn't include it.  That is about what I pay for a 4 yarder dumped every other week.  

I'd use the rewiring as leverage to drop the price a bit farther.  Happy House Hunting, or maybe buying!!