All Forum Posts by: Nicholas Lohr

Do you have documentation / pictures of both the way it was before and the way he left it? 

I doubt he would actually take you to court over a security deposit. 

If it were me and I had the proper before / after pictures and documentation I would call that bluff. 

Familiarize yourself with the FHA Self Sufficiency Test. (assuming you are going for a 3 or 4 unit)

It's a long story but I house hacked a 4-plex with a FHA loan and going into it I expected a 5% down payment but the self Sufficiency Test turned that into 30%! (which I had to come up with or there was no deal)

I would definitely steer you away from a custom build if you are new. Unless you are a builder yourself, have a lot of great contractor connections, or have a GC that you really know and trust it's a very difficult undertaking.  I am speaking from first hand knowledge. I just built 2 townhouses from the ground up and it was WAY harder than any remodel I have done. 

And then concerning your numbers there. (and ill even take the more generous extremes of your numbers) You said you have $230,000 to spend. 230,000 - 45,000 for the land = 185,000 left to work with. 

185,000 / 1800 square feet = $103 per square foot to build this new house!  (unless you are planning on getting a loan. are you planning on a loan?)

I'll tell you that my all in cost of to build from the ground up was $250 per square foot.  (and it took 2.5 years)

I know costs vary from state to state but they are definitely not that different.

I actually don't know too much about that move. Is your broker a fiduciary? I would get a 2nd opinion on that one if I were you just in case. 

And back to the properties you own, you mentioned you don't have mortgages on them.  There's some threads on BP about Return on Equity.  Maybe check those out if you haven't already. 

on second thought maybe I'm just being dramatic and I could have done ok by jumping right into a bigger multi family. With the wealth of free knowledge on this site perhaps you could be ok to go big? You'll have to decide that for yourself or find someone who skipped to the big stuff for their first deal and ask them how it went. I personally didn't. 

Anyway, back to your original question, I've successfully refinanced 2 large (more than 5 units) multifamily properties without waiting the 6 months. They both are in LLC's but they are both recourse loans. Also both are 70% LTV. Good luck to you...

Ah I see. Well the LLC part is more realistic then. I will say this at the moment it may be hard (and expensive) to find non recourse. I just shopped around to refi a multi family and all I could find was recourse. Again that's just because of the current market situation.

Also I get the "going big" thing.  I'm the same way. I don't know if this is your first deal or not but I will say I am DEF glad I went with a duplex to start. Looking back on the learning experience of the duplex makes me think that if I had went with a big building as my first one.... well, it would not have been good. 

From what you wrote in the first paragraph there it sounds like you're in pretty great shape! I think the questions are.... Are your tenants still employed and paying rent in the current environment? and,  Where are those tenants going disappear to anyway?

I don't know all the specifics of what you have there but you said you have "rental houses" and I just can't picture some mass exit from those. If you had undesirable C class apartments or overpriced A class ones could be a different story. 

Yes you could Bellman but it really depends on the lender and the property.  I will tell you that what you describe there would be very hard to get, especially in the current environment. 

If you wrote this instead, " Could I purchase a property with a down payment of 25%, recourse loan, take title in the my own name and I have great credit and solid income?" Then I think you would be more on the realistic track of what would actually could get a lender to agree to. Especially the LLC and non-recourse parts, they don't like that. (assuming we' talking about a small 4 units or less residential property?)

As far as the 2nd part, I've done 3 cash out refis and yes I had to wait 6 months.  However I've noticed the seasoning gets a little looser once you get up to a certain point.  For my duplex I did have to wait 6 months but for my 6-plex I was able to start the process right after I got full occupancy and the cash out closed 2 months later. 

Does this thing have a kitchen and bathroom already? The way you describe it makes it seem like it doesn't.

And it's unusual for a tenant to cover ALL utilities in a residential scenario so double check on that.

As far as not needing cap ex I've found it's much better to have it and not need it rather than the reverse.  When things do come up down the road, and they always do,  I always think to myself how glad I am that I budgeted for cap ex, repairs, maintenance, AND reserves.  I feel like I'm much more willing to shell out the money for those things since I budgeted for them in the first place.  This makes for more up-kept properties, things not getting worse, and happier tenants.  

For example, when the dryer broke and I was on vacation it was no problem. I called the dryer repair person and when they discerned it was a total loss I had repair person go buy and bring the tenants a whole new dryer. I did this from the beach. Was it expensive? Yes, but it only took a couple months of the cap ex budget that I had been saving from the beginning and hadn't used yet. Real glad I had it budgeted and ready to go. 

I highly recommend you use the BP rental property calculators, fill in ALL the boxes, and see what you come out with because who knows what the future holds.   (taxes, insurance, repairs, cap ex, prop management, utilities, vacancy...)

2 things stick out to me about this....

1. You didn't mention utilities, maintenance, cap ex, or reserves. Don't forget about factoring all those in.

2. 10k to convert a garage into an apartment sounds super low. Are you sure you're factoring everything here? That garage must be ready to be lived in too for only 10k! Building department permit and city permit expenses factored into the 10k too?