All Forum Posts by: Tom Wagner

Yep, high COL area! In NYC metro (and other expensive areas, San Francisco, Los Angeles, Boston, etc.) the max for a fourplex is $1,472,550.

 Hi Joe! Thanks for the note and definitely agree. I’ve run the numbers using the forecasted new tax valuation and am hoping to take advantage of a five-year tax abatement.

Where in NJ are you investing and what are you investing in?

While it is more complicated than this, the main reason is that a turn key property like this below the FHA max loan amount does not exist in my area. I suppose that could mean my ARV is actually higher than $1.5mm.

And I wanted as *big* of loan/ARV as possible because I wanted to maximize the appreciation base. $1mm appreciating at 2%/yr is $20k, while $1.5m appreciating at 2%/yr is $30k.

For me, it’s more than just cash flow.

Cash flow + appreciation + debt pay down + tax benefits = NWROI (Net Worth ROI)

Location: Jersey City, NJ

Property Type: Fourplex gut renovation, financed with a 203k loan

Purchase price: $999,000

Renovation amount: $460,000

ARV: $1,500,000

Projected rental income: $10k/mo

Annual income: $120,000

Net Operating Income: $69,500 (5% vacancy / CapEx / R&M, 10% property management)

Unlevered Yield on Cost: 4.63%

Annual Cash Flow: (12,028)

I'll be in the red from a cash flow perspective early, but I am still super stoked about the deal. 20 minutes from Manhattan in Downtown Jersey City, a rapidly appreciating part of the city that feels similar to Brooklyn.

Really trying to take advantage of the FHA loan by levering up to a $1.45mm loan (which is within $30k of max loan amount). Debt paydown will be $33k+ in year one and any appreciation on a $1.5mm base is big $$$.

More detail can be found in my Twitter thread on the deal:

https://twitter.com/twbuilds/status/1332807426056335366?s=20

When evaluating a market for cash flow, one thing I think people miss is a market's *potential* for cash flow. Cleveland and Columbus both have great cash flow, though it may be lower in Columbus now than it was a few years ago.

Consider the following two hypothetical but realistic deals:

Columbus SFH, $250k, $2,200 in rental income

Cleveland SFH, $250k, $2,600 in rental income

When evaluating a deal for cash flow people many people would lean towards the Cleveland house, but I think that would be a mistake, as Columbus has a much higher likelihood of rental and property appreciation, for a variety of reasons.

Sure, cash flow is important, but singularly focusing on cash flow is a mistake.

No investments on Spokane, but want to chime in and say that I am very, very bullish on Spokane after spending two weeks there in August. The waterfront area downtown is beautiful for as far as the eye can see in both directions.

As remote work takes hold and knowledge workers look to escape Seattle, I can definitely see it becoming an Austin-esque city in the PNW.

I wish I would've known about the increased cost associated with buying a property in a flood zone. On my $1,500,000 fourplex bought with ~$55,000 down via FHA the flood insurance runs over $350/month. The numbers still work but it cuts deep into my cash flow.

Hi Nicholas! what ever happened with this one? Did you move forward with 203k?

Hi Nick! Super curious to hear how this worked out for you -- did you follow through with this ground-up 203k new construction?

Has anyone successfully pulled this off? Super curious!