All Forum Posts by: Bryce Hacker

@Timothy Borg Hi Timothy, I ended up cancelling the contract. I was able to get my hands on the inspection report from the last time the house was under contract and there was too many things that I thought could end up costing me a lot of money to repair. With the poor inspection on top of my concerns with the cash flow, I decided to cancel and continue my search. 

Hi Rebecca, congratulations on the pre-approval! 

While a 10% down payment will most likely reduce your mortgage insurance coverage requirement, a 10% down payment will not remove your mortgage insurance. The only way to remove the mortgage insurance completely is to put down 20% or more. 

With this in mind, I would ask your broker what the difference in the MI coverage requirement would be with 5% down as opposed to 10% as well as the difference in the principle and interest payment. This will give you a better idea of what your monthly payments as a whole would be and you and your husband can decide for yourselves what will be more beneficial for you. 

No matter what option you decide to proceed with, I would recommend keeping an eye on the estimated value of your home and refinancing once you think you are close to 80% LTV. With the rapid appreciation in this market, you are typically able to drop your MI through refinancing rather quickly and can end up saving a good amount of money.

Hope this helps! 

Hi everyone, first off, I am a licensed MLO and I have my financing figured out so I don't need help with that aspect. I am looking to purchase my first home that I intend to house hack and live in short term (maybe the next 9 months or so), and I would really like some help analyzing the property for current cash flow as well as future cash flow for once I vacate the property. Initially, I was thinking that I would like to purchase a small multifamily in the greater Phoenix area. However, due to a lack of inventory and me having to use an FHA loan for multi-families (I don't have 15-25% set aside for a down payment on a multifamily that would be required with an owner-occupied conventional loan), I have not had much luck in finding anything worthwhile.

I have had a little bit of luck finding SFR's with detached casitas. Since the property is just a SFR and I will be occupying the residence, I can use a conventional loan with a minimum DP of 3% since I am a first-time homebuyer. I have gone under contract on a home where the main house is 4 bed/2.5 bath with a 1 bed/1 bath casita that is a short drive away from the up-and-coming downtown Chandler area. I have run a few scenarios, but I am worried about the potential cash flow as well as the ability to find tenants.

Just to give you a better idea of the monthly expenses, the purchase price is $570K with a 3% DP. Principle & Interest = $2,560.57. Estimated Homeowners Insurance at $65. Property Taxes = $97.68. Mortgage Insurance = $465.36 (high.... I know). Total monthly payment = $3,188.61

Scenario 1) Live in one of the bedrooms of the home and rent out the 3 bedrooms to friends at $900/room and rent the casita out for $1,200. Total rents received = $3,900. Cash flow after 5% CapX, 5% maintenance, 5% vacancy, as well as estimated utilities divided amongst the roommates, is about $30/mo. At this rate, I am barely putting any money in my pocket, but my housing payment is completely eliminated and I am able to set aside $585/mo for vacancies, maintenance, and capital expenditures. 

Scenario 2) Live in the casita and rent the home out as a whole to a family. I believe I can get about $2,500/mo for the house. After the same 5% for CapX, maintenance, and vacancies, plus the estimated utilities that I will pay in the casita, I am estimating that I will have to pay about $1,200/mo (which my girlfriend and I would split). This is the least attractive option to me, but my girlfriend likes the idea of having a little bit more privacy and our own space. 

Scenario 3) Move out a little later on this year and rent both the house and the casita as a whole. Again, I believe I can get about $2,500 for the house and $1,200 for the casita. After the same 5% for CapX, maintenance, and vacancies I will just about break even (utilities paid for by the tenants). Again, I am not putting much money in my pocket each month, but I am setting aside $555/mo in CapX, maintenance, and vacancies as well as gaining appreciation in the home. Plus, I will be keeping an eye on the appreciation and the equity I have built up in the home and will refinance as soon as I think I can get close to dropping the MI. At that point, I will cash flow about $450/mo on top of the money already being set aside (assuming rent prices have stayed the same).

There is also the possibility of living in the house and managing the casita as a short-term rental, or vice versa. So many options.......

This is my first deal and I feel as though I have fallen into a little bit of analysis paralysis. Am I better off just pulling the trigger and getting into the market instead of wasting time continuing to rent to find the perfect deal that may never come along? I know that your first deal doesn't need to be a home run and that time in the market can help not only make money but help me in gaining valuable experience for my next deal (which I hope to be before the end of 2022).

Seasoned investors, what would you do if you were a first-time homebuyer trying to find your first deal again? Any advice would be greatly appreciated. 

Hello, 

I have a friend of a friend who is selling their duplex due to complications with his business partner. The property was under contract but the contract fell through as the seller would not be able to get the property rezoned and turn the large bonus rooms into another unit, making the property a quadplex. I should be able to get a good deal on the property due to the mutual friend that we share and have ran the numbers and it will cash flow nicely, however, I need to find creative ways to finance the property as most of my income is commission and I will not be able to use this income to qualify for a loan until December. 

I have done some research on seller financing and hard money loans and am wondering if anyone with experience in these two fields can provide me with a bit of insight or if someone knows of a better way to finance the property that does not relate to the two options I mentioned. 

Any help is appreciated!