All Forum Posts by: Jim D.

Sure, you could probably find an investor willing to do that if you make the return % attractive enough for them. If you're doing it owner occupied, you could also use an FHA loan which only requires 3.5% down. Or better, if one of you does not have the condo in your name, that person can get a conventional 5% down loan for up to 4 units through the HomePossible loan. But the person using HomePossible cannot have owned any property in the last 3 years.

One is not inherently better than the other. There are a few advantages each has, but the primary factor is to look at the ones in your area and determine which will give you a better rent to price ratio. If a house costs $100k and will rent for $1,100/month, and a quad costs $200k and will rent for $2,600/month, then you'd want to go with the quad. If the ratio is close to equal, I'd probably go with the quad, just because it's really nice to buy as big a property as possible with that first-time homebuyer loan since it has very favorable terms.

Originally posted by @Andrew C.:

Awesome story!  Finding a frugal partner in life is the best and most important financial decision.  And the house hacking and other real estate decisions...a very close second!

My wife likes to joke that I probably ran a spreadsheet on the ROI of marrying her before I proposed. I can neither confirm nor deny the existence of said spreadsheet.

Hi all, I've recently transitioned from lurker to active participant in the forums here, so thought I would formally say hi.

My first purchase was 5 years ago, house hacking with my buddies as roommates. Knowing very little, I bought a cash flow neutral 4-bedroom house in an "A" area. Upon moving in, my roommates were surprised when I didn't claim the master bedroom for myself--I couldn't bear to take that room knowing that it would bring in the most rent. Actually, I didn't even take the smallest bedroom in the basement. I rented all four bedrooms to friends, and sectioned off 1/3 of the large downstairs living room with a line of 6 IKEA bookshelves. That was my bedroom. Taking house hacking to the next level!

Bookshelf bedroom notwithstanding, that year I managed to convince my girlfriend to marry me. We bought a new property each year as a primary residence and kept house hopping (these ones cash flow much better). Our most recent one had a nice shed, and she mentioned that were I still single, there would be a decent chance I would live in the shed in order to maximize the rent income from the house. By thus inconveniencing ourselves, we were able to pay for the majority of her medical school with cash, and come out with well over a $1M portfolio (currently at 75% LTV). We are aiming to finish her residency in 2020 with no student debt and a $3M portfolio, and then the real fun will begin.

Aside from ungodly food expenditures, we are some of the most frugal people you'll ever meet. My wife looks like a million bucks shopping at thrift stores, we share a 2007 Prius, and yes, we do actually enjoy dumpster diving as a hobby. Last week we went for a couple hours (date night?), and while sorting through the toy dumpster behind Toys R Us, I contemplated that at $350k I likely hold the distinction of being the highest net worth individual to ever stand in that dumpster. (In case you're curious, in two hours we scored a new volleyball, several phone cases, a two-person inner-tube, cheap jewelry, two boogie boards, and a very nice leather couch missing one leg. For verification, I have attached a photo of the 3-legged couch.) 

Given that frugality has been the key to building my portfolio, my BP celebrity crush (come on, we all have one) would have to be Scott Trench. After listening to podcast #223, I had to wonder if we aren't actually twins separated at birth. 

Anyway, many thanks to all who contribute here, and I look forward to a long and enjoyable association with you all.

I assume 3% per year when I run my spreadsheets, as that is the national historical average. In my experience, the farther in advance I tell my tenants the better they react.

I've heard some landlords say that they raise the rent when their costs go up (such as property taxes) to cover the increase, but that makes no sense. In reality, your costs have nothing to do with it--rent prices will be set by the market. 

Good Ghandi... my hands were shaking when I signed the papers on my first one, and that was only $300k. 

Do you have someone experienced that is helping guide you through this?

I do not have experience with this, but just an idea: Ask your lender if it's OK for you to sign a rent-to-own lease after you have the mortgage finished. Chances are they will find that acceptable. If so, just adjust your current lease per their request and then take care of it afterwards.

You would save $252 per year in interest by going with the 25% down. That interest is also tax deductible, so your actual savings would be more like $200 or so. So your $4,200 investment will be giving you about a 4.8% return if you use it to buy down the rate.

If I were $4,200, I would be sad being invested at 4.8%.

I have no experience with new construction costs, but my aunt just built a duplex and said she came out underwater on it right out of the gates (it's worth less on the market than she spent building it). Of course that's not always the result, but it's not easy to build cost-effectively and well, especially without experience.

A few thoughts:

1. Gotta love the agressively frugal mindset. That will get you a long way.
2. Your realtor is pretty bold predicting the market will come down next year. That's far from a sure thing.
3. If you can get a decent ratio on it, I like the idea of doing an owner-occupied purchase and then after a year moving back in with parents. 

What are the terms on your student loans? Rate?