All Forum Posts by: Cody Ringler

I have a lot of questions, @Cody Ringler:

• Why do you think you'll be able to add $100k of value with no renovation?
• Include an initial-repairs budget. There is always something!
• You're buying this with 0% down? Is this a VA loan? If so, you'll have to owner occupy, at least for a while.
• What about insurance?
• Management will be at least 10%.
• CapEx is high, but you forgot repairs. Together, they probably be ~15%, so your overall number is fine.
• What does the $100/month "misc" cover? Try and be as specific as possible with your expenses.
• How about water/sewer? That's usually covered by the owner of MFR.
• Any lawn care to consider?

@Cody Ringler you signed a Mortgage at your closing that said you intend to occupy the property for at least 1 year.  Moving out early and buying another primary residence in less than a year is considered mortgage fraud.

However, if you were to refinance that VA loan into an investment property Conventional loan (yes the rate will be higher), then you can move out, rinse and repeat. It also restores your full VA entitlement, so you could buy another property with $0 down. There is also bonus entitlement, so you may be able to use a VA loan on another property after a year without refinancing.

Your best strategy is to align yourself with a great team, which should include a rockstar loan officer that is passionate about helping real estate investors, is a VA loan guru, and coaches you about your exit strategies before you even enter.

Best of luck and TYFYS!

@Cody Ringler what kind of mortgage do you have on that first duplex?  If you move out in a year and rent out the newly-vacant unit, what does your cash flow look like at that point?  Does that one year time period come from the lender, i.e. do you have an FHA loan? If so, could you refinance after year 1 into a regular fixed-rate mortgage, and would your cash flow with the 2 rented units be enough to afford the PMI on your refi mortgage? If so, you could keep getting a new FHA loan on a house hack every year, refi after the year is up, and rinse/repeat. It'd be best if the loan involved a bit of forced appreciation, so that you could combine house hacking with BRRRR and increase your velocity of money.

@Cody Ringler You got really solid advice from @Richie Thomas - if you want to talk to a bunch of people who specialize in STRs, head over to the Short Term and Vacation Rental Forum and there are a lot of people happy to lend their opinion. For my part, I say triple-check your occupancy and daily rate expectations, and then underestimate - if you're still happy with the potential cash flow, awesome!  But if that makes the margins really slim, it's probably not that great a deal.  STRs should have lots of margin, so you can absorb the ebbs and flows of them.

By the way, you can self-manage your property without doing the cleaning etc. yourself - there's lots of tools to assist with that and all you need is a good, reliable cleaner, a handyman, and a system!  I self-manage four STRs and I'm not in the same area as any of them.  

For lending, there may be several options out there, but it will depend on the property and your circumstances. If you plan to spend some of your own time there, you might be able to qualify for a second home loan (you would not be able to use a property manager if you did this) and put as little as 10% down. Some conventional investment loans may allow as little as 15% down. If you won't qualify for a conventional loan, I do know portfolio lenders who will lend based on the STR income potential, but they require at least 20% down and rates/fees are higher.

Good luck!