All Forum Posts by: Brian Joseph OConnor

I closed on my first deal back on 10/16/24 so I'm a newbie. This deal was found on MLS and is a new construction 4/3.5 SFH with DADU and I purchased on n FHA owner-occupied loan. I only brought 3.5% down to closing and the seller paid 3% CCA which I used to buy down my rate to 4.8%. I'm house hacking living in the DADU and renting the 4 bedrooms out by the room. I had no trouble filling my rooms and the house appreciated for $10K over purchase price, the tenants are paying utilities. I'm cash flowing $1100/month. So even though I'm new I've seen enough to know I want to scale this new construction/build to rent by the room strategy in my market. I'm not renting to students! My property is in a depressed area walking distance to the largest employer in the area which is a shipyard. The area is loaded with men on 1-2 year contracts who have homes some where else and they just need 1-2 years of safe, clean, comfortable housing and the only other option is seedy hotels.

That being said, I approached a local DSCR lender who refuses to look at my specific rental strategy in underwriting. The lender actually said he will only underwrite my property as a single renter long term rental based on comps. So I did that and my property revenue cannot service the debt but using my strategy I'm cash flowing $1100/month after PITI on a new construction home under warranty. The lender seems to believe that the only rent by the room strategy that exists is renting rooms to college students and his quote to me was "more people, more leases, more problems".

What do I know?? But my 4 renters are in there 30's-50's and work 50+ hours / week building naval ships and submarines and they enjoy being close enough to walk to the shipyard and coming home to a brand new house with all the modern upgrades. My house has no vacancies and other guys are constantly calling and inquiring about rooms available. I'm not really "pitching an idea" as much as I'm wanting to scale up something that is untapped and ready to roll. My builder has 4 houses in the area already built and on MLS but I can't deploy another owner occupied mortgage for another 11 months.

A DSCR would be perfect for me because I have funds for down payment, I have good enough credit and my strategy has proven to do a lot more than just service the debt.

Does anyone know of any good DSCR lenders that I could contact?

Thanks,   Brian

MLS #10543365 Norfolk, VA

Side by side duplex 4/1.5 (1,000sqft), and 1/1 (650sqft).  Asking Price $315,000.  Built 1917, full reno 2022.  Planning to rent the 4/1.5 side by the room and house hack by living in 1 of the 4 bedrooms then planning to also rent the larger 1/1 side.

Planning 5% down as owner occupied financing.  I calculated rent estimates using both BP rental tool and Rentometer.com so the larger side will rent for average $550/month per room.  The larger 1/1 will rent for average $1,145/month.  Once I move out the entire property will generate $3570/month in rents.  I did my analysis as if I was not house hacking one of the rooms or as if I was counting myself as a paying tenant. 

My PITI + PMI is $2,369/month if I get 30yr fixed at 7% with 5% down.

I'm budgeting 5% capex/ 5% repairs / 8% vacancy and I will self manage.  All utilities will be billed to the tenants.

Using the BP calculator to underwrite this deal I'm showing NOI $32,274, Monthly cash flow $698/month, and CoC ROI 30.99%

file:///C:/Users/Provider%20QCK%20Richmon/Downloads/9284%20Peachtree%20St%20(1).pdf

Please pick this analysis apart and tell me what I'm not thinking about .........

Thank you for the wise tips Tom and Harry!!  I really appreciate it.

 Thanks Steve!

Yeah, the property was already listed with an agent so I couldn't do anything about that.  The heirs are from out of state and so we'll see what they say.  It's not ideal because agents are involved and neither mine nor theirs seems knowledgeable about seller financing.  Maybe I just wait it out and if it doesn't sell in the next 6 months the listing will expire and I can reach out to the heirs directly?  Or perhaps the 100K over asking price will at least prompt a conversation and we can negotiate about interest if they need that. 

I have asked my agent to ask the sellers agent if the seller would consider seller financing.  The information about the sellers being the heirs to the house and the news about the in-law suite already having an existing renter in place was all new info that I learned when I requested to see the property with my buyers agent.  I am too new and too inexperienced to know what is to be expected, or what seems contradictory.  I am also to dumb to know what not to ask.  So maybe the answer I get back will be a flat out no.  Maybe the sellers just want to sell it for top dollar right now.  

However, I am offering them 100K over their asking price if they will consider my terms.  I want all the furniture, zero down and zero interest with a 5-10 year balloon.  I'm fine if they slam the door in my face. 

How often do these Greenville meet ups happen?

