All Forum Posts by: Seth Terramane

Hey BPers.  We're about to close on our first property next week and we're quite excited. We're in Fitchburg MA and I'm looking for recommendations for subcontractors in the area. Specifically, I need an electrician, a gutter person, a painter, and a cleaning crew, but if you have other good rec's I'd certainly take them. Anyone know of good people in the Northern Worcester County area in Massachusetts? 

Thanks!

@Tim Herman and @Account Closed

Thanks for advice Tim and Kyle. Tim you're definitely right, I didn't take into account enough CAPEX. And I was planning to take care of the lawn and daily maintenance to keep costs down. And you're right on the money about the rents - 70%. I didn't realize that only a percentage of the rental income is taken into account (spoke with my broker yesterday).

Kyle, when I run the numbers, with the third unit, even at asking price it seems it will cash flow. But like Tim asked, there is some ambiguity about whether it can be a legal triplex. Which actually astounds me that the zoning board cannot give me a clear answer - suggested asking a lawyer. That might be normal but I wasn't expecting it. 

I'm going to run the numbers again but for a first purchase, this might have just been an exercise for practice. 

Thanks again guys. 

Hi all.

My wife and I are just starting out as REI and we're looking for/at our first purchase. We're working with an agent and mortgage broker we met here on BP and our strategy is to house hack to get into the game, refinance, pull our investment and equity out, and repeat. BRRRR essentially. If you all would be so kind, I need some advice on a property we like.

The house details

Market:
Boston West / Worcester Area, great schools, close to quaint downtown, 15% rentals in town, 57% with college degree, AGI of $90k, population growth of 3.2% in last 7 years, unemployment rate of 4%.

Property:
Large old farmhouse that has been split into 2 two-bedroom units and those units have been modernized. There is an unfinished third apartment that needs renovation to make it livable (the one we’d live in). A large 5 bay garage with essentially a 3-level workshop above the bays. This is an estate sale. Asking price is $475k. Besides the third unit, the outside and grounds need updating.

Currently:
The two livable units are rented to long time renters. Rents are undervalued by $300-$600, given comps, agent recommendation, and rent evaluating sites. All units have separate utilities.

Financing:
FHA 203k loan, with 3.5% down. Rough (very) estimate for renovation and updating is $35-$40k

Questions

• When evaluating a property as a deal that we’ll be living in, do I take into account the rent of the unit we’ll be occupying?
• In this scenario, it seems there is a potential to expand, creating new units out of the large workshop above the garage. Do (how do) I take that into account?
• Using an FHA construction loan, I still take the reno costs into the offer price, correct? The property seems overvalued as 2 units, but taking the reno costs into account, we're talking a significant price-drop from the asking. Does that seem, right?
• For determining income, the rental income is taken into account, but how do I take into account the at-market rents? Provide proof of comp rents in the area? Rentometer report? Can’t do it?

Thanks much for your time and expertise. If anyone has something to add, please feel free to do so. I’m sure there is info to ask for that I don’t know I don’t know.

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