All Forum Posts by: Eric Chiang

Hi BP Community, REI rookie here!

I'll be closing on a SFH later this week, where my partner and I plan on renting by the room for medium term rentals (MTR) for travel nurses. There is one hospital within <10 min drive from our place, with several others within 20 mins. There's also a university nearby. I'll be househacking one room for at least one year, with plans to move out afterward.

Here are my questions: 

- For those who have experience in MTRs, do you have any general advice for someone starting out in the MTR space? 

- Our plan is to utilize furnishedfinder.com for our bookings (focuses mainly on travel nurses, traveling HCPs). In order to reduce vacancy, we plan on also listing on Airbnb with 30 day min. What issues do you foresee if we also list on Airbnb (if any)? 

- Any advice on how to make our listing more desirable? We're utilizing professional photos, trying to optimize room accommodations (eg private bathroom for master bedroom, 2 garage spots for larger rooms), but looking for anything else that may make our listing more desirable 

- Any issues if we also accept long-term leases (eg 1+ year) & university students/other young professionals? I plan on having house rules in place, but I'm a bit worried about the dynamic between travel nurses and university students/other young professionals if I open up the tenant pool. At the same time, I also don't want too many vacancies 

- Any advice on how to systematize the process once I move out? I'm familiar with TurnoverBNB and Hospitable, but wondering what else I can consider

Any advice is much appreciated, as I am new to the space.

Happy investing!

Hi @Kez Strong, congrats on getting into REI!

I'm currently househacking a duplex, and used an FHA loan to put 3.5% down. From my experiences, my suggestion would be to weigh the costs of purchasing the duplex houshack vs. your current housing situation. If you're currently renting and having the househack would reduce your housing expenses, I would suggest househacking so you can also take advantage of the other benefits (tax benefits, loan paydown, appreciation). If you're living cheaply/at home, it may be beneficial to keep searching to make sure you find the right property where the numbers make sense.

Just make sure to also factor in costs such as vacancy/repairs/CapEx. Once you get your first property, you wouldn't want to stop haha

Happy investing! 

You've gotten great advice here thus far. The only thing I wanted to add was:

Instead of a HELOC, would a cash out refinance be a better option for you? From BP podcasts, I've heard David recommend HELOCs mainly for shorter term ventures (such as flips) due to the high interest rates (which can be variable) because you can pay back the HELOC relatively quickly. However, HELOCs are typically associated with lower closing costs

For a cash out refinance, you would be locked into a lower rate for a longer period of time (compared to a HELOC). You do need to consider the closing costs associated with this though.

Just some considerations. Happy Investing! 

Everyone situation is different, and it seems (from your original post) that you'd be more comfortable with the FHA loan option. As others have mentioned, it may be a bit more difficult to get an offer accepted with FHA, but it definitely works. I'm currently househacking a duplex and I used an FHA loan, albeit it was a property that was on the market for 3-4 months.

Would not suggest sticking with a realtor that pressures you to offer something that you're not comfortable with. Consider having an open conversation with your current realtor about how you're feeling and/or consider other realtors.

Happy investing! 

I'm running into this problem right now actually haha. I've heard that refinancing out of the FHA loan is the most common.

I would double check the logistics behind these, but some potential solutions:

1. If the FHA loan is only under your name, could your husband get an FHA loan for the next property?

2. If you are looking at SFR to owner-occupy and rent out the other bedrooms, 5% down conventional loans may be an option

3. Consider NACA program if possible

I'm sure others may have more experience/creative solutions, but those are some that come to mind. 

Happy investing! 

Lots of great questions here, some of my thoughts below (not answering specific questions in order, per se):

1. If you are going to owner occupy, consider an FHA loan (3.5% downpayment) or NACA program (0% down, but must more hassle). With the FHA loan, you can qualify with a low credit score, but you'll have a 1% PMI for the lifetime of the loan. If the numbers make sense, definitely something to consider. For 3-4 units, would need to pass the self-sufficiency test, so that's also a factor. This doesn't apply for a duplex.

2. It's good that you locked in a good rate with this lender, but I would still consider at least talking to a couple more lenders just to see what type of interest rates/loan option they offer

3. For one property, as other have mentioned, you can probably get away with tracking it via excel sheet. That is how I've done it thus far and it's worked for me. Once you have several properties, you may want to consider things like QuickBooks

4. I do not have enough experience to give advice regarding converting a SFR into a duplex, but just wanted to note that there are several factors that you should consider financially while doing it, such as the construction and applying for permits. Depending on the property, it may be worth the time/effort/money to do so, but consider the opportunity cost of using that time/money for another property as well.

Happy investing! 

Househacking, depending on the area, may not allow the tenant to pay your entire mortgage down, but it'll definitely reduce your living expenses while you build up equity. Additionally, you can utilize an owner-occupied loan such as FHA to purchase even a multifamily property. With programs like the FHA loan, you can qualify even with a low credit score. This allows a lower barrier to entry into REI.

Cons - as others have mentioned, you will have a neighbor who is your tenant. If you have a significant other that you live with, it may be harder to convince them to live on a property with a tenant. 

Overall, I've found the benefits to outweigh the cons, but you'll need to assess your own situation. I currently househack a duplex and haven't turned back.

Happy investing!

Hi BP, rookie here. 

Has anyone had experience finding a partnership template online that would work well for a buy and hold SFR in CA? 

I'd have an attorney review it once I've filled it out, but I'm not sure how good some of these online templates are for my situation. Was wondering if anyone has found one online that they liked.

Thank you in advance, and happy investing! 

Hi BP, rookie here. Been investing and analyzing small multi-family properties (currently househacking a duplex in Riverside, CA), and recently discussed partnering up on a SFR in CA with a friend (will be forming official partnership or LLC).

What are some of the pros/cons/differences of investing in SFR vs. residential multi-family properties (2-4 units)? I'm more familiar with small MF, and I just wanted to weigh each side of the argument.

From my initial thoughts:

SFR: 

- Competing against families looking to buy a personal residence

- Dealing with tenants that may focus more on school district/area to raise kids

- More properties available on market to analyze

- Potentially easier exit strategy 

Multi-Family:

- More rental income for less paperwork, without 2x the amount of work

- Limited buying and selling pool (would likely deal with another investor)

- Potential for tenant disputes on property

Thank you in advance for the help, happy investing! 

Agree that I've typically heard that seller financing tends to have lower interest rates than normal banks, though I've never had a deal with seller financing.

I recall BP episode 527 with Pace Morby discusses seller-financing, so that could be an inexpensive way to learn more about it.

You can potentially find deals that may be seller financing potential by setting up searches for properties that haven't changed owners in 20+ years. These owners would probably be more open to the idea (particularly if they are also REI), but it really depends on a lot of other factors since seller motivation for seller financing is more about the seller than it is the property. It's very difficult to force seller financing onto a situation where it's not the right property/seller, but there are a lot of benefits to it for the right situation (lower downpayment for you, lower capital gains tax and steady income stream for the seller without being a landlord, etc.)

Happy investing!