All Forum Posts by: William Donnelly

Hello Bigger Pockets,

I am a United States Marine, and i've been looking to break into small multi-family investing for a few years now. After a lot of research and analysis, I have finally put in my first offer!

The property is a 5 year old duplex in Southern Missouri. Each unit is 1800 sq ft with high end features, such as: Granite counter tops, top of the line cabinets and vanities, 10 ft ceilings with crown molding, top of the line appliances, wide open floor plans with travertine floors, 3 beds 2.5 baths with a garage and an upstairs balcony. VERY NICE units in a B+ neighborhood. Heres the catch...

This property is a foreclosure listed at 230k. Only one side of the duplex is currently rented out, and to a Section 8 tenant playing a mere 800 per month. Their lease is up in January 2016. The comps in the area state that this property should bring in at least 1100 per month.

The exterior needs some maintenance, mostly cosmetic including minor water damage on trip boards and paint. The driveway was never completed from the original construction. The interior needs minor touch up as well as paint and new carpet in the upstairs.

My contractor did a walk through and estimated the repairs total 60k. I could honestly do all but about 20k of the work myself as I live in one side for a year.

On top of that, the listing agent knows the bank president personally, and has practically begged us every day for the past few weeks to put in an offer, ANY OFFER.

So I did. Considering all of the above, using the rental property analysis tool here on Bigger Pockets, I can afford to pay 150-160k max for this property. All while taking into consideration the lower than market tenant for a few months, repairs and all other costs of occupying this property. 

From the asking price of 230k, my offer to the bank was for 140k, contingent upon inspection and appraisal. I pay my own closing.

The bank countered yesterday for 173k.

After discussing this with my lender, He stated that they would need to fix the exterior water damage before closing.

They are obviously taking my low offer seriously and are willing to play ball. Whats my next move? I was thinking of countering with 150k, same contingencies, and then in addition to add the water damage repair before closing. Any thoughts?

Hello Bigger Pockets,

I am a United States Marine, and i've been looking to break into small multi-family investing for a few years now. After a lot of research and analysis, I have finally put in my first offer!

The property is a 5 year old duplex in Southern Missouri. Each unit is 1800 sq ft with high end features, such as: Granite counter tops, top of the line cabinets and vanities, 10 ft ceilings with crown molding, top of the line appliances, wide open floor plans with travertine floors, 3 beds 2.5 baths with a garage and an upstairs balcony. VERY NICE units in a B+ neighborhood. Heres the catch...

This property is a foreclosure listed at 230k. Only one side of the duplex is currently rented out, and to a Section 8 tenant playing a mere 800 per month. Their lease is up in January 2016. The comps in the area state that this property should bring in at least 1100 per month.

The exterior needs some maintenance, mostly cosmetic including minor water damage on trip boards and paint. The driveway was never completed from the original construction. The interior needs minor touch up as well as paint and new carpet in the upstairs.

My contractor did a walk through and estimated the repairs total 60k. I could honestly do all but about 20k of the work myself as I live in one side for a year.

On top of that, the listing agent knows the bank president personally, and has practically begged us every day for the past few weeks to put in an offer, ANY OFFER.

So I did. Considering all of the above, using the rental property analysis tool here on Bigger Pockets, I can afford to pay 150-160k max for this property. All while taking into consideration the lower than market tenant for a few months, repairs and all other costs of occupying this property. 

From the asking price of 230k, my offer to the bank was for 140k, contingent upon inspection and appraisal. I pay my own closing.

The bank countered yesterday for 173k.

After discussing this with my lender, He stated that they would need to fix the exterior water damage before closing.

They are obviously taking my low offer seriously and are willing to play ball. Whats my next move? I was thinking of countering with 150k, same contingencies, and then in addition to add the water damage repair before closing. Any thoughts?

Thanks for all the great advice! We haven't ran across any C properties in B neighborhoods yet, but good idea to take a C and turn it into a B. As far as making an offer on the foreclosure, the listing agent knows the bankers personally and is practically begging us to put in ANY offer. However, time to sit around and wait for a response from a bank foreclosure is just something I don't have right now. On a positive note, I have recently found a duplex that appears to be a great investment opportunity. I'd prefer 3 or more units, but will be able to make it work with 2. I'll be posting more to come on that soon!

Hello All!

I am a new investor, focusing on small multifamily properties as an owner occupant. Forcing appreciation, new every two, and eventually moving to own a larger number of units. I have been doing research on this, and on bigger pockets.com, for several years altogether and I am finally ready to make my first purchase!

I'm currently active duty Marine corps. I'm using the VA loan to buy a 2-4 unit property. However, I have hit somewhat of a wall. I have been pre approved by my lender and actively searching for properties with realtors in south MS for about 6 months now. The problem is, almost ALL of the 2-4 family properties are lower income "C". I would like to stick with "B" class properties for several reasons. The main one being my family and I will be owner occupants.

Other than simply waiting around for another good multi to hit the market, or driving for dollars, etc, which i'm still doing- i'm currently left with two options:

1) Theres a "A" class duplex, higher end luxury, foreclosure that has been on the market several months. It only needs minor repairs according to the contractors i've had write up estimates. Comparable rents are 1000-1300 per month. Right now, one side of the duplex is occupied by section 8 paying only 800 per month, lease ending in Jan. 2016. The listing agent says there has been no interest in the purchase of the duplex so far, as the bank is asking top dollar 250k. The listing agent says to just make an offer, ANY offer, and the bank will likely consider, as the bank still owes money on the property as well.