I hate to miss this meet up but I won't be back in town until 4/26. Would love to get some creative finance assistance with a prospective seller in Greenville, NC if any of you local REI's have a few minutes to let me run it by you over coffee or a beer.
I’m free after work on Thursday or Friday in Greenville this week.

thanks,  Brian

I'm looking at a new MLS listing 5BR/3BTH rent ready home who's owner has died and the kids are trying to sell through an agent. No mortgage and the kids just want to sell it, avoid taxes and be done with it. My buyers agent is asking the sellers agent if they'd consider seller financing on terms. The house is immaculately designed, updated and fully furnished and rent ready. List price is 500K. I'd like to buy the house with all the furniture and the numbers work for cash flow and COCROI as an LTR rent by the room even if I paid 600K. I need to get this deal with zero down and no interest on a 30yr amortization with a 5-10 year balloon.

If there are any seller finance/subto experts around Greenville, NC willing to help me engage and lock down this seller under contract I’d pay for the assist!   I need help figuring out how to learn what’s important to the seller regarding terms, how to get both agents paid their commissions and how to get this done with no money down and zero interest.  I’d also like to structure in 1-2 months time to get it fully rented before first payment due.  I’d be open to paying a delayed down payment in 6-12 months using rent cash flow to pay it.

I have a property mgmt company ready to go and could have the 4 BR’s in the main house rented quickly and the separate in-law apt is already rented with a solid tenant paying  $1000/month on a month to month lease.

I really need to observe an experienced seller finance / subto REI engage the seller, explain how it's a win/win/win for everyone and get the contract locked down with lawyer and title company. Then I'll be off to the races! Seriously, I'll pay $1000 to any REI who can help me get this deal under contract.

Property is in Greenville, NC

Hey BP community,

So I'm underwriting a SF home in Greenville, NC as a buy & hold rental house hack.   I want to rent out all 5 bedrooms by the room double occupancy as a male-only sober living house that I will not be operating.   I will live in the separate mother in law suite with separate entrance/kitchen etc all self contained and not accessible to the main house.  The 10 renters will be part of a sober living organization called oxford house.  My lease will be with the "oxford house" and not with the individual tenants and oxford house has a list of strict rules including weekly drug testing, mandatory meeting attendance, mandatory job/school attendance, curfew, required house chores, visitor policies, etc.  If any tenant fails a weekly drug test they are immediately expelled until they complete a 28 day drug rehab and show sometime of sobriety.  The house is self managed with oxford house oversight and the house interviews and votes on all incoming tenant applicants.  As the landlord, the rent is consistent and predictable meaning the rent is set by me and doesn't change even if all beds are not filled.  The tenants are incentivized to keep all beds filled in order to keep their individual rent amount as low as possible.  If a tenant gets expelled than that means everyone remaining gets an increase in their rent/utilities.  All utilities are paid equally by the tenants and they have 4 house officers that manage the house budget and collect monies and pay rent and utilities themselves in an effort to teach personal responsibility.  Oxford house organization offers help, infrastructure and guidance to these tenants.

So the deal is a SF buy & hold house hack.  I have linked the underwriting report and would love for ya'll to give any feedback about my underwriting and additionally if you have experience in this niche rental market.

thank you!!

View report

*This link comes directly from our calculators, based on information input by the member who posted.

Yes I am very interested in this REI space myself. I am underwriting properties 4+ BR's and 3+ Baths with no HOA's and the COCROI/Cash Flow is really good. I'll link to a current house I am underwriting and I would buy FHA and live in the basement mother in law suite as a house hack. Then I'd affiliate with Oxford House Sober Living organization for some help with oversight and infrastructure but essentially would rent our all 5 bedrooms as double occupancy for men only and charge $150/week per bed. The oxford house model requires that all tenants pay equal share of the rent per week + utilities no matter how many beds are filled so if all 10 beds are not filled then the weekly rent/utilities goes up for the remaining tenants so its super predictable and consistent for the landlord. The COCROI is 85% and cash flow is $1900/month after PITI and 5% capex/5% repairs. No need for vacancy or prop mgmt contigencies. Also, the oxford house has strict rules for each tenant with 10pm curfew, weekly drug testing, weekly required AA/NA meetings, and required job/school. If any tenant fails a weekly drug test then they are immediately booted from the house no questions asked and they cannot come back until they attend a 28 day rehab and show commitment to sobriety. Also, the landlord signs the lease with "oxford house" rather than individuals so if someone gets booted for cause then there is no eviction protections or delays.