All Forum Posts by: Jake Thompson

Looking for some advice regarding house hacking a property that has leases in effect. This may be a question for an attorney (specific to my state) and the underwriters, but I figured I would ask here as well.

Looking to buy a 4 plex in Oregon, the soonest lease expiration is end of May. According to VA, you have 60 days to move in, without a "valid reason" to extend. Lender says it is ok to terminate a lease early when selling to someone who will owner occupy, and therefore waiting until the end of lease will not be a valid reason. He sent me a link to the Oregon Community Alliance of Tenants website, which appears to confirm what he said. I also checked the state laws and I think they confirm that you are allowed to kick them out in this case. But then again I'm not an attorney and the actual laws are hard for me to understand because they are so technical.

It doesn’t seem right to me that you could just kick someone out in the middle of the lease, without cause. Other websites and property manager I talked to says you can’t unless there is a specific clause in your lease that says so.

Does anyone have experience with this? I imagine it’s a fairly common situation in the world of house hacking.

Thanks @Matt Maurice, I already made the mistake first hand of renting to family and that went so terribly you would have thought thatI had learned my lesson. I wanted to support the business of friends and family I guess, but it makes things a lot more difficult when situations like this come up.

Looking for some advice on a tough situation I got myself into. My wife’s step mom owns her own brokerage and I have been working with her on finding a property to house hack. Recently my wife’s best friend’s husband got his license and hung it at the same brokerage and we’ve been working with him/them to find a property.

So far they haven’t been meeting my expectations at all. He isn’t experienced, and neither of them are investors. Anytime I run into a potential issue he is quick to try and convince me to move on, rather than trying to help me find a solution. I don’t think he’s working very hard on my behalf when talking with the listing agents either.

Every potential deal I’ve found so far has been from looking on realtor.com and then reaching out for the full listing. The other day he suggested that I find a single family home to live in and use my cash from sale of another property to buy rentals. He doesn’t seem interested in what I’m trying to do by househacking.

The biggest problem is that I never had a discussion with either of them with what I expect out of a realtor, so it’s really on me. I just automatically agreed to work with them because they are family/friends. 

I guess I’m wondering what my next step should be. Should I get specific about what I need from them, or should I just fire them and move on? If the answer is to fire them, how would you recommend doing it so I don’t burn bridges? It puts my wife in an especially awkward position since her best friend and dad are married to the realtor/broker.

For what it’s worth, I have experience house hacking, have worked in property management, and have been pre approved by a lender and am currently making offers, not just wasting their time.

Thanks

Thanks Nicholas, not sure why I didn’t think about that!

Hi everyone, my wife and I found a duplex that will cash flow about $500/mo (with both units rented) and want to use a VA loan to house hack it. We've house hacked once before, so we have some experience. I also worked in property management for a year.

Our challenge is that we don't have hardly any savings built up and the lender is asking for 6 months PITI as reserves. We're sitting at about 3 months reserves at the moment. Is there any way (legally/ethically) to get around this? Should we even try to get into a property with so little reserves?

I asked, and we cannot receive the money as a gift, at least according to this particular lender. I can ask more lenders, but I wanted to get feedback from the BP community first. Thanks!

@Jay Hinrichs that’s true. It looks like if they leave on their own, which they may do if you start raising rents 8-10% per year anyways, then the investor can raise it to whatever they want.

From the article (pay attention to last paragraph):

“The rent increase restrictions would exempt new construction for 15 years, and landlords would be free to raise rent without any cap if renters leave of their own accord. Subsidized rent would also be exempt.

The bill also would require most landlords to cite a cause, such as failure to pay rent or other lease violation, when evicting renters after the first year of tenancy.

Some “landlord-based” for-cause evictions would be allowed, including the landlord moving in or a major renovation. In those cases, landlords would have to provide 90 days’ notice and pay one month’s rent to the tenant, though landlords with four or fewer units would be exempt from the payment.”

So it looks like if you buy a property under market rents, you have to do a “major” rehab AND give tenants 90 days notice AND a full months rent for them to move out. That seems crazy to me.

Hey BP, does anyone have any good resources they can point me to for real estate development? Specifically developing apartments?

Also, does anyone have any suggestions on buying and repositioning apartments vs developing them? Pros and cons, maybe. I’m guessing development is more difficult and higher risk but can have the potential for higher returns?

I’ve searched around on the site but haven’t found a lot on the topic, especially as it relates to pros and cons of development vs buying existing complexes. If anyone knows a specific article or post to check out as well I’d appreciate it. Thanks!

Hi all, thanks for the responses! We're going to hold onto the property and cash flow we already have. The smart move would be to just save up the money needed for a down payment on the next property and try to recycle that. If I am unsuccessful on this BRRRR I'd feel pretty crappy knowing I gave up a solid cash flowing property. Plus, as @Ryan E. mentioned, San Diego will likely continue to appreciate over the next 10-20 years.

Thanks everyone for the input!

@Caleb Heimsoth The goals are more in depth than that, I was just letting you know that ultimately I want the passive income to reach FI. But I get your point. As for why I’d want to sell now, it’s because the market seems to be shifting. Also by the time the sale actually goes through, I plan to be working. Then by the time I find the next property and get it rehabbed and ready to refi, it shouldn’t be an issue qualifying. I don’t know, maybe I’m just overly optimistic, but I feel like the BRRRR strategy offers such amazing returns that it’s worth taking some calculated risk. But, I wanted some other opinions, which is why I came here. Wondering if there’s something I’m not thinking about or being unrealistic about. Thanks for your honesty!