All Forum Posts by: Andrew Emery

@Byron Valles what type of ADU did you go with? Any tips or things to keep in mind as I plan this out?

Thanks!

Hey Byron - Thanks a lot for your response, super helpful and good work! I would actually like to do this with an existing MFH so I can live in (and potentially renovate) one unit while renting the other(s) from day 1, and, based on your feedback, initiate the ADU build once I'm in the MFH.

The only reason I'm still thinking FHA is due to what I understand to be a hard 15% minimum DP requirement for conventional on a MFH. I think I'd rather keep the cash to put towards the ADU along with potentially city / state grants similar to what you did.

Hi All,

I'm currently in the process of refining my house hacking strategy, and wanted to run it by you all to get feedback / thoughts on some of the questions I have.

My plan was to use an FHA loan to owner-occupy a 2-4 unit MFH. However, the area I'm interested in has recently relaxed zoning restrictions for and actually incentivized ADUs in many neighborhoods. While I was originally planning on househacking by living in one unit and renting out the others, I've become very intrigued by the idea of building an ADU (probably a tiny home) on the property and renting out the primary MFH.

My questions for the BP community are:

- Does this sound like a reasonable plan (assuming I'm willing to live in the tiny home which I am and that I can find an existing MFH that meets the zoning / parking requirements, location, neighborhood, etc.)?

- How would you recommend financing this? I was budgeting for 75-90k as the down payment on a 600k-700k MFH alone before this idea, but now I'm thinking of putting a minimum DP on an FHA for the MFH and paying cash for the ADU - but I'm not familiar with the feasibility of this from a loan perspective or if there is a more strategic way of going about this.

- With 11 more months on my current apartment lease, do you have any advice on a timeline / sequence for all of this? Should I engage the ADU builder as soon as possible or wait until I actually purchase a MFH before starting those conversations?

- If I went down this path, how would you most effectively get into the next property - refinance the whole property after a year since it would now be appraised with an additional unit and would potentially get me out of an FHA and into a conventional (with hopefully slightly lower interest rates by then?

Thanks everyone - any insight is much appreciated!

Andrew

 

Hi BiggerPockets Community!

I’ve been reading these forums for awhile and have learned a ton of amazing information from you all -

I'm in somewhat of a unique situation (or perhaps not unique at all) in that I currently own one investment property out of state (downtown Chicago), but my renting it out was the result of an unanticipated move across the country and not of investment property deal assessment or financing. That said, it is generating positive monthly cashflow and has "forced" me to get my feet wet / served as a personal proof of concept for out of state investment.

I'm currently renting in a high-cost area of Sarasota, FL but am using my lease term as an opportunity to learn as much as I can about real estate investing to make as informed of a decision as possible about my next purchase. Currently, the concepts I'm looking for guidance / perspective on are:

- Does it even make sense to plan to purchase my primary residence after this lease is up or keep renting and use my capital for another out of state investment property?

I live in a luxury apartment complex with all the amenities (which I use) in a phenomenal location (minutes’ walk / bike ride to the bustling downtown, waterfront parks, and beaches which has allowed me to comfortably live without a car and enjoy the things this area is known for). I also have none of the typical qualitative factors people take into consideration when purchasing a primary residence (i.e., family preferences, proximity to school / work, etc.). In my amateur initial assessment, the mortgage on a comparable condo / house that would maintain my lifestyle would be double my current rent with bleak cashflow opportunity if I were to eventually move out.

- Out of State Investing in General

In today’s world, we have all of the online tools to make this a successful, repeatable strategy (it would appear). However, I know there have to be many pitfalls with this (lack of familiarity with neighborhoods makes deals make sense on paper but are a disaster waiting to happen in reality being one that comes to mind).

- Partnership

This seems like a very attractive route for my current situation, but I am unfamiliar with the tactical first steps and what apparent value I would provide to a prospective partner in out of state investing.

- Feasibility of BRRRR

This is a strategy I've never really considered as an option for me simply due to my total inexperience with doing any sort of rehabbing, sourcing materials, dealing with contractors, etc. This inexperience seems twice as daunting when thinking of it in the context of an out of state property. Before I completely exclude this strategy, I'm curious if this rationale is sound of if it is simply making excuses.

I know this was a ton of information, but I'm definitely excited to continue learning as much as possible and begin networking through the wealth of knowledge / individuals on this site. I know how easy it is to get into analysis paralysis with REI so I look forward to developing my strategy over the coming months so I can put it into action in the next year.

Thank you all!

Andrew