All Forum Posts by: James Bradin

If you are looking to put the least amount of property down an FHA loan would probably be best with a minimum of 3.5% down. This will require you to live in it for at least a year. The next best option would be to use a hard money lender, typically used in the BRRRR method. Basically a person loans you money at a higher interest rate 9+%. You buy it with the hard money, use the hard money to renovate, then rent it out, after it has been rented (typically banks want 6 months showing the cashflow), you refinance, pay the harmony lender back + interest, boom you now have a cash flowing property with very little money.

As far as finding a lender, I always recommend looking local.  Local smaller banks and credit unions sometimes will offer loans on things bigger banks will not.  Argue your case if needed, providing metrics and proof that you know it will cash flow.  

I honestly do not recall from reading the guidelines if anything specifically mentions living in a RV at the residence. However, I assume that would be breaking the intent of occupying the property for at least a year. I have always adhered to the VA guidelines when purchasing a property. With that said, I have never heard of someone from the bank/VA knocking on doors to ensure the person living at the property is actually the person on the loan. If I were in your shoes, I would still play it safe and live in the property for a year.

Just doing some quick running of your numbers I would say strictly as an investment property, it is not a great deal.  At a $463,000 purchase price with a monthly rental income of $2800 (assuming you were saying $1.4k per unit) you are significantly below the "1% rule".  Your mortgage payment is probably going to be close to $2,200 a month, and when you add in insurance, taxes, maintenance, cap ex, property management, and utilities, it may be hard to break even.  I do not plan to count on appreciation when analyzing properties/ 

However by using an FHA loan I am assuming that you are going to be house hacking for a year. If that is the case I would ask the following questions, if the answer is yes to any of these, than it is probably a good deal:

1.  Is your rent/current mortgage payment decreasing by house hacking?

2. Is there potential to do a live in BRRRR, fixing up the property yourself to increase the rent to more favorable rents when you move on to your next property?

3. Are there no SFH's in the area with better numbers for a BRRRR?

I am a huge proponent of house hacking small multifamilies, I am under contract on my 2nd duplex, after house hacking the other for 4 years.  I treat them as rental properties during analysis and ensure that once I move out, it will still cashflow.  This can be difficult in today's economy and real estate market (especially expensive markets).  I hope that this helps.

Coincidently that is also my dream car, and a car that I hope to one day afford as my RE portfolio grows.  I am not selling any extraneous assets, mostly because I have yet to invest in any.  However I do agree that cash is king right now.  I am much earlier in my RE journey than you.  However I am hoping that the house hack that I am currently under contract on will continue to build my cash reserves should I need to pull the trigger on any upcoming deals.  Since April I have not contributed any money to mutual funds/stocks (I threw a ton in during the low in March/April).  Now everything is focused on the next move.  Whether that occurs in 2021 or later, I would like to be ready.

I think there could be promising stuff in STR properties near big cities where the owners are on the ropes due to lack of airline travel/sports events/conferences/major attractions (Disney). I haven't done a lot of research on those areas as my portfolio is limited to a few cities not in that category. I am fine driving my old car saving up cash and waiting for the next deal to come up.

I purchased my first house hack in 2016.  At that point I had listened to every single BP podcast.  Around that time they were still really pushing the 2% rule.  It wasn't until 2017-18 that people began to mention "1% rule" instead.  During that time I ran the numbers knowing that my $210k duplex would be around a $1200  montage payment.  I was confident that I could rent the other side for $1000 a month.  I knew that that I would never find a place to rent for $200.  I house hacked  that duplex for 4 years.  Needless to say, my financial future was set.  I am currently under contract on another duplex that I intend to house hack for a year, and then possibly use as a vacation rental.  If you have any specific questions on house hacking let me know.  Brandon Turner's book on Managing Rental Properties is worth its weight in gold in my opinion (not even kidding).  That book has made me more money than any other book in my real estate career.

I have invested south of Tampa, in my hometown.  Tampa is a pretty expensive market, however there is a lot or growth east of Tampa (Brandon/Riverview).  If you are looking for older distressed properties Tampa will have several properties however they will be quite expensive.  The St Pete area was getting a lot of the younger "millennial" generation.  

I'll caveat this by saying that I personally have never done a deal in a partnership.  I have however heard of people doing 50% for putting all other money, and 50% for handling everything operations related. Assuming you found the deal and did most of the work to secure it you are undervaluing your value in the partnership.  That means your partner would be 100% passive. It is not unheard of to structure the deal like that.  If this person has a large bank roll and you want to do future deals with them, I would personally structure the deal 60/40 (or more) in their favor, to entice them to invest with you again.  What ever you decide on your partnership, ensure that you go through a real estate attorney.

My first deal was a house hack, although I was nervous about the process and uncertain in my ability, I was confident in the numbers.  It was the most sound financial decision I have ever made.  I learned the investment process, and more importantly how to be a landlord.  As a result, I now have a better understanding of what is important when vetting property managers.  I cannot recommend house hacking enough. A lot of newer investors suffer from analysis paralysis, house hacking is almost always going to make you money.   

Based on those numbers I would probably BRRRR it keep it in the LLC.

@Andrew DeWeerd yes that was a typo on my end. Thanks for the correction.