All Forum Posts by: Paul Kogan

Hey everyone, please help me with this deal. It's a 3 story duplex with 4 rental units. All units have separate electrical and gas meters. 1st floor - 1 bedroom
2nd floor - 2, 1-bedrooms (can be turned into a 3 bedroom w/2 bath)
3d floor - 2-bedroom.
It's a bank foreclosure that's on the market for $349K. They recently lowered the price to $319. I checked the public records and the previous owner owes $519K in loans! My potential gross rents can be ~$3700 per month (includes vacancies). The property is in bad shape and will require ~50K in renovations.
I'm thinking of $230K as my offer price. Here are my calcs.
Purchase price - $230,000
Renovations - $50K
down - 20% - 46K
Closing costs - ~15K
Loan amount - $184K
Monthly debt - $1225 monthly
RE + Ins - $300 monthly
Total out of pocket - $111,000 (pretty high)
--------------------------------------------
gross income - $44000
operating expenses - 50% - $22000
Debt - $18300
Net Income - $3700 yearly / 12 = $308 or $102 per unit

What would be the right purchase price?
Does it make sense to turn two 1 bedrooms into a 2 or 3 bedroom?
Does the 50% rule include RE taxes and Insurance?
How does the $50K in rehab money fit in the 50% rule or should I account for it separately? If i'm investing 50K in renovations am I still at 50% operating expense?
Thank you all,
Paul.

Hi Jon,
thank you very much for your input. I do consider investing in a multifamily as mentioned in my option 3. It's just that the steady income from the property makes me not want to sell, but I see you points. The ROI on this 300K property is really low.

We currently own a house but need more space. We found a bigger house that we like for 800K.I know the numbers are really high but we live in NY and you don't get much for 800K.
So, we're planning to sell our current residence that has $200K equity and the rental property mentioned above with $300K equity and use most of this money for a downpayment. Also, the new house has an apt. that will produce $1100 in monthly rent. My long term goal is to take out HELOC on the new house and use it for investments.
Please let me know what you think.
Thank you,
Paul

Hi Guys,
I'd like to give you my current situation and see if you can provide some feedback. I have a 1 bedroom condo in NY, which is now worth about $300K. There is no mortgage on it, just RE taxes and CC = $250 per month. I've been pretty lucky with the tenants and have not had vacancies longer than 3 weeks. I collect $1250 per month in rent, which adds up to $15K per year or 5%. Please give me your 2 cents on some of my options.

1.) Sell and put the money in a CD at 4.5 for 3 years. Same ROI no headaches.

2.) Sell and put the money in a house that we're planning to buy in the near future. Does it make sense? If I buy a house for $500K and instead of putting 20% down I will put $300K it'll save me more money in a long run than I would have ever made on this apt. (I like this option the best)

3.) Refi? and use the cash to invest more? Not even sure if it's an option.

4.) Hold and rent until I retire... don't really like that option.

Thank you,
Paul.

this software is really good. I'm a bit confused as to where to input rehabings costs. total cash out of pocket is unclear as well .
Thanks,
Paul.

Hi Jon,
I don't think the 1 maids quartes is rentable it's more like a summer house. Yes, 3 apts , 2 bedroom is $1200, 3 bdrms are between $1600 and $1750.

Thanks all, I'm not looking to commit a fraud I have way too much to loose. My father is going to occupy the maids quarters which is really a 1 bedroom standalone house in the backyard. the main house is not a duplex, but a 3 level house that has a 2 bedroom on 1st floor, 3 bedroom on 2nd, and 3 bedroom on 3d.

It is 3 separate apartments and for whatever reason the previous owner had 3 separate electrical meters put in.

The property is located in the Bronx,NY. The rents here are pretty high as well as the property prices, it's not a $60K house.

thanks for all the input.

Hi all,
please help me evaluate this deal. Legal 2 family with 3 electrial meters and "maid's quorters" in the backyard. It's a bank REO.
Asking price - $349,999.
Cost of repairs - $25K - $30K
My offer price - $230, hopefully they bank will let it go for $250K
My friend owns a 3 family house around the corner with $4800 per month rent roll. I can get around the same for this house.
So, here is my calculation -
Gross rent ~ $4800
Mtgt amt ~ with 5% down, $248,500
Cash out of pocket $12.5 down + $10K closing + $30K(repairs) = $42.5
taxes - $1300 per year
ins - $1200
monthly pmt - $1489 + $220(taxes +ins) = $1709.
Expenses 45% - $2000 per month.
Net income - $1091 or $363 per unit.
Cash ROI - ~25%
What do you think?

Also, 2 questions.
1. Would it make sense to claim this prop as OO (I alredy own a house)
2. Would section 8 have a problem with renting a 3d apt that's not technically "legal" but has a separate electrical meter?

wow! Thank you guys! I really appreciate how everyone is so helpfull and it's hard to get any free advice these. I hope that some day I can pay your back with my advice or suggestion.
I don't have a hard ship but I do have my money (whatever is left of it) tied up in the properties, plus I have 2 mortgages on back. All this prevents me from purchasing more properties because they will only allow up to 4 mortgages these days. Also, on one of the properties i have a partner who is on the deed but not on the mortgage papers and becasue of that I'm having a hard time collecting money from him. It's a mess and like I said bad decisions on my part so getting rid of properties would be a good option, even if it costs me. The other option is too hold but how long???

I have 2 properties that I'm trying to off load. The properties are located in Philly and it's hard for me to manage remotely. I collect $875 from each. I cannot sell it in this market because I'll be loosing $50k. I was thinking about doing a short sale. I have a very high 790 credit score and don't want it to ruin my credit. Can someone tell me the seller's repercussion of doing a short sale? As always, your input is greatly appreciated.
Paul

Both properties are in Phily, PA