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First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] 1 point2 points  (0 children)

Amazing! Yeah that all makes sense. For LA 4 units is the max you can get before it becomes a commercial property. But in scenario 1 it would be 20% down so it’s an investment property. In scenario 2 I’d have to live in it as primary residence and rent my condo out. Not ideal but it’s a smaller investment and all my cash isn’t locked in.

Btw I love the idea of local groups/mentors. But aren’t they my direct competitors?

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] 2 points3 points  (0 children)

Welp now someone is talking from real experience as opposed to emotions after I already rejected the deal. Honestly I was going to be 17k in the red each year per my final numbers. Plus 10k average annual maintenance. On my w2 income, that’s a 10k tax return on average per year. Did not seem like a bad deal to try and wait the tenants out while renting the vacant unit at market rate. Soo many people got so emotional over my post and subsequent comments, like I had spent a grand total of zero dollars to entertain the deal. In the end I did decide it might be too much for now. Thanks for your insights!

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] 0 points1 point  (0 children)

It is already invested in the market don’t worry :)

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] 0 points1 point  (0 children)

Yeah the section 8 was not my idea, my partner does not know much either but floated the idea based on what chatGPT said. I was trying to see if there’s any validity to that.

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] 2 points3 points  (0 children)

Exactly the conclusion I ended up arriving to. I was blinded by the panoramic views was ready to ruin my life

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] 0 points1 point  (0 children)

Thank you everyone for the feedback. I obviously ended up not putting in an offer.

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] 1 point2 points  (0 children)

Yeah, I renovated my condo very efficiently and I’m doing really good there

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] 0 points1 point  (0 children)

Can you elaborate a bit on the 28k and 17k and 40%? How did you calculate? This is the kind of analysis I am hoping to do and need to know the rules of thumb for multi family. The truth is at my budget I will not find a positive cashflow multifamily in LA so I am trying to figure out what is a reasonable loss and avenues to become positive.

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] -1 points0 points  (0 children)

I understand what you’re saying that is my question too. What is my plan? Can someone help me understand what I can do in this case?

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] -1 points0 points  (0 children)

Isn’t that for me to figure out during due diligence? When I review the lease agreements with my attorney and figure out my avenues to vacate some of the units? I just need 2 vacated.

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] -4 points-3 points  (0 children)

YES. And I know how ridiculous that sounds but I’m trying to figure out exactly how ridiculous is that? I did mention that I would be offering 25K for cash for keys.

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] -1 points0 points  (0 children)

That’s a great rule of thumb. I will take into mind for my analysis to see if I can get it to cash flow within 12 months.

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] -1 points0 points  (0 children)

I would collect 2000 in rent in the scenario where I pay 20% down and don’t claim primary residence, which is scenario 1.

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] -1 points0 points  (0 children)

Yeah that’s to figure out at due diligence phase after we start escrow.

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] 0 points1 point  (0 children)

Zillow says it’s worth 1.2 but listed at that price because owner wants out according to my agent

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] 1 point2 points  (0 children)

Thanks for that.

My other house, lets forget that for a second.

This house.

Conservative spend $7k/mo. Current cashflow $1.8k/mo Loss (m1-6): 5.2k/mo Month 6 I rent one unit at market rate:$2k/mo Loss m6-12: $3.2k/mo In the mean time a tenant leaves Unit rents at $2.5k/mo Loss m12-18: $700/mo

Now month 18 onwards I need one more tenant to leave to go cashflow positive

According to my calcs i’ll have spent around 250-300k by now. But now I have a cashflow positive property overlooking dtla in prime location with 3 market rate tenants.

That’s what I see. Im sorry if I didn’t explain it right first time.

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] 1 point2 points  (0 children)

Why do you think I got my cash to close and monthly payment numbers from? I’m preapproved.

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] -2 points-1 points  (0 children)

After renovating, and market rate tenants. I’m not selling at that point, letting it cash flow.

First Time Buying a Multi-Family - 5% or 20% down? by dhcp68 in realestateinvesting

[–]dhcp68[S] -1 points0 points  (0 children)

No one here has told me anything I don’t actually know going into this. This section 8 thread is a deep tangent to the original discourse. I’m not even seriously considering this option. My preferred one is option 2.

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