All Forum Posts by: Andrew Powers

You can try to get a typical income-based loan but probably won't qualify. There's other options... hard money loan, owner financing, asset-based loan, private money, etc.... look at the forums, books, etc for getting loans with no W2.

There's no rule for how many properties you start with but in general, it is safer to start with 1 and learn from it, then expand. It's like prototyping a product before going into series production (costs alot less to find / fix problems with prototypes than higher production quantities). How much risk are you willing to take given the economy, property locations, property conditions, property ROI's, etc? Do you have enough money to put down, have enough reserves for repairs / vacancy / etc? Things on paper may seem great but actually going through the process of dealing with tenants, PM's, repair people, owning a house that decides it needs a new furnance, etc WILL cause lots of surprises and learnings. It's easier to learn with less monetary risk than not... BUT these are just some things to consider, not trying to sway one way or another as there's not enough info in your post and I'm not you / don't know your risk taking level... partnering with someone with REI/location knowledge is a good idea as suggested above.

@Tina Wicks I would suggest creating a simple comparison chart showing up-front repairs (cash) vs rental cashflow (cash/month) and ARV. Basically trying to calculate the ROI of different levels of repair and help determine how long it would take to get back the cash invested in repairs. If you did no upfront repairs, how much is cashflow considering rent coming in and extra repair reserves being taken out? How about full rehab, how much is cashflow considering rent, repair reserves, holding costs? How about a situation in between?

This would help make a decision based on data rather than keeping fingers crossed. If you are unsure about how to calculate repair costs or how to estimate rents, there are alot of resources on the BP forum or get quotes.

Hi @Jake Ernst depends on your timeline, goals, risk taking level. If you are familiar with the area you are putting offers in, and it's your first house, maybe you should stick to that location. Get to know the process where it's most comfortable and then expand. Is your criteria too strict?

I would suggest finding an investor-friendly realtor. You can call around to listing agents and brokers to get a feel for investor friendly realtors. Even if you call a listing agent on one house, they can represent you on another house. When talking with potential realtors, make your requirements clear up front: ie I want to see xx house per week, make xx offers per week, looking for a house with xx features (in order of priority), etc. 

My first house came from the 3rd realtor I went through. At first my criteria was very strict and there were little to no houses that would have met it. Once I loosened my criteria a little, found the right realtor, and made that criteria clear to him... it took 2 weeks to have an offer accepted.

I agree with the above. I had a HW included on my house when purchased. 3 different claims resulted in 0 fixes, and I had to pay $95 each time for them to look at the issues. For example when the water heater died, the contractor that inspected the issue wrote specific wording on the receipt that stated there was "secondary" damage to the hot water heater that caused the failure (not true). The HW company called and said I was responsible for repairs. After the tank was replaced by a reputable company, I told them the story and they said they used to be contractors for a HW company... they were trained on how to write service call receipts to make the HW company not liable for damages. Lesson learned.

In my experience HW companies try to avoid any responsibility for repairs.

I used conventional 3% down, first time home buyer loan (single family only). FHA works for low DP too, but FHA loans are less competitive which isn't helpful in this competitive market.

I wouldn't be afraid of PMI like everyone talks about... just figure out what PMI would be each month and work it into the numbers. If the deal is ok with PMI then do it, if not then on to the next.

@Drew Sygit @Michael S. thank you! Yes I'm looking for the next one now! Looking at Metro Detroit again or Cincinnati

@Jamiel Strickland yes lucky it happened, it makes the deal that much better

Investment Info:

Single-family residence buy & hold investment in Royal Oak.

Purchase price: $120,000
Cash invested: $20,000

This is my first investment property. In 2019 I bought a large single family house in the metro Detroit area. I house hack by living in one room and renting out the others. It is important to me that the numbers work correctly. I live in the house for free + my roommates cover allowances for cap expenditures, minor repairs, and vacancy. It has been a great experience!

What made you interested in investing in this type of deal?

I wanted to purchase a house that my roommates or tenants would cover the costs. My comfort level allowed me to be OK with having roommates & target a not-so-typical type of house in the area (large single family).

How did you find this deal and how did you negotiate it?

I found it on the MLS. I was originally looking for small multi family, but after hearing Podcast 350 with Craig Curelop, I thought it was an interesting idea to pivot and search for large single family instead. That night I found this property (4 bd, 3ba). It needed a decent amount of work so the first offer was at 75% value, and then we met at $120,000. Even at this price, the numbers worked great.

How did you finance this deal?

I used the first time home buyer conventional loan. It is 3% down payment with the requirement that I take a first home buyer course (funny story about this later).

How did you add value to the deal?

The house was kind of a "half flip" where it looked ok (ie new interior paint, carpet, etc) but still needed a decent amount of work. It needed new mechanicals in the basement. Before moving in, I had a boiler installed. Then as time went on the hot water heater, washer/dryer, sump pump were replaced. All the mechanicals are new which keeps cap-ex low for now on.

What was the outcome?

I live in the house for free, and rent out the other rooms which covers PITI, cap ex, repairs, vacancy. I manage this property which helps me develop my excel "checklist" systems (maintenance, on boarding and off boarding tenants, etc). The roommates situation has been great, especially because of the house set up. 2 of the 4 bedrooms have their own large living spaces and own bathrooms.

Lessons learned? Challenges?

When under contact - lots of repairs were agreed upon, but not completed multiple times. Having a better template for scope of work would have been best to reduce time wasted (3 weeks) and less stress for all parties.

Funny loan story - I used a great lender but they made a slight mistake. They did not submit my paperwork for the first time home buyer course. Long story short, after 1 month I had to refinance with them at no cost to me... I ended up saving $50 per month with a reduced interest rate.

Hello DJ, welcome! I'm a metro Detroit investor and interested in the Cinci area. Feel free to reach out to have a chat!

Hello Jacob, It sounds like those income based requirements are from the MSHDA program where you're income needs to be under a certain threshold to get downpayment assistance or certain types of loans. I recommend talking to more lenders since there are often differences between institutions. 

There is FHA loan for multiple units at low downpayment.

When I bought my single family house hack in Oakland County, I did the first time home buyer loan at 3% down payment (doesnt work for multiple unit properties). I was above the income requirements for any of the MSHDA benefits.