All Forum Posts by: Paul Reynolds

Martin, I put a lot of cash into the deal (cash + HELOC). If all goes well I'll refinance in a year and get a chunk of that cash back. Yes, previous owner has tried unsuccessfully to get an exception/variance.

Hey everybody.

I recently made an offer (my first ever) on an investment property.  it's technically a 4 family (4 one bedrooms) but it's only zoned for 3 families. So the current owner has all 4 units occupied but every time the C of O is due he has to vacate the one unit so that it can be inspected as a 3 family. He's had the place 10 years so he's already done it a handful of times. At first I didn't think it was a big deal but as the deal progresses I'm a little nervous about it. What do you think?

Also, here are the stats on the house:

Rental Income = 2300/mo

Gas/Elec (included in rent) = -200/mo

taxes = -150/mo

loan = -200/mo

insurance = -70/mo

capex = -230/mo

vacancy = -230/mo

maintenance = - 220/mo

cash flow = $1000/mo (with no prop management, at least initially)

However,  if I lose that 4th OR I have to keep that 4th unit unoccupied in order to wait for the next C of O the numbers will not be good.
So again, what do you think?
Thanks!

@Frederic Babeux

No quotes from insurance, just using the # off the listing.  Congrats on the first duplex.  I hope to join you soon!

@Jerry Padilla

Thank you, Jerry. I can get a 400k HELOC at 5.25% (adjustable) so the rate isn't that bad but my concern was that I wouldn't be able to deduct the interest as the loan is against my personal home and not the investment property. I've talked to a few local banks that will do a conventional loan on a duplex but the appraisal is a good idea. I need to figure out a plan for financing, beyond the HELOC. @Matt Honeyford. The 80% ARV refi would be the way to go for sure. thx.

@Rob D.

Yes, I'm talking with CNB and ESL both now.  Seem pretty good.  I'll PM you about Dewey Ave.  Thx.

@Dennis Callaghan

Awesome info, Dennis. Thank you. The house is definitely doable and the hells angels actually own every house on the street (6 of them) except that one. Doesn’t really bother me though. I own two bikes myself. Maybe I’ll join.

;-)

@Robert Leonard

Wow. Thx for taking the time to post all that. Very helpful! I toured the duplex (not bad) and walked around the triplex (pretty good). Made an appointment to get a look at the triplex but an offer came in today.

Still may offer something on the duplex.

Thx to all for taking the time to comment.

Much appreciated!

-paul

@Matt Honeyford

That’d be ideal but I’m assuming I’ll have to leave 20% in. Would I just get it appraised after the work is done and then take that appraisal to the bank when getting the loan?

@shane: Thanks, I bumped it up.

@Adam McQuiston.  Eesh.  My realtor said the same thing.  I guessing I should take this as a 'bad thing', no?  Where do you invest in Rochester?

I should also mention that the mortgage numbers are for the conventional loan, NOT the HELOC (which is 6.5%)

Thanks guys, the properties are indeed in rough neighborhoods.  I'd rather NOT buy here but it seems like C or D duplexes are the only ones I can get to show cash flow over $200/door.  I'm looking at a buy/hold strategy and using property management..  I was going to start with cash/heloc and then convert to a conventional loan with 20% down.  Here's my numbers (monthly):

Algonquin: Mortgage 208 (30yr @4.8%), Insurance 17, Taxes 230, Maintenance 72, CapEx 143, Vacancy 143, Prop Mgmt 143 [Total Expenses = 954]. Rent 1425. Cash Flow = 471

(cash flow lower because taxes were higher than I estimated in my original post)

Adams: Mortgage 314 (30yr @4.8%), Insurance 26, Taxes 198, Maint 81, CapEx 163, Vacancy 163, Prop Mgmt 163 [Total Expenses = 1108]. Rent 1625. Cash Flow = 517