All Forum Posts by: Ryan Legat

I'm looking over your Evaluation sheet and some information seems to be missing and/or misplaced. 

You want to first figure out the PMI (Principal, Mortgage, Insurance) payments each month. I don't see it clearly listed in one spot on your sheet. I see taxes in one spot and I see a Mortgage cell with 11% (is that the interest rate?) There are mortgage calculators online but based upon your down payment of 11k, purchase price of 250k, 7 percent interest rate and insurance of 55 a month I came up with around 1300.00 a month PMI payment.

You also want to figure out all the utilities that the tenant won't be responsible for. Water, Gas, electricity, etc. Are the meters for these separate? If not  you will want to account for that in your expenses. If any are separately metered than you will have to only pay that expense while you are living there. It will help if you run 2 sets of numbers, one while you are an occupant, and one when you move out. 

I ran some quick numbers myself and if you do get the property between 250k - 300k and charge 1700 for rent most of your PMI, maintenance, and utilities will be paid for by the tenant. Of course when you move out the next tenant will pay 1700 a month which will be all profit. It varies by location but where I live that would be great cash flow and an ideal situation for a house hack. The deal looks even better when you consider the money you will be saving by not paying rent out of pocket each month.

As was stated earlier the more units the higher the gross income will typically be (but not always) and having an extra unit will provide a cushion in case on unit is vacant. The possibility of both being vacant is a lot less likely, so at least some cash will come in as opposed to none. 

Buy it really depends on the initial deal, you make money you buy, and I wouldn't rule out a duplex if you find a slamming deal. Typically for house hacks if you find a scenario where you can leverage the rent to pay all debt service, utilities, and most maintenance costs you are in a good spot. 

And one unit being vacant might not be too big a deal if you live in a high demand area for apartments. In that case the vacancy time might only depend on how picky you want to be. 

Eviction processes depend on state laws and the currently locality you live in. Usually small filing fees are involved which are dependant on the number of tenants and amount of rent owed (if evicting due to non-payment). The process of filing itself isn't too overwhelming. 

 Even if you do live in a "landlord friendly" location the eviction itself could be uncertain depending on the District Justice involved in the case. I've seen some Judges grant leniency, in what I believed to be, very cut and dry cases (For example a tenant didn't show up and was granted a reprieve). These situations can be frustrating and complicate the whole process.   

One good thing about going to court is you will gain insight into how the Judge stands on non - conformity issues with tenants. There has been times I delayed going to court only to find out the Judge took a more hardline stance with tenants and should have filed earlier. Of course always consult with a lawyer for legal advice. 

If you have anxieties or introverted I would suggest leaving the court process up to a property manager or lawyer. Court can be a nerve racking experience for anybody. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $185,000
Cash invested: $10,000

Duplex. Bought with FHA loan/house hack. Great cash flow and appreciation.