All Forum Posts by: Chris May

I've come across a few other posts on this topic, with a few people saying they found solutions but not many specifics offered.

I currently have a duplex with ADU (3 units total) for sale in Durham, North Carolina with a solid amount of interest. The problem is that Fannie Mae / Freddie Mac will not back multi family properties with an ADU. It's a bizarre distinction to me, but that's the reality I'm working with.

Can anyone point me to a loan product that my interested buyers can use? We've explored commercial loans, but the terms don't really work for most multifamily buyers.

Someone in this thread said they did it successfully, but didn't leave enough info for me to track down: https://www.biggerpockets.com/...

I figure this wonderful site must have an answer to this question!

Hey Folks - I'm located in Durham and have done some investing here, but the market has gotten too frenzied. Not finding many good deals.

I've noticed that property in Greensboro is much cheaper but the rents seem to be decent. Curious what kind of experience I should expect and what you all have learned. What are the CAP rates? Is it an active market? In other words, if I buy a property or two, will it be easy to sell if I decide to get out? What is the average days on market?

I'm seeing a lot of sub $100k properties around the university. Are these good areas to invest? Seems like there would be a strong rental market around there, but I'm skeptical of the prices. In Durham, that price point means low rents and less reliable tenants.

I hear you on waiting the extra 4 months. As you mentioned, only half the property would have qualified and we had a pretty unique opportunity in North Carolina that we couldn't really pass up. It made forfeiting that tax exception palatable. We also didn't think we'd ever think about selling, but here we are!

That would be great but unfortunately we're about 4 months short of 2 years.

 Whaaaat. Bummer! That's completely absurd but good to know. Thanks for the info!

 I was planning on Puerto Rico. I assumed that was allowed since it's a US territory. Is that wrong?

 It definitely is emotional, ha. We bought it with the intention of renting it until we're ready to retire, so selling now feels like we're upending our plan. It would probably be pretty hard for us to get back into that area later on because we're already down to 1 income. Would probably be tricky to qualify again.

Appreciate your thoughts.

 Yes, it's in Oakland and yes, that is definitely a concern. 

Luckily we have two tenants who pay market rates (for now), but as you mentioned, if the market dips and they move then we'd have to lock in new tenants at lower rates pretty much in perpetuity.

I think you're touching on the dilemma. Why would I want to be in the Bay Area market when I've already made a handsome profit. I'm tempted to take the gains and turn it into cash flow on homes in NC that I own free and clear. 

Sure, it could keep appreciating, but what if there's a recession? Will I be kicking myself that I left myself exposed to that much risk?

I realize there's no "right" answer to this question, so I'm just looking for opinions or angles I haven't thought of.

We owner occupied a duplex a few years ago in the SF Bay Area. We've since moved to North Carolina, are owner occupying another duplex here, and the California property is fully rented. We did a ton of work to the CA property, so that combined with the incredible appreciation out there in the last few years, we're sitting on a pretty remarkable paper gain.

We've racked up quite a bit of debt rehabbing both the CA and NC properties. Right now we're fine--rents cover the expenses on our CA property (barely), but the prospect of a potential recession and a short term rent dip have me a little concerned. We've increased our financial independence moving to NC (lower cost of living and wife no longer works), but part of that means having slightly less income to cover economic shocks.

The CA duplex is also really hampering our ability to finance additional properties. It feels like we're stuck and just have to ride out another decade or so to realize gains from the property.

So here's the plan: 

1. Sell our CA property
2. Do a 1031 exchange and buy 2 SFRs in North Carolina as rentals for all cash. Put another 50% down on a vacation rental somewhere fun (probably the Caribbean). Live there 1-2 months of the year, rent it out the rest of the time.
3. Pay off all debt (except for a modest mortgage on our NC duplex).
4. Further increase our financial independence by significantly increasing our cash flow from rentals while decreasing risk.

The thing that's agonizing for us is we were hoping to retire (early) in the CA property. It's an absolutely beautifully restored building and we love the neighborhood. We're also giving up future appreciation if we sell now. Of course, if we retire there then we're not selling ever. I also don't know how realistic it is that we'd be able to cover the mortgage if we moved back into the property while semi-retired.

I feel like the right answer is selling the CA duplex, but again, it's killing me.

Thoughts? Help!