All Forum Posts by: Patrick Fraire

I ran into this issue on a triplex I'm currently trying to buy. The seller wants $230/sf.

A triplex near by recently sold for $210/sf.

Both properties were identical however the one I want is in downtown and the comp was on the outskirts of town. I tried to justify offering $30,000 under asking price due to the comp. This logic didn't work with the seller or listing agent. They advised cap rate was the determining factor. So even though that property sold for less, the rents were probably lower since it wasn't downtown. 

I'm thinking it's a combination of the two. Comps and cap rates for other 2-4 units in the area. 

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*This link comes directly from our calculators, based on information input by the member who posted.

I am new to the Provo market and I am beginning to run numbers based on about 24 hours of research. I'd love to get some input from those that specialize in this market. Any input is much appreciated. I'm most curious about expenses and rental income. 

Thank you!

-Pat

Whats up Nathan! Fellow newbie looking to invest with someone in Provo with boots on the ground. Currently analyzing a few duplex deals for myself and a few partners here in California. Hit me up anytime I'd love to learn more about that market. 

@Peter Glenn, I am also considering buying my first property in so cal and I have similar concerns. Cash flow is very difficult to find with properties listed on the mls. Virtually nothing is a turn key cash flow property in so cal. I have found the best opportunities for cash flow are in higher maintenance rentals (student rentals and vacation rentals in orange county near disneyland). Both investments have higher vacany compared to traditional rentals but you can find some that cash flow (we are talking like $100 after expenses).

If you value the experience that will come from a challenge like student rentals, you may want to look into that.

Hi I'm looking at doing an FHA Loan on a property in Pomona, CA. I would House hack and rent to college students. I'm looking at offering 395k and I could rent out the rooms for 3000. REDFIN says my Loan with 3.5% down, would be around $2650 with PMI...correct me if I'm wrong. I'm meeting with a lender this weekend to get pre approved and put in an offer. But I'm wondering if anyone else would do this deal.

@Lane Kawaoka @Caleb Heimsoth Looks like we all have something in common, I too am an engineer (civil). I am making good money for graduating less than a year ago (around 70k) per year but I also have 25k in student loan debt. And it is difficult to save for my investments when I am paying $450/month in student loans. Since @Logan Jorns goal was set so high in such a short time frame, I didn't feel the investment was worth it. Now, for someone who is playing the long game, the degree and a career in engineering is worth the investment. 

The debt you will owe for any degree will not be worth it if your goals are to truly own 300 units and be financially independent by 30. You will not be able to achieve your goal working a desk job anyway. You will have to hustle full time for the next ten years. Networking, working for free for other investors, doing your own flips. To scale to that size, it makes NO sense to invest 250k...even 25k in a degree you will not use to achieve your goal. I saw someone told you the degree will be valuable if the economy goes down so you can get a normal job with the degree to make ends meet. That makes no sense to me. Employers stop hiring in economic downturns. And if the housing market goes down, that is the time to invest in more real estate. Look up some Graham Stephan. He became a millionaire by 26 via real estate. Didn't get a degree.

Polly Wu thanks for your feedback! Nice to hear from someone who knows the area! You are onto something there with the construction idea. My landlord is having an open house next weekend and I think I will float the idea to him then. I am a civil engineering major and have had several internships working for contractors, so I have some credibility running construction there. If he sees people aren't going to buy the home for the price he wants I think he will be more open to paying for the rehab. In which case I would looooove to come in and manage the rehab and maybe get my hands a little dirty in the process. Thank you for the idea and I appreciate your input.

Thank you guys for your feedback I really appreciate it. So here's what went down. I called the landlord back and explained to him what I thought was a good seller financing contract that made sense for both parties. I said look I want you to get the price you deserve for your home but I don't have a lot of cash at the moment to put down. So I will do $25000 down payment and will put an extra $30000 for immediate rehab. That would put me in at 55k. We then do monthly payments of $1500 (the home rents for $2500/month) and we put a balloon payment at the end of six years. After six years I will be able to refinance and pay off my loan to you. I didn't mention this but I wanted 0% interest and was hoping the fact that he could get the home for the price he wanted would be sweat enough for him not to charge interest on the loan. He replying by saying he would need at least 25% down to carry the loan. Didn't even address the other aspects of the contract I proposed. He then told me to try to qualify for a mortgage from a bank and then he'd sell it to me. In summary, his response was disappointing but I get it. I would want more than $25k downpayment for my home as well.

Greetings Bigger Pockets fam. I'm a college student who is about to graduate in 2 months and start working full time and making a salary of 70k annually. 4 friends and I currently rent a 4 bed 2 bath 1700sf single family home in Diamond Bar, CA. Our landlord told me he is selling the home. It is in extremely bad conditions. We have rented the home for three years and he never stopped by to check on it. Not once! It was in bad condition when we got there and it's not any better now. For example two mushrooms have grown in the bathroom there is a treehouse that is on poured footings that is falling apart. The ceiling is cracking and not to mention the cabinets and floors are all outdated. This place needs some serious rehab. With that being said this home is in a very nice neighborhood. Also right next to a university so very attractive by and hold considering the rent we pay $2500/month. Also I believe the 4th bedroom was an unpermitted addition to the home because on public records this home is listed as a 3 bed 2 bath. Anyways I want to flip this house. I told the landlord I want to buy it and he said he'd like to help me out and sell it to me. I told him my financial situation and he said he'd be willing to do seller financing. Here's the problem. He's set on the price that zillow estimates he home is worth. Which is WAYYY HIGH. Zillow says $625,000 and no house in this neighborhood has sold for over $600,000 in the last two years. Plus it needs a lot of rehab. He says he wants to list it at $580,000. I told him I'm interested but that price is out of my range. He asked how I would buy his home and I told him I could borrow money from my family for the down payment. He said to talk with my family see what I can get for a down payment and to call him back tomorrow so we can negotiate. My question is how do I talk him down to a reasonable price on this. Should I just wait for him to put it on the market so he can see it's not worth as much as he thinks. I mean this home is worth 580,000 after about 50,000 in rehab. At least! And he's asking that in its current condition. HELP! How do I sweaten the pot for this guy so I can still profit on this?