My realtor and I are thinking about offering 70k below asking. I've ran the bigger pockets rental properties calculator analysis, and that would be a good purchase price for my to make this property a successful investment. My question is, how low can I go from the asking price for a "reasonable" offer on this type of foreclosure?

2) I'm also interested in new construction. The small multi family market here is not very strong. So for me to build one would eliminate the incredibly difficult task of finding a decent property to purchase. I am looking to close on the mortgage BEFORE construction begins, so that all rates and stipulations are locked in now as opposed to over a year from now. I know this can be done, as i've ran across several articles of people who've done it. I just don't know if it can be done with a VA loan. Does anyone have any insight on how to close prior to beginning construction on custom builds?

Thanks in advance!

Hello All!

I am a new investor, focusing on small multifamily properties as an owner occupant. Forcing appreciation, new every two, and eventually moving to own a larger number of units. I have been doing research on this, and on bigger pockets.com, for several years altogether and I am finally ready to make my first purchase!

I'm currently active duty Marine corps. I'm using the VA loan to buy a 2-4 unit property. However, I have hit somewhat of a wall. I have been pre approved by my lender and actively searching for properties with realtors in south MS for about 6 months now. The problem is, almost ALL of the 2-4 family properties are lower income "C". I would like to stick with "B" class properties for several reasons. The main one being my family and I will be owner occupants.

Other than simply waiting around for another good multi to hit the market, or driving for dollars, etc, which i'm still doing- i'm currently left with two options:

1) Theres a "A" class duplex, higher end luxury, foreclosure that has been on the market several months. It only needs minor repairs according to the contractors i've had write up estimates. Comparable rents are 1000-1300 per month. Right now, one side of the duplex is occupied by section 8 paying only 800 per month, lease ending in Jan. 2016. The listing agent says there has been no interest in the purchase of the duplex so far, as the bank is asking top dollar 250k. The listing agent says to just make an offer, ANY offer, and the bank will likely consider, as the bank still owes money on the property as well. 

My realtor and I are thinking about offering 70k below asking. I've ran the bigger pockets rental properties calculator analysis, and that would be a good purchase price for my to make this property a successful investment. My question is, how low can I go from the asking price for a "reasonable" offer on this type of foreclosure?

2) I'm also interested in new construction. The small multi family market here is not very strong. So for me to build one would eliminate the incredibly difficult task of finding a decent property to purchase. I am looking to close on the mortgage BEFORE construction begins, so that all rates and stipulations are locked in now as opposed to over a year from now. I know this can be done, as i've ran across several articles of people who've done it. I just don't know if it can be done with a VA loan. Does anyone have any insight on how to close prior to beginning construction on custom builds?

Thanks in advance!

Hello all. I have an interesting Duplex i'm looking at purchasing and occupying one side for a year while renting out the other side.

One side is currently occupied by section 8 tenant who only pays $800, when the FMR is closer to $1300. Apparently HUD says FMR is $800 but this is not the case. Tenants lease is up Jan 2016. The duplex is high end 3br 2.5ba with garage and extra land for possibly building more units (The lot is 100'x250'). 2 floors with a garage and balcony patio for each unit. Travertine floors and high end fixtures throughout. Since its only a few years old it will not need any major repairs any time soon. Since it is high end, no updates or renovations will be needed either.

Purchase Price: $230,000.00

Year built: 2009

Income expense ratio: 1.13%

Gross Rent Multiplier: 7.37

Debt Coverage Ratio: 1.48%

Monthly income: $2600 (assuming both sides occupied and no section 8 tenant)

Monthly Expenses: $2070

Monthly Cash Flow: $530

My main question is: Since Ill be occupying one side for a year, will it be worth it to have negative cash flow for a few months to a year while the section 8 tenant is occupying and I am occupying the other side? Income will increase $800 to $1300 Jan 2016, and then income will increase again once I move out in a year. I also really like the idea of having extra land included with the purchase so that I may start new construction on more units.

Basically, is it a good plan to start with negative cash flow will owner occupant?

Thank you for reading

Hello all, I'm currently looking to invest in small multi-family properties. Can anyone give the pro-cons to building new vs. buying existing? This will be in MS where land costs are low, and flat, so not a huge amount of land development needed minus obvious utility hook-ups etc... Are there companies that specialize in this development finding land for you and building from nothing in an all inclusive package? If so, does anyone know of these type of developers located in MS?

That's exactly the kind of responses I was looking for! Thanks a ton. I should know more of these critical answers in the coming weeks. It's in MS, not sure why I put Alabama lol

Hello all, Im currently looking to break into real estate by investing in a multi family residential. I've found a fourplex of 4 town homes, 2B/2BA, in a decent location in Alabama listed for $220k. It has been completely remodeled with new cabinets, stainless steel appliances, carpet, paint ETC. It almost has that 'luxury' feel. Comparable rentals in the area are going for at least $750 per month. this appears to be a good deal and potentially profitable investment. The only catch is, all four units are currently vacant. Can anyone provide any insight as to why this property has been on the market for 4 months now, and is still at the original asking price? And why does this sound too good to be true? Thanks, SGT Donnelly USMC

Hello all. I am currently a Marine and trying to break into the residential real estate world in the Southern MS region. I have already found this website extremely beneficial and I look forward to learning from y'all and sharing any insight I have as we! Best! SGT Will Donnelly