All Forum Posts by: Solomon Fulop

Don't do it! Unless you can stomach the idea of being very limited in your ability to protect/ control a property and/or have 12 months of rent set aside in cash in case your tenant stops paying. If another state close to your border is an option I would go that route.

I would like to know the same thing that @Dalwin Garcia is asking. It seems that lenders for these types of properties are hard to come by. Does anyone have any advice regarding lenders?

@Andrew Clark?

Thanks in advance.

@Nina Grayson the lender will absolutely roll in the costs and its likely to be required because the underwriters are gonna have a problem with it in its current state. My plan is to hold it 10+ years rehabbing the units during vacancies and then get the rents up further.

thank you!

@Brian Zaug  The assessment and the market value are two completely different things, no?  So if I purchase a property at that price, it doesn't mean that the property will assess for that value, although, it may assess higher it wouldn't necessarily assess at the purchase price, correct?  This house was recently assessed in 2017, but I am not 100% sure, or where to find out, if that would trigger a reassessment.

@Will C.

That is one of the biggest reasons I am here asking as an attempt to make sure I don't lose an EMD at the seller is asking for a 2k EMD. The knob and tube will be mostly replaced although I haven't figured out whether to re-trade or meet them in the middle or what yet. NACA will care about that if it's in the inspection which some of it is. Anything related to that in the home inspection will have to be addressed. As you astutely mentioned previously based on the assessment the price seems high and although I don't want to be a re-trader, I'm also not going to eat the cost of 10k worth of electrical on a house that I'm paying that much for.

Thank you!

@Will C.  First and foremost, thank you for your input!

1. Because interest compounds and %5 interest on a large purchase vs 2% interest on a large purchase like this will save 10's of thousands of dollars in the long term even if you consider some of that is being paid up front. This particular property isn't a short play, this is something I plan to hold on to.  

2.  I agree with you, it is extreme. Yes I am working with a realtor; her and her husband are also flippers in the surrounding suburban areas.  There are houses the next major road (5 short blocks away) up that are going for 400-600,000$ and those prices are moving in the direction of where this house is based on development going on around it which will hopefully make it great to rent because people want to live within walking distance to the local coffee shop (15-20 min walk), a farmers market (15-20 min walk), 2 grocery stores (15-25 mins in either direction) . Those houses are in better condition than this one is if I'm being honest, but they are equally as old if not older in some cases.  To be honest, I don't love the price but there are rehabbed (flips) houses in the area (newer kitchens and bathrooms) that are going for $330,000-360,000.  This particular property would take work to get to that point tbh, but it is unique in that it is large, has off street parking (rareish) in these neighborhoods, and has the units split across 2 structures (rare in this particular 10 block radius).  I don't know if the 2 structures is a gift or a curse given the ages of them.  This does make it tricky to comp, but I looked at the price for square foot and its somewhere in the middle if I take into account "like structures", that is to say, total BR / BA, square footage, within that particular neighborhood.

I say all of this because I still don't know at this point due to lack of experience if the location is worth overpaying a bit combined with the opportunity to get the rents up and be able to handle the vacancies easier because its a 4-unit.

You all have been a great help to me working that out, so thank you all for your responses.

@Draven Stallings Thank you for replying!  I was hoping only to do the bits that require bringing it up to code for safety purposes as the cost to do the electrical alone is going to be substantial without ripping into the plaster and lathe which is added expense.  A lot of electricians seem reluctant to fish wires into walls and I don't blame them as it can be time consuming and frustrating.

The appraisal number means that the city / county came to the house and appraised the house for $83,000 last year.  Maybe someone else has different experience here, but it seems that in my city at least, these numbers are very rarely a reflection of a houses worth or market value.

@Justin Kane The knob and tube bits are using copper wires not aluminum wires. I just got the quote back from the electrician I had look at it and he quoted me 14K for the job which is likely going to require renegotiation in the price as I am not comfortable paying for such a major repair when the guy is trying to sell the property at full retail with good working mechanicals which is not the case.

Thank you!

@Nina Grayson Wow, thank you for running that avg rent number as I was just in the process of talking to some property managers to get a more accurate depiction than rentometer, so I appreciate that a lot!

I am definitely accounting for fixes and knowing that I need to brace for some vacancy regarding getting that rent up within the first 6 months. I just got an estimate for some electrical work which may be a deal breaking at 14k for the two houses and it needs to be done prior to close I'd assume. 

The 30% of the $2100 is me paying "rent"  to live in one of the units even though the mortgage would be covered by the numbers I've put in, but ultimately I am putting away money for maintenance and repairs in a separate account because thats the responsible thing to do. Does that make more sense? 

@Kyler Cook  Thank you for your input.  I know the numbers are tight which is why I am trying to get outside opinions.  

I cant help but wonder if the opportunity cost (more units means more opportunity for rents and protects from vacancy) is worth the offset cost of repairs on a 4-unit over time especially because there are more roofs and kitchens, etc.  This is probably my largest source of contention at the moment as to whether Id be better off going off with a cheaper duplex with less units, a bit less opportunity, but less repairs vs the alternative.