All Forum Posts by: Nik Corbaxhi

I invest in condos and it is a good long term option. If you are looking for appreciation, in general, condos tend to lag behind when compared to SFH. however, for long term investment and continuous Cash Flow, it works. It is intimidating at first because of the HOA requirements, special assessments, owner occupancies, caps on rentals...etc. However, as long as you do your due diligence to make sure that there are no restrictions on you to rent it out, you should be good to go. Make sure the numbers also make sense for you.

Based on your calculations, you have a CoC return of 13-14%, which to me is not bad. Does the house require any immediate fixing and did you account for those? At 109k, I would expect some upfront costs going to it. If you did an inspection on it, some of those should have come out but you should look at the bigger items (roof, furnace, flooring, bathroom, kitchen) and see if those are in fair condition, at least to get you started. If you don't account for those, what seems to be a 13-14% ROI could be less than double digits, especially if you have to do the room and a furnace or 2 all at the same time. Due your due diligence and if you are comfortable with the numbers, go for it. That return for your area is pretty good. (I used to live in North Colonie for 9 years. :)

My recommendation is to continue to hold off until you figure out a way to communicate with that vacant lot owner. Your concern is valid and what could be a great opportunity might burn you at the end.

Amber, having that much equity is great. While its a good chunk of money and you have options, one thing that you would need is to get a HELOC or refinance the house to get that money out. Account for the the time commitment expectation and what type of Real Estate investment you would like to go in. It seems like you have gotten your feet wet a bit, so you have an idea with what comes with it. I would use a portion of it to purchase another property and once you get that in order, then seek other options again, assuming you have a daily job and acquiring multiple properties at a time might be too much of time commitment.

@Jordan Johnson, congratulations, seems like you have a couple of options. 

1. go with your plan. Sell the house and hopefully the proceeds buy this other property for you. 

2. If I were to guess, the school enrollment numbers are going up and the school is expanding, hence explaining why the price of the house has gone up significantly. In that case, if you expect them to keep going up, then hold and look into renting to students. Potentially you could turn the attic space to a 4th bedroom (do this legally if you decide to do), and rent to student. The return would be great for you. as for the other house, still chase it with just the down payment and regular conventional loan process. 

Whatever you decide to do, you have to know what your goals are. If you are looking to invest into real estate, this could be a break for you. If not, take your gains and move on. 

The costs seem in line with what I would expect. Congrats on the property!

@Jacob Winkler, I only know of one person that has dome something similar and it did not work out for him at all. The partners were not making payments on time and many times he found himself doing the heavy lifting until it all went south, the market tanked, and they sold and all took their loses.

I don't mean to sound negative here and that might not be the case here, but if I were you, I would vet these partners very carefully to make sure they are good for the investment. This also depends on whether you are taking a mortgage or buying cash. Also, make sure you get all agreements with legal advice, so there is no room for interpretation tomorrow. 

@Michael Campbell, unless I am missing something here, why do you need to know how much is left in the mortgage for the current owner?

Let's suppose I own a house that is worth $200k and I only have 40k left in my mortgage. Is your plan to offer me 40k for the house? 

Instead of asking how much is left in the mortgage for the current owner, you should perform an analysis of much the house is worth to you based on market value and that should be the main basis of you making an offer. 

@Michael J Scanlon, you cannot keep the mortgage in your name and treat the property as an LLC to benefit from what the LLC has to offer. You would have to either do a Quit Claim Deed from yourself to the LLC or a warranty deed to the LLC. There is a lot of controversy between doing a Quitclaim Deed of the property to LLC vs transferring the warranty deed to the LLC.

If you go the quitclaim deed route, you are simply passing any interest you might have in the property to your LLC. The quitclaim deed does not guarantee that you (yourself) own the property. A warranty deed on the other hand passes that guarantee on to your LLC.
 

If you have a mortgage on the property, its best to check with your loan originator to see if they even allow you to do a quitclaim deed. Some mortgage companies allow it and some will ask you to pay the amount in full once they find out that you have transferred the title of the property to an LLC, but the mortgage is still tied to your name.

Either way, you have to be consistent, if you decide to run as an LLC, everything needs to be tied to the LLC as its own entity, including title, bank accounts, utilities...etc. 

You might have to explain a bit about what is so "unique" about this unit that it makes such a huge difference when compared to market. You have to look at demand vs supply and the types of potential tenants you are renting to. If your unit is unique because it offers something cool but not necessary for normal living, you may have a harder time justifying your price. 

I agree with Mike's assessment as far as the price goes. You have to have the lowest number you are comfortable renting the unit for in order to make it work financially, so tag a $50-100 on top of that and see where it goes. 

If you don't want to take a risk with timing, as @Mike McCarthy suggested, why don't you just price it at market and get it rented, then the next time you start showing it, you can afford to play around as you will most likely be showing towards the end of the current tenant's term, so no vacancy issues there.