All Forum Posts by: Hector Serna

Hey Hector, I'm on the same page as John regarding the water bill and the inspection. Proceeding without a thorough inspection due to the water bill could pose significant risks. Unforeseen issues might lead to long-term costs, so it's crucial to factor this into your decision.

Consider renegotiating with the seller to see if they could contribute to the water bill cost. Living in the property not only offers a firsthand understanding of its condition but also aligns with the principle of doing your due diligence. Being physically present can reveal nuances not apparent during a standard inspection, providing valuable insights for your investment plans.

To navigate this successfully, prioritize meticulous due diligence. Assess every aspect of the property, including potential repair costs and any outstanding issues. Hope this helps!

If the seller isn’t paying his water bill, what else isn’t he paying? Have you checked property taxes (do that online)? Code violations? Gas bill?

Sounds like you don’t have enough experience to deal with this black box of a house. Hard pass and don’t look back. 

@Hector Serna what Jason is referring to is that you seem to have made an offer and were approved for financing under the assumption that this will be owner occupied, not a rental/investment property. The lender/bank that approved the short sale likely assumes that it will be owner occupied and the terms, rate, and conditions of the loan will change if it is not owner occupied. Or the short sale will not be approved altogether unless it is owner occupied. You'll have to put 15-25% down - depending on the loan product/lender - and will pay a higher interest rate than an owner occupied loan. 

You're essentially pulling an accidental bait and switch on the bank and mortgage originator without knowing it. That's why Jason mentioned mortgage fraud. You have to disclose that you do not plan on living in the property and that it is an investment, non-owner occupied rental if that is what you intend to do. I may be missing some details or making incorrect assumptions, but that's the point that he and I were getting at. 

This is going to be occupied by you,. Rents are important cause in a year plus you'll need to have that as your benchmark. Live in it, improve, it rent it out next year and search for another house or go back home to the parents.

You did not buy this property as an outright investment property Day 1. Let's be clear on that, don't commit mortgage fraud right out of the gates.

Hector. I don't know you but I want to say I AM PROUD OF YOU!  This is brilliant. I am assuming you are on the younger side... Buying a rental investment property before your own primary residence is what I preach and I know it is brilliant.  You are way ahead of the curve my friend.  Bravo!

@Hector Serna 

If it is a short sale and you are only putting 5% down, that's an owner occupant loan, chief. I'd suggest making a call or two to make sure that everything with your plan is kosher and approved.

@Hector Serna

the point of a house hack is not to cash flow positive, it's simply to spend about the same or potentially less than you would on rent.  so if you'd rent for (using round numbers) $1000, but (after rent) you pay $950 toward your mortgage, you're still ahead.

and it allows you to put less down than the (I assume) 20-25% you'd need for the 180K short sale.

so... 5% of 250K would be a lot less than 20-25% of 180K.  you could look into a 203K loan if repairs are needed.

just some things to consider.

@Hector Serna

why not move into a house hack using a low down payment loan then?

like others - I would strongly NOT recommend putting extra money against principal.

Hey guys, so if you guys go to my previous post, you’ll see that I was debating on whether or not taking on a 180k short sale, 1959 build, single family 3Bed 1bath, 1.9k mortgage as my first long term investment. The home needs approx 15k-20k in repairs. After all repairs are done, I’ll be able to rent it out at 1.9k-2.1k. Well my offer at 180k was accepted! 
Now hear out my plan. I’m currently making 80k+ gross income, I live with my parents who dont charge me rent (Nor want me to move out), and I have zero debt. Only bills I have are my parents electricity bill and phone bill (and always help pay for bigger projects around the house for example a boiler & sump pump we just installed). I was thinking of renting out the home and in addition to send $800-$900 to the principle in order to bring down the loan until I’m able to refinance at a better interest rate and get legit cash flow going.

What do you guys think of this approach?