All Forum Posts by: Eric Hardt

Yes, generally I’ve seen them at 65-75% Ltv and normally higher origination +1 point higher rate. But of course as others have stated, make some calls to local/smaller banks and see what they offer in your area.

@Jonathan Lewis

FHA is owner occupant only. So you'd go conventional. Would range between 15-25% down. Rate will also prob be 4.625 or higher.

I don’t know Texas so unsure if your insurance, electric, water, etc is good. But capex is low. No vacancy accounted for. All things I would consider.

@Sean Keefe definitely check the commitment length. The last few primary residences I have purchased have all been 1 year, but I have seen some others be 2 years as well.

@Brandon Ribeiro man.. I feel like you got tons of conflicting advice here without you providing much info.

First of all, I think you have to make sure that $750 a room rent is accurate. Not familiar with area, but surprised it would be that high without a private bathroom. I’d also want to try and get an idea on how quickly situations like that would rent.

Next, I imagine you’re going to be in the $1700 range for piti plus Pmi. Can you get a mortgage for this.  I don’t know your debt load, but I’d imagine that you’d need a 60-70k income. If you do have that, fantastic. But why haven’t you saved more than 10k? Are you currently renting and if so, how much more is this this property’s piti and expected capex? I just feel like it wouldn’t be a very responsible decision if you couldn’t  reasonably afford the place without renters. Buying a duplex and house hacking is entirely different than what I presume is a SFH and doing so. What if you absolutely hate it?

If you’re dead set this is the house, I think you have a few options. Save hard and cut short term spending. Borrow money (banks will generally look into source of funds). Look into down payment assistance programs. And my last advice I’d be leery of.. but look into short term loans. I’ll be honest in that I don’t know if something like a 10k personal loan would disqualify you from a mortgage, both from a underwriting perspective as well as a dti perspective. Look at a zero percent credit card to save agressively if you are extremely responsible with your finances. Put all reasonable purchases on that card for a few months and save that money. Just make sure you pay it off before interest accrues (again affects dti, but minimally). Be honest with yourself if this is the right decision right now. I feel like it really only is for a small percentage for those who post similar questions.

My $.02

@Joshua Herald your financing numbers are way low. I don’t think there is any way you find this for less than 4.5%. And I presume it will get to 5 pretty quick unless you have great credit depending on area. Your mortgage insurance is low also. I also don’t see any upfront mi anywhere. Also, not sure how this would be set up from a utility perspective.

Even with all those things, living close to free sounds pretty good!

@Bryan Pham I'm with Brian and Jason here, unless things have changed in the last year. I bought a new primary residence last year and was able to use the lease for the home I was living in (converted to a rental) to offset my DTI. This was a Wells Fargo conventional product. They took 75% of monthly rent as income, then the PITI/HOA as debt payment.

Strangely enough, I had a ton of demand and ended up buying another rental a month after I closed on the primary through someone I knew. They allowed me to show it before i closed and I ultimately secured a tenant prior to the full underwriting process, and they allowed me to use that future lease against my DTI. I would have qualified anyway, but it allowed me to put less money down.

I understand that these things are short and you can only get into the weeds so much, but I wish there was a bit more questions from David and Brandon. David as the guest was definitely one of my favorite episodes ever as I really thought he was super intelligent and his out of the box thinking.

I think when Ashley talked about a $40k profit over 3 months, davids ears perked up like mine did. You’d have to clear $450 a day every day for 90 days to get there. I’m not calling bs on it by any means, I just think asking a bit more detailed questions about it would not only add a ton of credibility, but also give a lot more knowledge to new investors possibly interested in the vacation rental space.

I felt the same way with the previous guy with 22 units (I can’t recall his name). My perception from listening to that podcast was that his 10k a month was rent - piti and didn’t account for vacancies, maintenance, capex, etc. I definitely could have mistaken but I think questions about that could have lead to a lot more knowledge gain, healthy debate, and perhaps a different mindset.

With all that being said, obviously you want to be courteous to your guests. I don’t think you want to put anyone in uncomfortable spots, but I think those are some things that could make some of these episodes quite a bit better. I know David gave me a lot of motivation to grow my portfolio when he was a guest, so I hope as he gets more use to hosting, he does some of these things to really take this show to another level. Just my $.02

I definitely wouldn't want to live there. I see a company advertise turnkey here sometimes as a great area, which I always thought was laughable. I definitely would classify as C- and D as well. As Filip also mentioned, the taxes in Dolton are crazy. Expect to pay 5% of value. Some of the turnkey ive seen are lower, but they were also just reassessed last year and have t taken effect yet. There are plenty of areas in Chicago and burbs that cash flow, t just depends on what you are looking for. Chicago has lower taxes but the city and county are an absolute disaster. Expect to jump thru hoops if you go with section 8. Illinois is obviously extremely tenant friendly also. Burbs (dolton, Burnham, cal city, Chicago heights) are all higher taxes. I've considered Blue island for some investments but haven't pulled the trigger on anything.

@Tara T.

HOA fees tend to be a lot higher in the city. I don't think mine are bad at all. One of my buildings has only had 1 HOA increase in 12 years. The other 2 in 12 years. Condo investing is definitely not for everyone. I'm really only doing it to learn and be a hands on investor in that process. Now that I've received that experience, I'm looking in NWI for the SFH and multi's.

I also haven't bought anything off market. I pay close attention to a lot of the closed properties in Oak Lawn, and I know very few of them close off market. Most of the off market properties are in areas that I'd rather avoid in the more south suburbs (Calumet City, Dolton, Country club hills, etc). Based on my limited searching, rent values are only about 20% less in those areas and properties are probably 50% cheaper. However, property taxes tend to be higher (4-5%) and I'd say appreciation is even worse in what is already a market that has substantially under performed the rest of the country.

I also don't have a recommendation for NWI agents yet. I started working with one, but don't have enough information to recommend. The one thing to keep in mind when looking is your price point and the quality of the realtor. I know some of the better agents have minimum commissions, which you might not be able to meet if you're in the sub 100k market.

Hi @Tara T.

I live in and invest in the oak lawn area. My experience has been that it's a struggle to get some of the homes to cash flow with 25% down. I avoided sfh because of that reason and went into condos instead.  Also felt a lot of the sfh rentals sat on the market for quite a while. Keep in mind edgewater is significantly lower in taxes vs these areas. Taxes here are between 3.5-4% of assessed value. It's crazy.

Most of the 2 flats are also overpriced. I don't believe I've seen anything on market,  there are quite a few of them just west of Christ hospital. Let me know if you have any questions, and I'd be happy to try and offer any other input.

Similar to what Scott has said, I'm also beginning to look more actively in northwest Indiana.