All Forum Posts by: David H.

@Sherfeng Vue

You’d may have to speak with your lender and the individual lending institution you decide to work with as their policies may be different than those I experienced.

I can say from my personal experience that you can have as many owner occupied loans running as long as you occupy the buildings for at least one year and you do it one year one building at a time. When you move out after the first year you are free to get a new owner occupied mortgage and retain the previous one. No need to refinance. It’s a method commonly referenced on Bigger Pockets as a component of house hacking.

Some lenders may require an explanation as to why you are moving, though this explanation can be quite simple. In my case, I was “too close to the highway” and the property I was moving into was further away from the highway.

@Sherfeng Vue

Hi Sherfeng,

Sorry I wasn’t more clear. I just purchased a duplex that I will be owner-occupying with 10% down. I will live in it for a year and move on to the next one.

In my market you can get a conventional loan for owner-occupied properties with as little as 3% down (with a 700 FICO) and no PMI. Typically they make up for the no PMI with higher interest rates, for example you can expect 4.5%. One bank for example offering this product is Biddeford Savings Bank

Hope that helps!

My thoughts are landlords are often being punished for keeping up with inflation and responding as any other business owner would to supply and demand (as others have stated).

In my market there are out of touch expectations for rent raises or lack there of. It’s quite rare to see rent raised each year, say 2%, to adjust for inflation. Rent is typically raised when the tenant moves out, so rent spikes drastically to catch up for the years of not raising it while occupied, plus renovation costs. Simultaneously, the city has raised property taxes on average of 4% each year for 5 or so years (probably longer just an off the top of head recall). To top it off the city is doing a real evaluation of property taxes which will surely double many landlords tax bill.

Supply and demand coupled with entitlement is major factor in my market as well. The city has threatened rent control left and right. Too often it seems renters are demanding to live in the most desirable neighborhoods in the city (Munjoy Hill) at prices they deem fair. Frustratingly, if you drive 25 minutes you can rent for half the price. Drive 40 minutes and you can buy a 3 unit for $100k. Even more frustrating is that the same crowd is entirely anti-development. No new units in the city and no rent hikes. 🤔

@Justin Furtado

I second the HELOC route. From the looks of it you will have access to quite a bit of capital going this route.

Great investment so far in my opinion!

@Michael Ealy

Thank you for sharing Michael! This is very inspiring.

I love how you detailed the steps you took and emphasized how the specialized knowledge you had coupled with implementation delivered such great success.

I also really like how you created an incentive for the real estate broker and the result was beneficial for all.

Additionally, the point you made about knowing your markets rents, both section 8 and market, I’m finding is key. I’m very new to real estate, only on my second duplex know, but this has been very important for me when assessing a good opportunity.

@Jonathan R McLaughlin

I completely agree with Jonathan.

I just purchased a duplex and took this route due to my prior experience inherited nightmare tenants.

One thing I’d suggest is to be very careful with estimated rehab costs. If one is a smoker and both are borderline hoarders that screams $$$ to me. You never know what is under a carpet, bed, behind a cabinet etc. when dealing with a hoarder.

@Murphy Frankhouser

Have you tried any credit unions? In my market their are quite a few low money down conventional morgage products available from small savings banks and credit unions.

I just closed on a duplex yesterday at 10% down, 3.625% no PMI. I know of a savings bank that has as low as 3% down at 4.5% with no PMI. There are quite a few 5% down products as well, some with PMI and some without. Granted, this may be because I live in a market that is entirely over banked.

@Ben Ertl Happy to help Ben!

If you'd like a good contact at LiveOak just send me a message. My old boss who taught me everything I know in SBA is working as a nationwide lender at LiveOak. He is specializing in business acquisitions and real estate so I think he'd be a perfect fit for your scenario. If he can't do it I also got a few others guys I think would be happy to take a look.

@Ben Ertl

The structure would differ from SBA lender to lender. I think you could get structure in a few ways that would be beneficial to yourself and the seller.

Some SBA Lenders can structure up to 100% LTV (I know its crazy and I'm not sure how they pull it off, looking at you LiveOak). Most likely you would have to come in with 5% Down. Especially since this is a hospitality project which would be considered a special use property.

One issue with Seller Financing on SBA loans is the seller financing must be on full standby for the life of the loan in most cases. The seller financing must not exceed half of the required equity injection. Typically we see: 5% Down payment + 5% seller financing + 90% LTV. It really depends on the seller if they would be willing for such an arrangement.

You could (and I don't suggest this) use borrowed money (hear me out) for your portion of the down payment ONLY IF you are able to pay that borrowed money with outside income. I am working on a business acquisition with real estate and the $200,000 down payment is completely borrowed and being payed down with outside capital (the purchaser is a doctor). This is a very rare, very risky, and highly frowned upon method, but hey, its possible.  (spouses income can count as outside income for paying down borrowed equity injection) 

@Oliver Carey

I agree with Oliver. SBA would be a great option. I’ve worked on similar situations as an SBA lender.

SBA 7a loans can be closed in 30 days with the right lender. It all depends on who you choose to work with. I’d try LiveOak Bank or Ready Capital for something like this.

Something to watch for with some SBA shops is some avoid rural areas and independent hotels.

Another thing about SBA in general is make sure you work with a “PLP” lender. Just ask them and if they don’t know they are one walk away.