All Forum Posts by: Ian Murray

What size is the MF? Are you not able to do a FHA loan with a smaller amount down? Does it need a lot of renovation?

Awesome!  Good luck!  

Investment Info:

Single-family residence buy & hold investment in Carlisle.

Purchase price: $350,000

Bought this as a house hack using a VA loan. We will live in it for two years while stationed here and then rent it out to students afterwards. Will cash flow at least $500 based on the current rental market.

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

Quality housing for students and faculty at the Army War College is very limited. I wanted a SFH or multi-family that cost, all-in, significantly under my housing allowance.

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

MLS with a realtor. The house sat on the market for over 180 days because the seller priced it too high. We were able to offer significantly less than asking and have the owner cover the cost of any repairs from the inspection.

How did you finance this deal?

VA loan

How did you add value to the deal?

We added air conditioning to the house, something that most houses on the street have begun adding, and landscaped. We may extend the third bedroom to make a master en suite.

Lessons learned? Challenges?

Old houses have old house problems. We have found some small issues that we have repaired, and we may need to replace a few windows.

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

Yes, Heather Lightly was our agent and Kevin Russell from Mortgage Link was our lender. I would recommend them both.

Make sure that you still have enough eligibility for the second property you want to buy. Unlike the first VA loan, you will have a limit on the amount that the VA will back until you sell the first property.

https://www.va.gov/housing-***...

If you do, then it can be a sound strategy.  I would actually recommend staying in the property for two years if you can.  Then, you can rent it for three more years before having to worry about tax strategies to manage any profits from the sale of the property.  If you plan to keep it long-term, then proceed as planned (with caution).

Maybe do a quitclaim deed transfer, putting the house completely in your name, and have your parents hold a first position lien on the property.  That would make you the owner and them the bank.  They wouldn't be liable for renter issues anymore than a bank would be.  

Double check with an attorney for the exact mechanism, but something like that could work.

Joshua,

Typically, a car is not viewed as an investment if it is a daily use item.  I am in a similar dilemma, as I will be returning to the US in May and need a car.  I am electing to go with a hybrid to split the difference.  Most of my driving will be in town/city, so I will be able to take advantage of the electric power, but the mpg is still pretty good for highway driving.  

If you want to go cheaper, get the gas engine car and use alternate means to get around.  I try to commute by bicycle as often as possible.  Saves on gas and parking, and it prevents me from making little side trips to the store unless it is absolutely necessary (and fits in my backpack).  It is another way to force yourself to be conscientious when it comes to spending.  If you get an e-bike, you can commute longer distances or reduce the risk of sweating in your work clothes if you don't have a place to change at work.

Ultimately, I would recommend going with the option that will keep the most cash in your pocket/account to use it in a productive manner.  Of course, that's just my opinion. 

Ian

Hey bigger pockets community, I need some advice as a newbie.

I have three properties available for purchase all in the same area:

1) Four-plex (4 x 2/1) $225K, rent is $2400 per month, CoC 16%

2) Duplex (3/2 and 2/1), $135K, rent is $1750 per month, CoC 20%

3) Duplex (2 x 1/1), $90K, rent is $500 per month, CoC 20%

I could purchase the four-plex or both duplexes with financing (20% down, 4% for 30 yrs).  The other option is to buy the small duplex in cash (I can get it at $25K under market from a wholesaler, who will still be making a hefty profit).  Then, I could refi it in 12 months to take out the vast majority of my purchase money, leaving less cash flow but all profit.

I appreciate any input.  Thanks.

Ian

@Joshua McMillion, thanks. Unfortunately, they cannot be turned into STRs due to both the HOA rules and city rules. Key West requires a transient lease for anything less than 30-day rental, which are finite with none available right now. They are like taxi medallions in NYC and go for about $200k per. Based on the HOA, we could turn the property into a mid-term rental for traveling medical professionals, business people, long-term military TDY, etc. That is something we are looking at in the next couple of years. It may have to wait until I am down there to manage the first one.

MTR would probably generate another $800 per month, maybe more, but there is also the added overhead of furniture and cleaning.  I am looking into making a deal directly with one of the medical staff providers but haven't made much progress due to my w-2 job workload and working the other deal.

RERP team, I wanted to thank you for all of the outstanding lessons over the past year. I started my REI journey last November, and I am on my way to closing my second deal (or fourth, depending on how you look at it).

I have spent most of the last decade overseas with the military and always thought it was too hard to invest in real estate given my situation.  After looking for a possible "forever home" for a number of years with no luck, I finally listened to the advice of two close friends and followed my own words -- Hard is authorized!  Within a couple of months, I found my first deal, a 3/2 in Key West, FL, listed for $400K.  I reached out to the owner and found out that she had two more just like it ready for sale but not yet listed.  I reached out to a friend in Key West to get his thoughts, and he and his wife were interested in partnering on the deal.  We closed in December '20 on one and January '21 on the other two. 

Properties:  3 x 3/2 condos - 1072-1095 sq ft

Asking: $1.35 million

Purchase: $1.2 million

Terms: 30% down, 3.0% for 30 years

Rent: $2900, $2950, $3000 per month

Cash Flow: $2400 per month

Current value based on comps: $1.3 million

Moving forward a year, I just put in an offer for a 4-plex in KY for $230K that will cash flow about $800 per month, as is. Following a little rehabbing, it will generate about $1200 per month of cash flow. The first deal doesn't have as high of a CoC ROI as I now look for, but the condos are turning into a great value. I got these deals by leveraging my network of friends in different areas to find good investments. I could not have done it without their help, being that I am currently half a world away (literally) right now. We'll return to the US next year and are already looking at house hacking a multi-family at a our next duty station.

Thanks for all of the great advice!

Ian

Edwin, I would say that it depends on how you want to partner. If you want your name on the deed, that may be difficult. If you want to contribute to the down payment in exchange for a percentage of the profits/cash flow, you can draw up an agreement outside of the purchase contract (see a lawyer for help). You could also provide labor and funds for rehab during the house hack portion, possibly living in it while rehabbing it. Pace Morby has some interesting ways, too. I think one of them would be a Subject To agreement from your brother to an LLC/partnership that you and your brother create that would allow the loan to stay in his name but the LLC would operate the property and earn the cash flow. Again, consult a lawyer on how to execute any options.

Lots of ways to look at it without having to have your actual name on the deed if that is the biggest hangup.