All Forum Posts by: Daniel Sager

I just met with a commercial lender today to plan for my Fall 2020 plan and ran some numbers on a couple of properties I had selected currently on the market. I say Fall because that is roughly when I will have the funds for 20% down on a 6-8 Plex property.

After looking at the cashflow numbers, they aren't really as high as I had hoped (looking at mainly C properties) and am now thinking I would actually be better off buying a 4plex sooner with 20-25% down and then, as soon as I am eligible to move out of the 4plex I am currently hacking, doing another FHA and moving into a third 4plex for 3.5% down. The cashflow would be better and I would be less out of pocket. Also, as my realtor mentioned, 4plexes are much easier to unload when I am ready.

I had wanted to move into commercial because of the cashflow but now rethinking. Thoughts?

@Skyy Dugger

I just started a new job in August and was pre-qualified in September (same line of work but slightly lower income for the first year) and moved to a different state. Was still able to qualify for much higher than I wanted to spend after writing a couple of letters to underwriting.

I found a 4plex where the burned out owner was moving out of one of the units so it worked out well. I would suggest seeing whom is closest to having lease up and maybe offering cash for keys to get them out so you can owner-occupy and qualify for the 3.5% down.

@Kai Van Leuven

I have thought about these same issues as well (especially stagnant income growth effecting appreciation).

This is a real thing and it seems income growth has stagnated for quite awhile for a lot of folks.

My input would be that, as others have pointed out, people will always need a place to live. There may be an overhaul of "the system" at some point (topic for a different thread haha) but as long as you haven't overbought on properties with zero cash flow in ND at the height of the fracking boom, you'll more than likely be fine.

Chances are, people will always want to live 🎶downtown🎶 and the folks that currently are are already paying thousands per month for a shoebox. I'd be willing to bet that gentrification continues in coastal areas and becomes even more exclusive than now. At some point there will need to be more vouchers and such in place so that the workers at the bottom will be able to live in these places to support the economy.

@Robert Tinker

I am looking at furnishing an extra bedroom to Airbnb in my building that I'm househacking. Owners unit is a 3 bed/1 bath. The room I'm looking at is 9x10 and j measured it out the other day and I'm thinking a full is the biggest I'd go because there wouldn't be any room to even walk around the bed with a queen! Smaller bed with some nice Ikea end tables and "millinial" lamps and such is going to look better than a large bed with no furniture lol.

@Aaron K.

Thanks for your input sir

I purchased a 4plex a few months ago for house hacking and inherited 3 tenants. I have since gotten rid of one of the tenants and have rehabbed the unit. This is either a B or C property depending on who you ask (decent area but no garage etc).

My questions are what most of you folks require for credit score minimum and what is best resource for a solid lease? Existing lease previous owner used left some to be desired.

Thanks!

@Natalie Schanne

Preferably ugly!!! I'm glad someone else said it haha

@Derek Hutson

I did this for 6 years in 2 different homes with the most recent being in the Springs and as long as she is chill and you get the folks it'll be great. It's all about the people you get in there as you know...just don't rush it. Its very common for the gf/wife to be leery of this set up (even after being presented the numbers!!) So maybe suggest making it all girls? Maybe this will make it worse? 😂. I'll mention three things from my experience:

Get a place with a separate master bath. This is a must!!

Go large SF over duplex; especially in a market like Denver. I highly doubt you will find any (non destroyed) duplexes that won't have a mortgage payment barely less than 2 houses.

Use month to month leases only so you have an out of for some reason it isn't working out but you'll know pretty quick.

It can be a stressor on a relationship but honestly man it's set me up to be much further ahead financially than most people I know. My age or older!!

@Angela Vestal I recently purchased a 4plex 5 mins from the Anchorage airport and a buddy mentioned this to me as both of his parents were career flight attendants. I just finished rehabbing one of the units (2 bed/1 bath) and was planning on Airbnb for one of the rooms in my unit (3bed/1 bath) but this is something I'll be looking into.

I plan on purchasing another building in 10-11 months as well.

@Justin A. I bought my first SFH at 25 and did a house hack/"slow flip" (didn't know at the time that house hack was the preferred term). I would suggest figuring out how many bedrooms you would need to at least break even on the mortgage + expenses. For me it was 5 bedrooms which was difficult to find in my area much less one that wasn't extremely expensive or destroyed. I found a great house that needed mostly cosmetic upgrades but made the mistake of using a renovation loan because the home needed a new boiler and electrical panel. I made good on the house when I sold it but I could have done much better had I used cash for the major upgrades.

I sold at 2.5 years to avoid capital gains and rolled my winnings into more of a flip at that point. I had had time to get comfortable with remodeling and knew what I was getting into (and also knowing what I had no business doing!).