All Forum Posts by: David West

Sure...we purchased our home in September 2015 for $408,000, over 2 and a half years we put in about $40,000 in rehab and we're selling for $592,000. The new place is a duplex close to the beach and I'm buying it for $720,000. We have about $17,000 on our heloc and we are putting 20% down on the new place. After closing costs and the downpayment, it's pretty much a wash. I anticipate moving expenses to be in the ballpark of $2500 plus the cost of whatever we do in the interim (45-60 days).  

We did it!!! 

It's been a long, arduous road but we are about to close the sale of our primary residence and move to a new place. Our first deal will officially be in the books shortly! We've put a lot of sweat equity into our current home, made a good profit, and we are looking forward to bringing everything we've learned into our new duplex close to the beach here in San Diego. I'm happy to share the specifics of either deal if you're interested, but this post is about one of the many dilemmas that you face as a seller. 

We've been negotiating with the buyer for several weeks and we finally have been able to come to an agreement. Here's the catch: we thought we'd be able to rent back our home after escrow closes but it looks like that is no longer an option. 

The place we are moving into has tenants and they need to be given 30-day notice once we release our contingencies, one of which is closing the sale of our current property. My agent presented the idea to the buyer's agent and apparently, the buyer flipped out and almost walked away from the deal. 

Now I'm in a position where we can close the deal, but my family (I have 2 amazing toddler daughters and a beautiful wife!) needs to be out of our home in 10 days and probably need to rent a place for 45ish days. 

I've heard this is a pretty common problem with selling and people get through it all the time. I'm posting it here because I've always received great feedback in the forums and I value the outside perspective or insight from anyone who has been through something similar. Sometimes there is an obvious answer that I'm not seeing so I appreciate any comments. 

I'm happy to provide any additional details if you need.

Here are a couple of the things I'm concerned about: 1) I have a very unique disdain for moving. I know it's not a common thing, but I hate moving, and it would be awesome if I didn't have to do it twice. 2) I don't have an unlimited bankroll. Even though we are making a nice profit on this place it is all going into the down payment of the new place so money is a little tight at this point. Ideally, the solution will also be something economical    

What would you do if you were in my shoes?   

@Upen Patel are there other products outside of fha that would allow for less than 20% down on an owner occupied duplex or triplex? Ideally 5-10% down?

@Account Closed I agree, I may have to bite the bullet, stack up enough for the bigger down payment but it does slow down the process. I really want to move into multi family and scale up. I'm going to check with some local portfolio lenders and see if they can make it happen. It's hard to believe that everyone else investing in expensive markets are all putting down 6 figure down payments. Thanks for the response. 

@Frank Chin thanks for the response. It sounds like you were able to overcome the dti issue from the heloc by using funds from another source. Unfortunately an alternate source for the down payment isn't available in my situation currently. Additionally the median home price in my area is $570k. I'm glad it has worked out for you as you've been able to obtain multiple properties in spite of the hurdles. 

My wife and I purchased a SFR in San Diego, CA in 2015 with an fha loan. Appreciation has been great and I've refinanced out of that loan to a conventional loan and opened up a HELOC with 58k available.

We want to move on to a new place but keep our current home as a long term investment. We view our current property as a long term hold for several reasons. 

We want to grow our portfolio and have identified a couple duplexes or even smaller single family residences in better neighborhoods, but my lender has told me that I won't qualify for fha or lower than 20% down programs because it won't make sense to the underwriter that we are moving to a smaller place. We're looking at places between $550k - $625k. 

In the case of the duplex she said I would not qualify because they wouldn't be convinced that we would live in one and rent the other. Additionally there would be some hurdles using the rental income from my current home towards my dti since I would be using the heloc for the down payment on the new place. 

I don't understand the logic. Besides the fact that we actually are going to live on the property and not just use it as a rental, doesn't it make sense that people would sacrifice square footage for a better neighborhood, better school districts, less commute, better quality of life...etc? 

Has anyone else had a similar situation and been able to purchase the 2nd home with owner occupied financing? How did you do it?

Do you have any advice or insight? 

I'm trying to get my brrrr on but they're not making it easy!!! 

I would greatly appreciate any feedback. 

@Dustin Lauer thanks man. Time to manage is the one I'm most worried about. We're going to budget for professional property management but I'm going to take it on for the first few months to see what really goes into it then decide if we need to hire someone for it. 

@Kevin Fox thanks for the insight. I wouldn't call this particular deal a homerun. The back up plan is to rent it out long term if the short term doesn't work out. If I had to go that route we wouldn't lose money on the property but it would break even or maybe provide minimal cash flow. This one is more like a base hit so I may be back on the hunt to find a better deal. 

@Jessica Fatel ya, it seems like the returns really make the deals worth it and it would be a great way to pay for vacation rentals. I feel like I have to be missing something because why is every investor in my area not jumping on these types of deals. I'm really looking forward to hear the community's responses. 

@Sarah D. I reached out to a management company called Evolve and they said they should be able to rent it out for 200 nights a year. They would handle the management for 10% of the booking. The place I was looking at is a 4plex in Bankers Hill. I'm curious how much work would go into managing the short term rental process and if I'm better off doing it myself. My goal would be to come in and immediately get all the units up on Airbnb. Out of curiousity, why would you only turn 1 of your 4 units into the short term rental? Do you know why your friend isn't happy with Pillow?