All Forum Posts by: Brendan Miller

Hi @Sara Mcconnell, I'm actively looking and making offers in the ABQ market, mainly for quadplexes, but it's very competitive for good deals. For you I'd probably recommend looking into a house hack to get started, either a SFH or a MFH. You could do an FHA loan with 3.5% which could get you started.

As for books, BP publishes recommendation lists: https://www.biggerpockets.com/... You can also go to the Bookstore tab on the BP homepage and you'll see all of their recent stuff. There is a book specifically for BRRRR, as well as 'Investing in RE with No an low money down' which talks about different financing strategies.

Hi @Michael H., typically the recommended answer would be to tell them that you can't do that, and they'd need to pay pro-rated rent like normal and that their security deposit will be held until a move-out inspection can be completed. I just had a tenant move out and owed 7 days for the last month, and this is how I handled it. 

I would find a local GC in that area to discuss with further and they could walk you through the scope and process. Some of the hidden costs can be specific to the area that you're building in, but your GC will be able to tell you what scope they cover, what scopes they don't cover, and give you guidance on who to contact for recommendations on items they don't cover. One big frustration people have with building new is running over schedule and budget, so I'd make sure to carry a contingency budget beyond the GCs number (to account for the unforeseen costs that arise). I'd also make sure the GC provides a detailed schedule that you feel comfortable with

Hi @Gabriella Borukhov I'd say it really depends on cost of whether to buy an existing home versus build a new one. You should be able to check the MLS to find comps for the type of existing building you're looking for and then compare that to the cost to build. I would say that most beginners would not normally start with building their own investment property, however that doesn't mean it can't be done! I would start with researching what the full cost is to purchase the land, develop it and build and then let the numbers drive your decision. Good luck.

I'd build a proforma to understand exactly what your projected returns will be based on the cost to build, construction loan, future projected rent, etc. Those numbers aren't bad, but I would recommend tightening up your projected rents, that's a big spread that could sway your go/no-go decision.

I know you mentioned that $400K is your cost to build, so to me it would depend on how much equity you'll be getting out of it upfront. If you're expecting your property to appraise at $500K for example (with your cost being $400K) and rents at $2,200, then there would be an opportunity to refinance in the near future to pull out your 8-10% for a new deal.

Hi @Steve Tse, I would recommend searching online (or through your HELOC lender) for a HELOC Amortization Calculator, and plugging in this information. Most lenders should be able to provide you with an amortization table to accurately project repayment schedules, I would request it directly from your HELOC provider

Hi @Lauren Lam. Reach out to PenFed Credit Union. They are a national servicer of HELOCs on investment properties and they are one of the more competitive that you'll find regarding LTVs and interest rates. I just opened a HELOC with them a couple months ago for an investment property of mine. You'll only be able to get a max 75% LTV, but it doesn't sound like that'll be an issue if you're leaving $100K of equity in it.

https://www.penfed.org/home-eq...

Hi @Michael Vincent, I'm not totally following your question, but if I understand correctly you're wanting to use HELOC draws as a downpayment for an additional property. Yes, you can definitely do this and it is a pretty common strategy amongst investors. Your lender on the new property purchase may ask/question where the down payment money is coming from, so you'd need to make sure your future lender allows it.

As for the 2nd part of your question, you can purchase a 'move-in ready' or new-build property, but in order to refinance there would likely be a seasoning period on your loan before you could do that. Typical seasoning is 6 months to 1 year depending on the lender/loan requirements. It sounds like you'd be banking on appreciation to get the equity required to pay off your HELOC, which isn't a guarantee. A better strategy would be to find a good deal at the buy, so you're making that money going into the deal (i.e. buying a property that's worth $200K for $160, resulting in instant equity). Once you draw from your HELOC, that loan amount will count towards your DTI.

Hope this helps.

@Kyle Hoppman it depends on the lease agreement, however most leases likely don't get that detailed. At minimum, I would assume your lease includes which equipment exist in the unit (i.e. washer, dryer, fridge, etc) and which party is responsible for maintenance of it. Typically I have a 'Maintenance Responsibility' section in all of my leases clarify that the tenant is responsible for cleaning, yardwork, air filters, etc however I've never had a rental unit with a water softener but I would include that also if i did. I also have heard of some landlords that prefer to have these types of items covered by the landlord since it increases the odds of the tenant actually swapping the filters out or refilling the salt in this case.

I assume it's a pretty minor expense, so if your lease doesn't indicate, then I'd have a discussion with the tenant and if they push back you could pay for the salt to drop off to them, and then make sure to update your lease before you renew or resign a new tenant.

Hi @Jonathan Cook, you could look into an FHA loan which allows you to put down less than 20%. Otherwise, you could look into non-conventional loan options (outside of Fannie/Freddie) that allow for less than 20%, such as local credit unions.

As for your numbers, you're missing a few important components; the big items would be maintenance, CapEx, and utilities (water/sewer/trash) for a 4-plex. I usually carry 5% of the gross rental income for each of the first two items, and the utilities piece varies depending on location and the building. You'll need to verify which utilities are owner provided versus tenant provided. For example, most 4-plexs for individually metered electricity and gas therefore the tenant pays for them, however the owner still covers water/sewer/trash which can be a couple hundred dollars per month depending on the area. I would also request Estoppel agreements from the current tenants to verify that the $550/month lease amounts are accurate.

Aside for the numbers, it seems like a good owner occupied 4-plex to get into, but I wouldn't bank on pocketing the difference between the rental income and the $810/month.