All Forum Posts by: Bryan O.

You will get what is called Estoppel statements from the tenants. This is the due diligence that shows that the lease the owner provides you is correct. You then purchase as normal however you were planning. Note that if it is SFR you are ineligible for FHA, VA, and any that require owner occupancy.

If it's owned outright, see if the owner will carry the loan for you. No better deal than that!

I just bought a 3-unit in February and owner-occupy. The tenants love that I'm next door because they see me out and around working on the property and just generally being accessible. We are friendly, but not friends if that makes sense.

Using the FHA loan, I put down 3% (somewhere around $12k) and my rents cover the payment and mortgage insurance. I only pay utilities and home insurance. Basically, that's $2000/month I save from moving out of the rental I was in (it was a nice place). That's a HUGE profit per year.

The other major benefit is that as a newbie, you are literally right there and it makes doing showings, collecting rents, and maintaining the property very easy. I am trying to force as much equity and profit as I can, so doing my own maintenance and management in the early years will allow me to expand my door count much more quickly.

Best of luck. Search for "house hacking" as that is one of the favored terms for what you are talking about. There are many posts related to it with lots of good info.

I would have him on the lease at the outset and screen him the same as any other tenant, ESPECIALLY if he is contributing any of the rent. Make sure the expected income (retirement level) is enough to cover the costs.

I do a binder agreement to hold a property. My thought on cost is 2x the rent. So if they want to hold a $1,000/month unit for 2 weeks, I would charge them a $1,000 binder "consideration" to hold (in a signed agreement). If they sign the lease by the end of the 2 weeks, it transfers first to security deposit, then to animal deposit (if applicable) and then to rent. If they do not sign the lease, they find somewhere else to live and I relist the property. The money remains mine. This ensures that only the serious will sign... otherwise, I pass on them and move to a tenant who is ready and able. It takes too much time to list, screen, show, screen, etc. to mess around.

There are ways out of the 1-year occupancy. You will have to find the paragraph in your FHA documentation. I don't recall where exactly it is, but there are a couple of outs, one of them being relocation for work. Go back and review yours to find out. Otherwise, just bite the bullet and do what you signed up to do... the FHA loan is blatantly an owner-occupancy loan.

I'll be there! Bring your mom  ;)

Just remember that for the next units you will be unable to use FHA. You will therefore need 20%-30% down payment for them.

Craigslist FTW

I always go to the county assessor's website. It should list what type of zoning the property has. They also usually tell you the exact taxes (for the year prior) and the last sale information.

Regarding buying all cash or 30% down, the standard answer applies: it depends. If you have plenty of credit/loan ability, leverage is a good thing. Since you mention additional properties in the area, do you want to use a large amount of reserves to buy that property? My head says use the 30% for it, then do the same for the additional properties if they are that good.

Best of luck!

Hi Joshua. For the duration that you are living in the other unit, I'd change your values for vacancy, management, and maintenance (I know you mentioned it at the end, but I just want to reinforce that it's more than just the management fee you save on). When you are right next door, you should only ever have a day or two of vacancy because it is so much easier to show, plus the people I've worked with are happy to have a responsible landlord living in the next unit, which means they stay longer and take better care of the property. They feel more like an owner since they know you are in the same condition and right next door. Your maintenance is reduced because you should be doing some of that yourself as well.

It's an awesome idea <horn tooting>and I just did the same with a 3-plex in February this year. It is working out amazing and I am able to force more equity by being right here for much of the work.</tooting> As @Brandon Barnic mentioned, more doors is better, but some markets just aren't that convenient!

Best of luck and it'll be great!