All Forum Posts by: Kyle Nelson

Danchrisandre Delgado We looked at this deal a lot. Ultimately we ended up passing on the deal due to issues with the mechanicals and utilities. I spoke with two appraisers myself to get an idea for how they perform the market appraisal. They essentially told me that the rental appraisal will come in lower than you may expect. They don't look in detail at the finishing and quality of the units when making their appraisal. If your unit can somehow pull higher rents than the comps, it probably won't show up in the report. When looking at your numbers, be very conservative and then pull only 75% of that conservative rental rate to help you qualify. Your mortgage lender will let you know the rough number you need to hit to qualify at a certain amount. On a separate note, I did end up getting my first deal and am currently rehabbing the house. Good luck with your deal, keep me updated! -Kyle

Welcome Ben! I'm have an Urban Planning and Regional Development degree myself (University of Arizona). I'm currently working as a Transportation Planner in Lansing MI. Welcome to the forum, I look forward to some good conversation.

Dan Bryskin thanks for the reply, big help. It seems like I have a lot of research to do into the readability and cost of the changes. I know the house is in an awesome area near a lot of great jobs, but the huge variable cost of paying all the utilities scares me a little bit. Thanks again for the advice.

Hello everyone, I am looking for help from experts in Victorian old late 1800s property investors. I know there are a lot you out there in Massachusetts, Philadelphia, and other northeastern states. My question is regarding utilities, I am working on the numbers for a deal but I can't determine what the utilities would be. The house was built in the late 1800s and recently had a mostly cosmetic update. It is a very large home around 3000 square feet. 4 units, all 1 bedrooms. Gas, water, and electric are all on a single meters. About 40% of the windows are new and the rest are old single panes. I can't say for sure how much insulation there is but I'm guessing very little. No central air, old furnace in need of replacing, old 50gal hot water heater. How much would you estimate the electricity to be? I have about 10K I could use to make it more efficient, where would it be best spent? From my analysis, it looks like utilities included properties wouldn't quite cover the cost of utilities. Would it be best to separately meter one or more of the utilities? Also, what should I do about soundproofing floors or ceilings in these old homes to cut down on complaints? Or is the money better spent elsewhere? Thank you for your time. P.S. I would be happy to expand if there are more questions. Regards, Kyle

Alexander Zurn Thank you. You've been very helpful in this process. I hope something worked out for you and you have a property now.

Alexander Zurn thank you for your reply. I agree that the units being vacant could be a good thing, but my lender makes it sound like a hurdle. She also gave the impression that the appraiser might not be able to come up with a number at all. It sounds like that wasn't a problem for you. May I ask if you were relying heavily on the rents to qualify? In my case it is less than $35K above what I was pre-approved for on my own (albeit with slightly higher taxes and insurance). On the ultra-conservative side I expect $1000 to be counted (75% of gross rents) toward my income, my comparable analysis tells me they should count $1,400 toward my income. Thoughts? Thanks again.

Hello everyone, I am about to place an offer on a 4-unit property. My intention is to use an FHA loan, but I will need the rental income from the property to qualify. My lender tells me this already makes it a challenge. To add to it, the property is vacant. Luckily, FHA guidelines allow you to qualify after having a market appraisal of the rents done. My lender tells me that this is a difficult process and almost never succeeds because the comparable properties have to be very similar to get a rental appraisal from them. To me it seems like the rents could come in very low and I could still qualify because the asking is only a small bit above what I was pre-approved (still to much for me to cover with cash) for on my own. Has anyone been through this process to get approved? What are the chances they will be unable to give an estimated rent number at all, does this happen? My figures show if the offer is accepted, but the underwriters reject my file I am only out $600 + time for the appraisal. As I mentioned, being very conservative with the appraised rental value of the units it should be plenty to qualify. Looking for advice from experienced investors/lenders. Thank you everyone!

Welcome to bigger pockets! I'm a new REI in Lansing MI. I'm about to buy my first investment property and I've learned a ton from BP, the podcasts especially. It's great to have you aboard.

Hey Mark, Thanks for the answer. I have called quite a few places that will use 75% of the rental income on the property if it has renters. But reading the FHA guidelines, it seems they have the ability to use appraised rental values to help qualify on a vacant property. I just haven't been able to find a lender that will use appraised rental value, which is fairly understandable. Thanks though, I didn't know the appraised rental value was part of the regular home appraisal. Is that just for multi-family?

Hello Alex, I'm a lot like you. I have been listening to all the podcasts, browsing the forums, and reading all the books and I'm ready to house hack. I'm currently working with an agent trying to get my first deal. I hope to meet with you in the future and discuss real estate. Good luck on the hunt! -Kyle