All Forum Posts by: Deandre P.

I'm assuming there is a particular reason to why you want to purchase in SC then Boston? You can only have 1 FHA loan at a time so for your scenario you would have to purchase in SC, live there then either pay it off or refinance. What makes the most sense though is to purchase a multi unit in Boston first, then purchase a home in SC using conventional (5%) rather than FHA.

Do you have each student on an individual lease or are they on one lease together? If they are on a single lease together, then it is there responsibility to continue to pay rent and I would not clean or market the other room.  If they are on individual leases then you should have collected individual security deposits. If this wasn’t done, you may have to self fund initially and deduct at the end of the lease term.

I wouldn’t place much emphasis with the 1% rule. At best I may use it to get an idea on which markets have the potential to cash flow better. There are so many caveats that aren’t captured in a 1% rule analysis (appreciation, taxes, insurance, debt coverage, etc). I’ll typically analyze a few deals out of each market and compare markets that way whenever I’m deciding on which market to go into. 

I think the security deposit makes the most sense. I’m not much of a fan of increasing rents for a specific tenant for credit history, etc.

Can approach this a few different ways. If going the subject-to route, I would offer them some amount of cash as a buyout of their equity.  Based on your #'s if there's a balance of $430,000 and assuming the asking price is close to value, then there's ~$69,000 in equity ($499,000-$430,000).  I don't think its reasonable for them to leave all that equity on the table just to save the $1,900 a month payment. If I was making the offer I would offer them $50,000 to $60,000 cash (depending how much you want to negotiate) to subject to the property.  The can pay their seller agent  commission from the cash payment.  This would make it a win/win for everyone.  You get into the property at a more attractive interest rate, spending less cash then you would if you purchased and had to put 25% down.  They get the equity, which is what they would get anyway if they sold the traditional route, and seller agent still gets paid.  

It all depends. Lenders do vary in some regard, most of the difference will lay within the rate and closing cost (I.e origination charges, fees, etc). Other than that the parameters like DTI ratio, down payment will usually be pretty similar if you are comparing bank lenders. Credit unions do typically offer lower rates compared to traditional banks, also I have seen credit unions be more flexible in financing approvals. Outside of that there are other lenders outside of bank lending, which can differ drastically with their terms, credit requirements, down payments, etc.

I don’t think hard money would make sense in your scenario. Ultimately you are looking to operate as an event venue so I would suggest an SBA business loan. Prepare a business plan, look into your bank/credit union for sba/business loan. 

In my opinion, doesn’t seem like an issue to me. There is always a risk a tenant won’t pay, however at least in this case you have 12 years of good rental history to go off of.

I would suggest looking for a multi-unit, like a duplex/tri-plex/four plex. Could live in one unit and rent out the others. A great way to invest in real estate and earn cash flow, while minimizing living expenses.   

Quote from @Sean Starkey:

I took out a 180k HELOC on my primary and didnt have a good exit strategy. I used it to buy my STR in yucca valley and its doing well so it was a good purchase! I really want to find some lender out there that can make this loan at a fixed rate including principal and interest. We are interest only at the moment and its horrible. We are paying $1500 per month. Please someone out there help me get this loan fixed!!!

We have tried in the past few months but our primary isn't worth enough to allow to use it as collateral. I don't want to refinance my primary because we have a 2.75% rate. I simply want this HELOC fixed including P and I for 20 years or more so that it can be lower monthly for us.

Someone out there must have an idea!

Help!

Was the 180k used as a down payment for the STR? Or was the 180K used to purchase  the STR free and clear? The best strategy would be to pursue a cash out refinance on the STR property, as you should have at least 180k in equity. Based on the info presented you are already paying 10% on the HELOC so a 30 year fixed rate on the STR, wouldn’t be to much different, however could likely lower your payment.