All Forum Posts by: Alex Forest

Originally posted by @Carrie Easton:

as someone who is actively looking for a new primary residence - the rates of shot up like crazy. we just put in an offer on a house that was $10k less than our previous offer (different house) but out monthly payment would be $300 more.  hopefully the market will be less competitive with rates climbing back up to pre-pandemic levels.

 How much was the rate hike?  I saw some numbers that implied the 30 yr went up about 0.5% over the last few weeks, but am wondering if you're seeing much more with the same lender, more recently?

@Joseph McCrillis 

Property A (main folder) Each below are subfolders within:

1_ Leases

2_Business LLC_Legal_Loan docs

3_Rental Analysis

4_Repair_Maint

5_ Listings

6_Pics

Repeat for each property.

#1 then has subfolders for each year. #3 has become a folder to do periodic rental rate analysis checks over time. I log past rates for comparison over time; I also like to check in on the same certain other properties to see how they have changed over time (if listed on a website).  #5 has each time its been listed with subfolder dated, the posting, stats, Applications, notes, etc.  Once the Applicant becomes a tenant, they move to folder #1.  

@Matt Huber Take a look at this thread and read through.  Same topic. Perhaps youll want to reach out to others on that thread.

https://www.biggerpockets.com/...

Originally posted by @Matt Huber:

@Alex Forest I noodled this over with a loan originator today. She read directly from the Fannie guidelines. We found that it doesn't qualify as a single family with ADU because "The ADU must be subordinate in size to the primary dwelling." In my case, both houses are the same size. (They are essentially duplicates of the same house.) Further, the Fannie definition of a 2-4 unit property is "A property that consists of a structure that provides living space (dwelling units) for two to four families." It seems to me that this specifies that the two units must be contained in a single structure in order to be eligible. The property I'm looking at has a total of 2 units in 2 separate structures.

So, unless there is some guideline that specifie properties with 2 units in 2 structures are permitted, I think that getting this funded with a conforming product is unlikely. @Matt Devincenzo if you have a precedent or any authoritative reference, I'd love to hear it. I'm not sure I can structure this deal to work with a non-QM product.

Now, is it possible that one of the houses is a little smaller than the other? (ie "subordinate in size) Sure; after all, two stick built houses constructed to the same specification will probably be slightly different (if you want to get out a yardstick). Is it possible that an appraiser would report this as an SFR with ADU? Again, yes, but I unlikely I think. But even if you made it over this hurdle, the next problem is finding good comps to support the sale price.

And to think: I expected this to be a relatively clean deal!

 The one I was referring to was a 3 bdm (1300sf) with the other a 4 bdm (1500sf). That is one difference. I guess what the lender your talking to is saying is that because the two you have are identical, they don't see one as being subordinate, such that they would not consider it a one unit with accessory.  In the example I provided, they did consider it subordinate.

The guidelines in the link provided above by Matt D. are actually quite short, and do seem to say yours could qualify as a detached two unit, no?  If this is a good deal and your looking to move on it, I'd proactively look for comps in the area (even reach out to the county assessment office) that are similar and meet with the Appraiser to share what you have.

Originally posted by @Matt Huber:

@Ned Carey I agree, sounds like they just use PITI. I've talked to a couple of non-QM lenders today and the rates and terms are quite a bit better than I expected.

@Matt Devincenzo Yes, it is two single family homes on one parcel. The houses are almost identical. Each home is 3 beds, 2 baths, very much like tract homes (but no garage). So you're saying they should qualify for conventional financing?

 They may. Two houses with two addresses and separate meters on one parcel.  It is possible for it to fall under conventional. Im curious what others knowledgeable about the guidelines say, but I do know in some cases this can be viewed as a single family with accessory unit (and may be characterized as a legal nonconforming use depending on the zoning and ordinance) and be conventional at an investor rate.  The Appraiser is the eyes and ears of the lender and how they characterize it on the Appraisal matters. Also, whether or not they are able to get comps that are similar nearby.  Are there similar such properties nearby?

Take a look at this article that plots price to rents over time, pegging the ratio value of 1.0 to January 2000. It's a gross national representation. There is correlation, but times when the two are out of step for a period of time too.

https://calculatedrisk.substac...

@Chris Duffy recommend not asking for more. You already have two months and just got a decent rate increase. If shes good, be happy with that. I would be very annoyed as tenant. In the new lease, just say security deposit is XX and it has already been received.  

When I was in Yellowstone in the winter of 2012, I rented a snowmobile and went on a tour. It was beautiful, very few visitors, tons of snow.  The buffalo would walk on the roads and we would slowly pass each other. I asked the guide why they walked the roads instead of in the wilderness and away from people.  He said the snow was deep and it took a lot of energy for them to walk through.  They needed to take in as many easy calories as they could and expend as few as possible.  The road was easy to walk on. That message stuck with me, and really, I think can apply to many business and corporate settings.

I think the element of time should beppart of the OP question.  Is the goal trying to be met in just a few years (so you can get out of your job) or as part of a retirement plan long term.  If the latter, it doesn't take too many units to achieve once paid off.  We've taken to small duplexes and are seeing $1k cash flow per building (after a bit) while mortgaged and then will be around $2k+ ( after ins, taxes) once paid off at current rents.  With five of these, it can yield good results if can wait, and while the level of effort is there, it's sustainable with a full time W2, and can't be nearly as much effort as having many dozens of doors that are leveraged for a very long time.  Also, I know quite a few folks don't seem to like them, but 15 year mortgages do offer lower atteactive rates than 30 and committ you to that shorter timeframe.  @Dan Bass

Originally posted by @Gary B.:

Hi there, I have a multi-family property and one of the tenant ready to do a handyman work for me at the property. What sort of insurance I need or he needs to work for me on repair jobs at property?

Best, Gary

Agree with the fella above, go look for the thread on BP about the handyman that fell down the roof. It is active now.  He was also a tenant. Poor guy got very hurt. 

@Taylor L. they don't seem to provide much detail that I can see. The original report by redfin, which the article references, is really about how Nov marked the lowest level of bidding since Dec of 2020 nationally, dropping below 60%.   Within the report though, Richmond metro ranks the highest, which is what the article picked up on.

@Russell Brazil Yes, I can see how it makes sense too. I lived in both locations and recall as I moved to Richmond thinking, cost of living felt like half compared to Dc at the time (decade ago), and if one could retain the income of a DC metro region but live in the Richmond region, they could do very well(same goes for small businesses that are located in central va but do business in Nova/DC). 

There was another interesting tidbit this morning I came across, an interview with the outgoing Virginia Economic Developmemt Director ...he offered an interesting prognosis that the future workforce would likely not be all remote (he thought less than10% of businesses would be fully remote), but he did think most would be hybrid, partly in the office and partly remote.  I think this will be an important factor for the region, what the future workplace looks like.  And two years into the pandemic, it seems less like things may 'snap back' to what they were, and maybe some of the trends will start to hold.