All Forum Posts by: Brendan Miller

@Heather Rodden

Personally I would only sell if you’re trading up, or if they aren’t good cash flowing properties. I am selling one of mine right now because it didn’t cash flow well and I’m intending to use the net profit as down payments on at least a few new properties. If you still have some time left in your investing career then I’d hold onto them.

@Andrei Constantinescu

Erickson is spot on with his recommendation. I'd look for a fourplex that you can put 3.5% down using an FHA loan or 5% down with a conventional. This should allow you to live rent free and hopefully even cash flow. Live there for at least one year and then do it again!

As for how it get the down payment, if you own your current property you can put a HELOC on it if you have enough equity in it.

@Ryan Jopson

There are a lot of options out there, I just used PenFed Credit Union for my condo rental property at a 75% LTV. The rates and LTV options will vary between companies.

They also have a 90% LTV option for primary residences.

@Maria Callaghan

I don't mind HOAs, they are pretty common in most areas that I invest in (AZ). The main things to look for are what the fees are and what is included in those fees (amenities, utilities if it's a condo, maintenance, etc). The 2nd part is making sure the HOA is properly managed, and has adequate reserves. You can request from the HOA how many special assessments have been issued, if there have been a lot or high dollar assessments then that is a red flag to me.

I like HOAs because they help control the consistency and curb appeal of the community. There are likely a lot of bad ones out there, that’s why it just requires a bit of due diligence.

The one part I don't like is that you don't get loan pay down on that portion. For example, condos often have high HOA fees, where 1/3rd of the rent needs to cover HOA fee.

@Emily K. I didn’t read all of the other comments so it may have already been said, but if you do head down this path I’d make sure that the tenant (or yourself) is financially capable of paying for the rent without being 100% reliant on the AirBNB revenue (i.e. have a reserve account). You will still be responsible for the monthly rent to the landlord regardless of whether or not you have revenue coming in.

Also make sure to check with the HOA if there is one. Some HOAs allow for LTRs but not STRs (defined by the HOA CCRs).

Good luck!

@Nick D. I haven't personally done this, so I'm curious to hear other people's feedback. If you don't get any additional feedback, you should be able to call the City of Phoenix Planning Dept and assess the overall process, timeline, fees, and feasibility fairly easily. I just quickly looked it up myself, and it looks like they have a step by step instructions packet on their website (link below). I think the main steps include filling out and submitting an application and then attending the hearing the following month to have it voted on. As long as it gets approved, the overall process should be less than 120 days based on that packet. 

It often depends on the definition of the zoning classifications within each city; based on the below info, I'm not sure which zoning classification a duplex would fall into. It appears to be a 'Dwelling, Single-Family Attached' so I'm not unclear if it changes the current zoning. 

Anyways, hope this helps. Good luck!

From the COP's website:

Dwelling, Multifamily: A building or buildings attached to each other and containing two or more dwelling units. The term "multifamily dwelling" is intended to apply to dwelling types as triplex, fourplex, and apartments where any dwellings have their primary access to a common hallway or corridor.

Dwelling, Single-Family Attached: A building containing dwelling units each of which has primary ground floor access to the outside and which are attached to each other. Each unit extends from the foundation to roof and has open spaces on at least two sides. The term "attached single-family dwelling" is intended primarily for dwelling types as townhouses and duplexes.

https://www.phoenix.gov/pddsit... 

https://phoenix.municipal.code...

@Sabrina Maples good luck! Downtown Chandler has come along way over the past few years, so I agree there is a lot of potential. It’s currently listed for $2.2m on LoopNet which is better than the $2.6m from your original post.

@Sabrina Maples you’re talking about the Casa Blanca property? I’ve heard of this being done especially with hotels/motels seeing decreased revenue during COVID. I’d be curious if rezoning would be required from the C-3 to a MF and what that process/timeline looks like. It definitely is an intriguing idea! I’m not familiar with that area, but I know downtown Chandler has some not so great areas surrounding it.

@Jeff Young I personally would pay off your existing car loan of $4K and start with a fresh slate for real estate once it's paid off. In making these decisions, I would normally look at the difference between the loan rate and the rate you could be making from that money if you put it to work in a real estate deal. 

Another important aspect to consider is not only the down payment required to pick up a property but also the adequate reserves that you need in case issues arise (i.e. repairs, vacancy, etc). I'd recommend having a funded reserve account of 6 months in expenses for each property. Some lenders will require this on investment property loans, but not likely required for a primary residence.

@Kyle Johnson I agree with @Jon Kelly's advice regarding getting input from your anticipated property manager (assuming you'd be using a PM since you factored in the cost). They'll be able to get you true market rents and they'll have a better understanding of that particular area and will be honest if they have concerns about managing that property. I would say that you want your deal analysis to be on the conservative side, rather than the optimistic side. I would vet through the steps that need to be taken to get to a $4,600/m rent and make sure all of those things are truly achievable before moving forward. It sounds like the deal only works for you with rents at $4,600/m, so it may sway your decision if you can't fully close that rent gap