All Forum Posts by: Chase Maher

You can only use an FHA loan on a primary residence and it has to be a primary for minimum 1 year.

Once you have lived in it for one year, you can move, and keep the loan in place.
 

I know this is old... but...

FHA is an owner occupant loan, yes... but only have to live there for 1 year.

You just can't use another FHA loan while one is already in place, unless you have some sort of employment re-location letter.

Doesn't mean an FHA loan can't be in place after 1 year seasoning period... I have several FHA loans on properties that are now rentals

As a cash buyer.

No because I am not acting as an agent.

I disclose in my purchase agreement and if they ask, I am always truthful.

One of my flips under contract to buy currently is pretty interesting... its a 2 bed / 1 bath 950sf single family with a large 2 car garage. 

PP: 325k

Rehab: 45k

ARV: 460k

The area is an opportunity zone with strong rents relative to price point (for San Diego). Its unique because it already has 2 entry doors and 2 yards separated... with a conversion of the garage to a 1BR apartment it could easily be turned in to 1400-1500sf duplex with a 2/1 and a 1/1. Multiple neighbors have paved a portion of the front yard, so if the same was done there would be 4 off street parking areas.

Rents would be $1,750-$1,800 and $1,200-$1,250 = ~$3,000

ARV would increase to $485,000 if done with permits and the rehab would increase $20k.

Could be a nice BRRRR that would cash flow $500-$600 a month. Plenty more if AirBnB was put in place (Great area for that)

I have not done a conversion like this to create a duplex out of an SFR... anyone else experienced with this and have any thoughts?

I understand that, have other rentals and am aware of the expenses... however with completely remodeled properties, especially with a condo, I'd imagine expenses are very low. I should have included that though, so I will make an edit. Thanks

What's up BP!

I mostly do wholesaling and rentals w/ some flips and retail deals here in San Diego... however easy cosmetic deals I flip or BRRRR. As we get further and further in this market cycle I am wondering on every flip/BRRRR which avenue I should go down. Take the flip profits now, or BRRRR with a great interest rate and some cash flow... doesn't keep me up at night bc both options are great, however I want to maximize my time and profits.

For any multi-units I am heavy in the BRRRR category, but I have a couple San Diego condo deals I am in contract on now and curious the thoughts from BP on which route is better... and I typically don't like holding condos long term due to the HOA and the low ceiling on cash flow, but another perspective I have heard is how easy they are as a rental.

I got in to this for long term wealth #1 and short term profits #2... just an FYI.

Condo #1:

*This deal is under contract and ready to close in a few weeks using HM at 85% of PP and 100% of Rehab with 9/2.

PP: $155,000

Rehab: $30,000 - $32,000

ARV: $260,000 with upside as nothing has sold in building in 2 years

HOA: $300 a mo

Rental: $1750-$1800

PITI w/ HOA from Refi ~ $1,500

Minimal Vacancy

BRRRR Pros: In a predominantly rental area, can 100% BRRRR and hold for $250-$300 a mo cash flow.

Flip Pros: I'm licensed so it'll only cost me about 4% cost of sale

 Condo #2: 

*This deal is in negotiations with bank for Short Sale using HM at 85% of PP and 100% of Rehab with 9/2.

PP: $150,000 - $200,000 (Discrepancy because we are negotiating... starting at 150k, closer to 200k will lean me towards flip vs BRRRR)

Rehab: $28,000 - $30,000

ARV: $295,000

HOA: $388 a mo

Rental: $1800

PITI w/ HOA from Refi ~ $1,600 or less, depending on purchase price/refi price

Minimal Vacancy, Brand new hospital being build walking distance, less cash flow but better area than Condo #1

BRRRR Pros: In a predominantly rental area, can 100% BRRRR and hold for $200-$300 a mo cash flow.

Flip Pros: I'm licensed so it'll only cost me about 4% cost of sale

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TL;DR - Are condos good for BRRRR or better to flip and keep my rentals as multis or high cash flow SFR's

What @Pratik P. said is on point.

Disclose, always. Tell the truth, always.

I place all my marketing around quick cash offer for sellers. In my market (SD) wholesaling is tough, sellers are savvy, so many times the seller and I both agree listing is better... at that point I have built rapport and seller wants a no BS agent.

Its just another tool in your tool belt, pick which you want to focus on, have that be your goal of your marketing, and use the other when needed.

Thanks for feedback. 

I don't think I am distracted, but to each his own, this is why I posted for feedback... at no point am I raving about SF and OPM, and am certainly open to other avenues. I don't need the cash flow right now, and would like to keep my capital available for flips. So the Seller financing and OPM is a tool to accomplish that and make it work without bleeding cash until a re-fi.

The ask is down IMO, buying at way under price per door avg for area and buying with relatively conservative plan to go from 7cap to 9cap in under a year.

What's up BP!

I have the opportunity to partner 50/50 on a 16 unit purchase in Norfolk, Va with a friend and fellow investor. My skillset and experience is 95% residential, so I am hoping to get some feedback and opinions here. The deal, prior to inspections, is very solid on paper, in my own opinion (I am from there) and the opinion of a friend who is a top commercial agent in the area.

Details:

$750,000 PP

Seller financing 5.5% (Interest Only for 10 years, total note 30)

30% Down **

Current NOI is 52k

We could get the NOI to 60k right away with a $50 per unit rent raise as they are underpriced quite a bit at the moment. Plan is to make improvements in the 50k range and raise over the course of 6 months to an avg rent that would bring NOI to 72k and then re-fi. All tenants are month to month, so raising the rents is a bit easier and then lock in 1 year leases.

There are some bonus opportunities i.e. spreading water bills to tenants as well as airbnb opportunities in 2 of the units as it is on the water, but we are not factoring that in right now.

My questions:

We have the seller financing option, and the ability to do private for the 30% down second at 8-10% and 2 points. The total debt service would be basically a wash with current NOI, and cash flow would be low even with the higher NOI, but it'd be 100% OPM. What do you think about this strategy?

Is there a concern with a market shift and a deal like this, wanting to re-fi in 12 months or so to pay off the debt, lock in better rates and begin cash flowing at approx a 9.7% cap and the local market avg is 6.5-7%?

Thanks in advance and I am hoping the replies open up more questions and feedback.

Check in to the zoning of the land, and what is nearby for recent sales. There may be some hidden or easy to obtain value there, it is at least worth the look.

Sell the land. Live in or rent the house. 

1031 the land in to a 2-4 unit to get your feet wet