All Forum Posts by: Jacob Emens

And yes I put down 3.5% and got the seller to pay closing costs.

Hey @Nghi Le the rate is actually 2.99, I’m just saying the effective rate is about that due to the MI I have to pay (~560/mo). And yes, I’m hoping to refinance before 2 years, but planning for 2. 

Thanks again @John Barrett, insightful advice. I really appreciate that and actually to start with, we’re lucky enough to actually have a tenant on a lease for at least the next six months, albeit in the smaller unit. This gives me some time to rehab a bit myself and spread out some of the initial rehab of the larger unit. When we’re ready , we’ll swap over to the smaller and do the same while renting out the larger side. 

@Michael Haas $4300 is the goal, but since we’ll be living in it that’s not where we will start. We won’t get that until we can refinance and buy another, hopefully in two years barring any environmental factor that slows us down. Thanks though, this is our first property and hopefully we can make it worth it even with a slow start if need be.

Thanks @Aaron Nelson I appreciate the insight here! The numbers absolutely work while living here, but they only work after moving if we can rent it out room-by-room, and so long as I'm on top of my rental management game to battle extra vacancy (they also work if I wish to hire a property manager, but I'd rather not do that until I have more properties than I have time to manage so I can learn the ropes). 

I think I'll ultimately rent it room-by-room but not for the first year or two while I live in and rehab, and while strategizing my next move (which will largely be dictated by COVID and the market). @John Barrett it’s too late to back out of this deal so I’m going to have to make the most out of it at this point.

The next one I buy will definitely have more analysis done prior to getting this far along. As I eluded to before, I wasn’t initially planning on making this solely a rental property (the original plan was to find a “home” that eventually could house my family and parents in the other unit). 

Thanks for you insight on this @John Barrett and @Aaron Nelson! I look forward to chatting with you more in the future when I’m a little more seasoned and hopefully not up to my ears in debt.

Thanks for the response John!

You are absolutely correct in that I don't yet have a defined goal for this house. My goal was absolutely to make this place into a rental property (ideally we'd live here for two years, rehab, then rent out while we do it again with a tri/four-plex, rinse and repeat - this is my over-arching strategy). Having said that, I fear that this one may not be a great candidate for that due to the numbers I have run. The only way this place pencils out for me is if I piece the rooms out and rent them out separately. With that comes a lot of risk of vacancy though, and to your point, it may get a bit expensive to convert the property into a suitable room-rental. So I guess my real question is: do I keep this place and try to make it a long-term rental, or do I fix it up, rent it out for a bit, then sell it after it appraises (knowing that I'd like to create a rental business for myself with cheaper properties)? 

To clarify a few things:
1. I am not looking to force this place into being a rental (though, if I can make it so, I'd love to).
2. I don't necessarily have a time frame for getting out of it, meaning I could hold it for a while then sell after appreciation and forced appreciation. 
3. My goal IS to start investing in solid rental properties, so however I can not take a loss on this place is what I'm going to shoot for.
4. I make a pretty decent wage (~140K/year), so I don't have much a problem putting in some extra money up front if I can make it cash flow decently in the future. This also allows me to hopefully invest in another property before having to get out of this one. 

Some of my ideas: 
1. Rehab to rent out the larger side to a single renter to begin with, move into the smaller side to help minimize how much we're spending every month (getting $2500 instead of $1800/mo makes this a bit easier). After refinancing in two years, rehab the larger side once more to make it a room-by-room rental property.
2. Rehab the larger side while living in it, refinance after two years to drop MI, and hope that the repairs don't outweigh the cash flow while the renters are doing loan paydown for me. With appreciation being as solid as it has been in this area, hopefully in ~5 years I'll get enough through both appreciation types to sell it and come away with $100K or more after sale to use on a down payment on one or two other properties that are much better cash flow deals.

Here is the quick number breakdown. I put the interest rate at 2.99 but that doesn’t include MI which puts it up at 4.25: https://www.biggerpockets.com/...

Here’s a link to the house: https://www.google.com/amp/s/w...

Hey everyone, I’m brand new here so thank you in advance for all of the great posts! BiggerPockets, if nothing else, has opened my eyes to what I may have gotten myself into. 

My fiancé and I have been looking for a home, not necessarily an investment property, just a home that perhaps one day we could make into an investment property if our budget allowed for it. In our Seattle market though, competition is tough, so we looked a bit north to find a decent single family property with not much luck. That's when my agent recommended taking a look at a duplex that we could rent one side out while we live in the other (I now know this as house hacking, but didn't when I bought it). The only number I was concerned about was the monthly payments, which looked great in comparison to the SFH I was looking at. So, I bought a duplex in Everett, WA...for $675000 (I know, wow). It appraised at 690K which is better I suppose, but it definitely needs work. According to the appraisal it has an ARV of 720K. I can give you a breakdown of the numbers, but in this market if I rent out the larger side after rehab, I'll be at around $2500-3000mo, and the small side around $1800 (the small side has a renter and doesn't need much, if any rehab). Even if I can refinance in a couple of years out of FHA and drop mortgage ins, I'm looking at a mortgage payment of ~3600 which would be okay if I could get $4300 in rent out of it, but part of the house is old (1932 old). I have to put a new roof on it, floors, paint, luckily only $500 in plumbing, and ground some electrical outlets. Since the house is enormous (4660sf), the rehab and repairs are probably going to eat away almost any cash flow that I can get from renting each side out as is. However, appreciation has been fantastic in this area, it's really close to Boeing, really close to a Naval base, and is in a class B or B- location. The only thing I can think of to salvage this place is to rent out the larger side (3100sf) room by room until it appreciates enough to sell for a decent amount. The layout is funky as heck, but with a little work we can have 3 full bathrooms on the big side, 5 full bedrooms, and a two car garage with extra street parking for the other tenants. I'll post the details of the house in next post so you can see what I'm talking about.

What queued me into all of this was starting to read up on becoming a landlord for the first time. I had no idea what I was getting myself into, I just knew I didn’t want to lose all my money to this place. Well, that quickly led me down the path of reading about rental property investing, which led me to “The Book on Rental Property Investing” by the one and only Brandon Turner, which led me here (and in turn to “my god, what have I done”). Please help! 

Details to follow.