All Forum Posts by: Derrick Dill

If you don't have perfect credit, now is a good time to raise your credit scores so you can get better rates for better loans, thus giving you better deals.

You can add a credit card, increase credit limits, etc.

PMI is included in the mortgage payment (the most common practice is everything is put into a "impound" account, so technically everything is included in the mortgage payment.) PMI is also tax deductible if you make <100k.

I waited until 20% equity before I refi'd.

Lathan,

I did FHA owner occupied duplex last year, and I'm purchasing my third rental now (so I had the same plan as you).

1. 2 separate insurance costs, the PMI pays your lender because your putting so little down (3.5%) and insures him in case of foreclosure. You can refinance to conventional to get rid of PMI. Home owners insurance insures your home, and is required.

2. If you're unsure if you can afford it, you need to talk with a lender, he will tell you exactly how much you can afford. The lender includes 75% of the rental estimate (ex. rents for 1000$, includes 750$ in your DTI to calculate your approval.) It's not a good idea unless you have at least 6 months in reserves.

3. Not sure about most accurate, but check on craigslist for that area and check what rentals are going for. You can also use rentometer.com as a reference.

4. I live in California, my duplex is half a million dollars. I rent to one tenant for 1600$, and roommate for 600$( good friend)=2200$, my mortgage impound account totals roughly 2800$. House hacking usually will pay for your mortgage and cash flow you some in majority of areas in the Midwest. For Example, In Ohio, I just bought a duplex mortgage is 618$. One unit rents for 750$, other for 800$. If you house hack that, you're cash-flowing 900$+ monthly.

Depends what your goals are. If you want a primary residence there in Hawaii or invest out of state. If I were you, I'd take advantage of VA loan and either buy a primary residence (if that's what you're looking for) or invest in some rental properties in the main land.

You should check with some mortgage brokers or credit unions, they usually go up to 45% DTI. If you don't want to do this, pay off your 9k car loan ASAP or refinance house or student loans (if it'll lower your payments enough) and get your DTI within range.

Jerome,

As an investor in California I found myself with similar decision. I house hacked (still am) and got my first duplex property here in California, then I went turnkey from there.

Your next steps are:

1. Get a lender, get pre-approved and see how much you're eligible to be financed for. This will determine how much you can afford, it's important to narrow down your price range.

2. Decide on a market. Where? Do you want cash-flow? appreciation? hybrid?

I thought I'd have an issue with debt to income ratio as well, but your DTI should be getting better as you purchase cash flowing properties. I bought a property with mortgage impound account at 540$, rents for 1200, lender calculates 75% of rent=900$. From a lenders perspective, I have 540$ more of debt, but 900$ more of income, my DTI gets better and so should yours.

I'm a 29 y/o millennial and there were some comments that I resent about my generation.. First of all to the original poster, I grew up and work in Orange County, if you go to the MLS right now and look for multi families in the entire Orange county, the CHEAPEST, most beat-up, in worst area of OC is 500,000$, half a million dollars. Many markets millennials simply CAN'T.

"Seven in 10 seniors (68%) who graduated from public and nonprofit colleges in 2015 had student loan debt, with an average of $30,100 per borrower. This represents a 4% increase from the average debt of 2014 graduates." My Father worked part-time delivering news paper and paid for his college. I worked a full time job and went to school full time and left with 40k in student loan debt. I got my degree in Nursing and love my job and helping people. I have a mortgage for a Duplex at 3.5% interest, my student loans are at 7% (DOUBLE the) interest and accrue 21$ of interest A DAY. I have every intention to pay my loans at there incredibly high rates back in full on my own. Can get a loan on a mortgage for 3%, Yacht for 2%, for EDUCATION of our youth is 6%+ interest.

How did student loans exponentially grow? To work on the national deficit, we started taking funding from education (among other things), and who had to start picking up the tab? Us, the millennials. It's a different era, where we pay for education in full, instead of having it subsidized by the government.

This means higher Debt-to-Income ratios, harder to get approved for loans, and having to rent month-to-month eating monthly incomes makes a recipe for millennials needing to wait for home ownership.

I'm a young professional trying to become financially free with passive income. House hacked my first property in California, live in one unit of duplex and rent the other out, bought a SFR in Kansas city, and I'm in the process of purchasing my 3rd property now in Ohio. I'm a buy and hold investor

Chase,

I went through a realization like you did with Cleveland. I'm an investor from California and did my research and decided to invest in Cleveland. Like many have mentioned the population growth is an issue, and usually go hand-in-hand with appreciation. However, Cleveland has been more lively lately.

1) I am seeing properties that cost around $60K that will produce gross rental income of $1-1.4K per month. Is this realistic or are these inflated rents? Would this indicate a property needing a lot of rehab or cap ex? Generally, are these prices/rents in decent neighborhoods?

Depends what areas you are looking. I'd say average rent is closer to 1k, rather than 1.4k for a 60k property. Many of these are old homes that need renovation.

2) Is Holton-Wise actually a decent property management company or not? I looked at their BBB rating and it is not great. Are they just a turn-key scam company? If not, I see they will do some rehab. Does anyone know how this works? Would they be a good option for an out of town investor? Do you know what percentage they charge? Any other property management companies you would recommend? Same questions as above for other companies. I am looking to build a team in Cleveland (I'm out of town).

I asked one of the Holton-wise agents for his list of B-class singles in Cleveland, and he sent me a list of currently available B-class properties. They are not a turn-key scam company, they are not even a turn-key company. If you want to buy a property through one of their real estate agents and not use them as property managers you can, you can choose to use them how you want to. If you want to use your own contractor or home inspector you can, but they have guys readily available if you need as well. As an out-of-town investor myself, I haven't had property management experience with them, but if they're not satisfying your needs, then switch to a different one.

3) What is the biggest pitfall in Cleveland?

Older houses, lower growth, cold, high property taxes in some areas.

5) Are there any specific locations I should look in? Great streets / neighborhoods?

The area I've decided to invest in through my due diligence is Parma. I like Parma because:

-Largest suburb in the state of Ohio.

-Affordable homes

-Ranked 32nd safest in U.S. per neighborhoodscout 2014 (ranking has gone down since then, but still a really safe area)

-Area is surrounded by schools: elementary, middle, high school with several amenities.

-Low vacancy rates, Parma is densely populated.

These are some of the reasons I decided on Parma, but I encourage you to do your own due diligence, let me know if you have any questions.