All Forum Posts by: Allen L.

Hey @Nico Savoia, I really admire your motivation and drive towards REI! One question I have for you is... putting real estate aside, would you want to experience the college life? For many, college is not only where one gains specialized knowledge but also where one figures out themselves and builds life long friendships/relationships. If there's any part of you that wants to experience that, this is the time to do it. While it's true you can always go back to school later on, it's harder to do so once you've left the academic setting. It's totally up to you of course, and there's no right or wrong answer. And regardless of which path you choose, if you're passionate enough about something (which it sounds like you are!) you're going to find a way to make time to do it. I have a full-time day job which pays the bills, but I also work as a real estate agent and invest in rental properties. :)

And on the real estate agent side of things, it’s going to be hard when you first start out. It’s all about finding your first clients and having the right support in place (mentors, your broker, etc) to help you get through those first few transactions. You’re going to learn a lot in every transaction, but once you’ve gotten those first few under your belt, you’ll start to get the hang of things and become more knowledgeable and confident in front of your clients. 

Hit me up if you want to bounce any of your thoughts and ideas!

Congrats and welcome to BP! The podcasts really help. Once you listen to about 20 episodes or so, you'll have a good sense on what people are doing and how you can get started. The podcasts are great not only from a knowledge perspective, but also from a motivation standpoint as well!

Agreed, no right or wrong answer here. But personally I feel borrowing an extra $10K at <3% is a great deal, despite the incremental property taxes you'd have to pay. You can use this money to do repairs, offset closing costs, invest, or even start putting it towards savings for your next property. ;) 

@Quentin Inniss

In addition to the suggestions from @Alexander K, get your own credit card as soon as you’re able to and start building some credit history. Continue to talk to people on the forums, listen to podcasts, and stay motivated! You’re already doing the right thing by hanging out here, and you’re well ahead of the game for your age!

@Christian Bernhagen I didn't invest in Chicago for the 203k loan, although I did use a national lender for this. I'm based in SF and started out locally, but now venturing to out of state properties, particularly the midwest!

@Christian Bernhagen

I was in a similar situation buying my first home where the repairs exceed the amount of funds that I had, and I would have not been be able to close with a normal FHA loan. I used a FHA 203k loan which allowed me to finance the sale plus the repairs into a single loan. Ask your lender if you would qualify for this and how that might increase your chances of getting into the home you want. Feel free to reach out... Happy to share more about this 203k experience in greater detail.

It's quite possible for you and your fiance to get a SFH after the duplex your timeframe. A few considerations:

Duplex - Lenders usually count up to 75% of your rental income towards your DTI ratio, so if this amount covers your monthly payment (PITI) or more, then your owning this home should be good from a DTI perspective. Many lenders do like to see signed lease agreements and ideally, two years of tax returns showing the rental income reported for the income to count, so keep this in mind as you rent out your property.

Down payment and DTI - I think your ability to get the second home will largely depend on having enough down payment and having a favorable DTI ratio. Assuming the duplex can take care of itself on paper, you will need to work with your lender to figure out how much of your $80K/year goes towards your existing debt, like student loans, car loans, credit card payments, etc. and whether you can still afford the mortgage payment of the new home. If you need to do a back of the napkin calculation today, try taking 36% of your monthly gross income and see if it can cover your monthly payments plus the PITI of the second home. For the PITI of the second home, pick a DP% that you think you can save up in 1-2 years but do check with a lender to see if they offer a loan product that accepts that DP%.

And +1 on the need to have your fiance completely on-board with the plan. I would suggest putting your plans in a shared document and then revisiting it every so often together to ensure you're both still on the same page. I say this because 1-2 years from now, it's easy to forget the details or how you have arrived at your plan. If plans change, as they often do, document the changes.

I did an FHA 203K loan a long time back. The loan itself is really helpful if you don't have a lot of funds to fix up your property. With that said, you will need to find a contractor and/or a third party who is willing to deal with the paperwork needed to validate that the work is complete at each phase so that the lender can release the construction funds. Maybe I was inexperienced at the time or maybe times have changed now, but when I did this it felt like there weren't a lot of contractors who would work with a 203k loan.

And +1 on the reserves! The project will easily find a way to use up the reserve funds. :) 

If you have limited resources and loans to pay off, you could consider a combo house-hack + delayed version of the BRRRR. You can try getting the FHA loan to get into your first home as mentioned by others, and then house hacking by renting out the other rooms of your home. This will help you save up money to do a rehab, after which you can then do a refinance or take out a HELOC

Sure, there’s some risk to refinancing later if property values go down in the near future (I.e. might not be able to pull as much cash out as you might think), but I think having roommates to pay a good part of your mortgage for your primary residence, in the city that you live in, would be a great way to get started especially if you plan on buying and holding.

It sounds like the existing tenants just want to ride it out as long as they can before they get evicted. If WA is anything like CA, the owner has a right to move in and has a right to evict for non-payment, but you would have to follow the book by the letter. Whether it’s a cash-for-keys type of deal or eviction, it’s best to get help from an attorney to get them out in this case.