All Forum Posts by: Eric Guiltinan

Is the other place a duplex as well? Are you planning to house hack it? After another 6 months you will have satisfied your occupancy requirements for FHA. You have 60 days to occupy a property after getting an owner occupied loan so you could actually close on an owner occupied conventional loan in only 4 more months. If you occupy a duplex the downpayment requirements is 15% and you'll get a better rate. I think that if you don't occupy the downpayment requirement is actually 25% for a duplex, not 20%. I think the reserve requirements are less too. I'd reach out to a lender now just to run the numbers and learn exactly what you need to save.

Owning two duplexes right next to each other and living in one sure would make management easy. And the move would be so easy!  Sounds like a good idea to me.

I think the issue is that when you homestead a multi family you actually only homestead the portion that your living in.  For example your tax exemption is reduced proportionally to the square footage that you live in.  However the lien placed on the property to secure the loan is for the entire building.   Section 20(a)(6)(H) says that if the loan is secured by additional property other than the homestead that the bank cannot force a sale to recoup their money.  The end result is that they won't give you the loan.

@Pat Jones

My lender at UFCU said he could do it but I have a hunch it will fall through when it reaches underwriting.  I'll pm you his contact info.

You sound as frustrated by the law as I am.  The legislature clearly didn't consider owner occupants of multi family properties when they drafted this section.  I've often thought that maybe I should contact my representative or something but then I realize that its probably a waste of time.  However... maybe a retired attorney is just the right person to get this rule changed :)

@Brian Braunhuber  Article XVI, Section 50 of the Texas constitution forbids home equity loans and HELOCS on non owner occupied properties (only homesteads are allowed).  I don't think it matters where the bank is.  Your only option is a cash out refinance.

Are you sure about Moody Bank?  Perhaps the person you talked to was inexperienced?  I am also interested in doing this so if you find some way of pulling it off please let me know.

Eric

Hi Brendon, 

Good luck.  You can do it.  I think you are right to start with an owner occupied duplex.  Its difficult to know where the market is going but if you buy something that will cash flow after your improvements then it doesn't really matter.  That's what I did and its worked out great for me.  Let me know if you want to talk.

UFCU.  I will pm you my contact over there. 

If you have a 5% conventional you are definitely eligible for an FHA loan on a duplex. I bought a duplex with 5% down in Austin and a second with an FHA loan in Austin. No problems.

Any cash you leave in a property after a purchase or refinance that is greater than 75% (or whatever the bank requires) is an investment with a return that is exactly equal the interest rate on your loan - the inflation rate (~4.5 - ~1.5 = 3.0).  Calculate your returns based upon the money that you have to leave in the house to get the loan.  Take the rest and put it elsewhere.  You can get 4.5% with a mix of bonds and conservative dividend stocks.  In the end you have the same exact return but you are much more liquid and diversified.   Or do what most do on this site, accept the risk and reinvest in real estate.  

Like many have posted above i'm also skeptical of the numbers posted here.  Maybe a short term rental Airbnb thing or just a simple miscalculation.

@Lisa Bujulian @Account Closed

Pulled this off the census website this morning.  This is the latest data.  The next year (July 2015 to July 2016) is supposed to come out in December but it hasn't been released yet.  This chart is the growth rate of the 50 largest metros from July 2014 to July 2015.  I'd show more than the 50 largest metros but the graph gets sloppy.

Data comes from here:

https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk

Just to clarify here, some people in this thread are pointing to total growth, while others are pointing to the growth rate. I have a haunch that the growth rate number in the original post is a better indicator of where real estate prices might be headed. For instance, if you had a hypothetical city with a billion people in it and it grew by a million people in one year nobody would even notice. Although if Austin grew by a million people in a year I think FEMA would have to step in.

That being said, the growth rate number cited by Lisa is super stale.  Its from July 1st 2013 to July 1st 2014.  That period is 2.5 to 3.5 years ago.  Definitely not a number for an investor to look at.  I periodically dig up the population estimates off of census.gov  Maybe I'll take a look tomorrow.