All Forum Posts by: Ethan Clay Lesperance

Anyone have any insight on this?  My curiosity is getting the better of me so I figured I'd see what yall thought? I have a home with an apr of 2.85% and I really don't wanna refinance if I can help it. I have a pretty fair amount of equity in it I'd love to utilize. 

Depends on the terms of your loan...in my case I had to live there as my primary for ar least 12 months...I met the requirement so I'm now free to use the property as I wish. I also spoke with my insurance provider and they assured me they cover STR...in addition I have an umbrella policy. I am required to inform the lender of the insurance policy changes to ensure it meets the requirements on their end.

Ok so I called the lender(loan depot) and the insurance company(USAA) and I'm good to go as far as turning the "old" primary into a STR. I also called the lender that did my.last DSCR loan and asked some questions. I know that I've already go about 50k in equity in the property but the last appraisal was before 18 new windows @ 20k were installed. I'm also in the process of getting a new roof put on. It has a brand new HVAC system, updated 200amp electrical panel and all new wiring throughout. I'm also going to add some outdoor(deck) space and update the kitchen with new cabinets and countertops(modernize) as well as take out the carpet and put down lvp flooring. All of these things will certainly increase the value of the property which means a jump in the equity I can utilize. The catch is, my current interest rate on the conventional is 2.87% and I'm positive it will nearly triple if I refinance with a DSCR so it's a tough decision. Keep the 2.87% or take all the equity out I can and let the property work to make up for the increase in interest. Thoughts??

Quote from @River Sava:

Congrats Ethan!

Leveraging capital from others can be a great move espeically if you are BRRRRing. Out of curiosity, once you reif, do you think you'll do another BRRRR or look into something turnkey?

I'll most likely stick to BRRR as I have the skills and resource to maximize my profits. Meaning, I don't have to hire out as much or trust the navigation process of a builder/contractor. I pull my own permits, hire my own subs and do a fair amount t myself. I saved nearly 50k on my last rehab which in return yielded much more equity in the end.

Investment Info:

Single-family residence private money loan investment.

Purchase price: $140,000
Cash invested: $140,000

ARV 375,000...currently making monthly interest only payments to investor...using as primary res....
Will refinance in a few months and use equity for other investments.

What made you interested in investing in this type of deal?

ARV = ROI. Use equity for other Inveatments.

How did you find this deal and how did you negotiate it?

FB marketplace. Wholesaler.

How did you finance this deal?

Private Investment.

How did you add value to the deal?

I had used 2 properties as collateral.

What was the outcome?

I took a 140k house on 5 acres and put 140k into renovations and it appraised for 375k...this took right at 7 months.

Lessons learned? Challenges?

Ask for more money! Don't use your own if you can help it.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No

Quote from @Alex Gurvitz:

If you inform your conventional lender that you are turning your primary into an Airbnb, they will most likely put your mortgage into technical default. 

Are there loans that are geared more towards what I'm trying to do? I have a fair amount of equity in the home I'd be more than happy to pull out and utilize!

Quote from @Vlad Krokhmal:

Got it, nice track record man. What would you say is limiting your growth? Lack of capital or lack of interesting opportunities? 

 Good question. I'm trying to keep things manageable ans not spread myself out too much is what I like to think. It may be a bit of fear? Sometimes I'm not super sure how things are going to go and I don't wanna be just good enough to get myself in over my head and not know how to make the next move. On the other hand, IMO I have done fairly well for not having much more than an imagination and a good amount of ambition. I'm also fairly skilled in the trades so I know what to look for when it comes to certain things and I can do alot of things myself but time is usually hard to manage. I have a full time job and 3 young kids.

I recently moved to a home i was going to flip but decided to keep and make it my primary. I have a conventional 30 year loan on the old house(lived there for 2+ years) and private loan on the new one for now. Anyway, im planning to turn the old one into a 5 bed 2 bath airbnb. Is this ok to do while having a conventional loan? Is insurance going to be a problem? Do i need to inform the lender and my insurance of my intentions? 

Quote from @Alecia Loveless:

@Ryan Orr Be sure you check with your insurance company if renting to students. My insurance company doesn’t allow undergraduate or graduate students. No students. Which is helpful to know going in.

Does this mean that even if the tenant gets their own renters insurance its still not an option? Is there an umbrella policy of some sort that would work? JW

Quote from @Ryan Orr:

Currently interested in house-hacking a duplex in Springfield. Springfield is known for its multiple colleges in the area. Is this a pro in house-hacking because there will be more people renting? Or a Con due to the type of tenants associated with colleges?

IMO you're heading in the right direction. You're ability to manage is what will make or break this. You'll need a strong lease and you'll need to have the backbone to enforce the lease essentially dealing with your peers?. Since you live in one side of the duplex you may be able to be more selective about the character of the tenant(s) that inhabit the other unit. You could aim to get the studious, low key, chill type of tenant as opposed to the rambunctious party animals typically found in a college setting thus avoiding the types of "confrontation" that are likely to come with the latter. Turnover is expensive so make good choices! 
Done right and you live with little to no out of pocket expenses possibly even make a.few bucks, you realize some equity and leverage the equity down the road for your next investment.  
My vote= JUST DO IT!