All Forum Posts by: Jacob Lapp

@Gervon Thompson

Understood, we utilized 5% down first time home buyer conventional loan for a duplex. Had him saving 30k to make this down payment for a roughly 200k duplex that he could rent one unit in our area live in the other and have his expenses covered maybe 50-100 in cashflow while living there. $1000 in cashflow after moving out and renting his unit.

This increased his savings rate by a lot because he was able to eliminate his rent expense.

@Gervon Thompson

Is $675 the minimum monthly payment and are you paying rent?

I just broke down the numbers for a friend in a very similar situation. Except he didn’t have the savings you have for a down payment. We broke down 2 situations.

1.) Hammering student loans (as much as possible every month), paying rent, saving for down payment for house after loans are paid. For him this would take a total of 4 years assuming his cost of living and savings rate stays the same.

2.) Making the minimum payment on student debt for him around $300 a month and paying rent and saving for down payment on multi family property. In 14 months he would have enough for a down payment. Live for free (eliminating rent payment), see a little cashflow and then be able to hammer student loans more efficiently.

In the same 4 year time line for both

1.) Student debts paid off and purchased a multi family, no savings and starting the journey.

2.) Student debts paid off, purchased 2 multi family properties with decent savings and cashflow.

I think it’s a no brained for you to take your money and put it towards the down payment and let this property pay for your student debt.

We did a whole podcast on this since I think it’s extremely relatable. Episode 10 of the Young Slumlord Podcast it’s on apple, Spotify, google, YouTube etc. Feel free to check it out!

@Eric Weldon-Schilling

This post seems like it should be on Facebook you probably won’t get much empathy here from landlords.

Personally I wouldn’t want to go to court if I were in your shoes. Lawyers are expensive. Pay the money you owe him and find a new place.

@Matthew Porcaro

Yes it is a triplex. But I didn’t know about that program I will definitely look into it! Thanks!

@Matthew Porcaro

I’m in my second multi family house hack now and am ready to do my third deal but have 5 months until my year of residency is up here.

I have a deal in my hand that would be perfect for the 203k loan.

I was hoping the residency would lapse with the time for the rehab but I don’t think that would work based on what you are saying.

Any insight on that or a way to make that work would be greatly appreciated!

@Matthew Porcaro

Awesome feedback to the post!

I have a question about the 6 month lapse and wrapping those payment to the principle of the loan..

Does that 6 month rehab period mean you do not need to claim residency until that is over?

@Fahadbin Alam

You are asking about what happens to the first house hack?

By house hacking, you are claiming residency at the property for at least a year. But you are getting a fixed 30 year mortgage on the fact that you are going to live there for at least a year. So when that year is up you can buy your next one.

I’d make sure you talk to a lender first and see if you qualify for a first time home buyer 5% down conventional loan. Because if you use your fha on your first home you are missing out on this program.

After that you still have the option to do FHA. Or a slightly higher down payment on your second conventional loan.

You can only hold one fha loan at a time. So once you either wait until you have 20% equity in the property you can refinance to a conventional loan and now you can do another fha.

@Alicia C.

I’m not a big Brrrrrrrr advocate. But 7 years ago I’m assuming your interest is higher than what’s available now?

Talk to your mortgage broker and see your options. If it’s a 2% difference (speculating) refinancing could be a great play.

Option 1 Refinance and don’t pull any equity out and decrease your monthly payments/increase cashflow.

Option 2 cash out refinance keep 20% in the property and start over, this could either

increase monthly payments and kill cashflow,(not worth doing then selling the house would be the move)

Keep payments the same and give you some cash to go buy more properties. (Worth doing)

Or lower payments/increase cashflow and give you some cash to go buy more properties. (Definitely worth doing)

It all depends on that unknown interest rate that you are currently paying. Definitely worth talking to your lender!

@Peter Morgan

Personally I am much more interested in multi families with no tenants. (And as a buyer will pay more for them)

In my market I can list a decent unit and within 2 days or less have a pool to choose from.

If you listen to podcasts or talk with other investors the majority of their headaches come from inheriting tenants.

This inheriting tenants thing right now is especially scary if I didn’t vet the tenants myself and their ability to pay/history.

A lot of times sellers sell because of said problem tenants and this is almost never disclosed.

Lastly for you as a seller you could be collecting below market rents and the 1% rule might not apply to the listed price (compared to what market rents would be) so you’re listing agent is able to speculate on market rents (with comps) if it’s vacant to justify listed price. Where that can seem like a stretch if your collecting $700 and market is $1400.

@Nicole Heasley

That’s correct and I couldn’t agree more. Thanks for the response! I’ve only been looking at MF for that reason. I guess my dilemma is I haven’t found the right partner with the same exact goals.