All Forum Posts by: Jared Dewey

I think I've concluded that I want to start out house hacking by buying a sfh and renting out each of the rooms, I think it will do fairly well as I also live near a college and can rent out to students to get higher cash flow than a traditional 2-4 unit. Another reason I think this is a great move to getting started as all of the 2-4 unit properties are much more expensive in my area. Only issue is when I'm trying to practice running the numbers all the videos continuously make an arbitrary number up and say we'll just charge this and never really explain too much. When using tools like Zillow they estimate rent based on renting out the entire house to one person (or so I believe). Other sources just say go and compare and use some rent estimate tool. I think its hard to use these pieces of advice as using the rent by room strategy doesn't really take in account the fact that your renting a room along with an entire house so it doesn't really compare when looking at other rental listings. Maybe other people are talking about other rental listings with the rent by room strategy (I can't find any) and or I'm not looking hard enough and not looking in the right places? Maybe there is a certain metric to use when regarding square feet? I honestly don't quite know and am obviously a little lost on this topic.

Quote from @John Clark:

The sum total of the renting to each of the room occupants has to exceed the rent you'd get for renting out the entire house to one person. Why?  Because if you get more from renting to 1 person than to many, it makes sense to rent to only 1 person.

Keep in mind that rents per person will be lower due to the lack of privacy, etc. Also keep in mind that it's more work for you, so even if you did get more money from multiple roomers, it may not be worth the effort over what you'd get from renting to just one person.

But at least start with the simple division of single-tenant rent divided by the number of room occupants. If you cannot meet that number on average with the room occupants, then don't rent out that way.

Right now I'm currently not in the market to buy for at least a couple months, so I'm just practicing getting down the basics of running the numbers because I'm still very new to real estate. Considering I want to go buy a SFH, when looking at one on Zillow how would you estimate the rent of each of the rooms solely based on what they provide you with? I know you had mentioned the sum of all occupants must beat the renting it out to one individual or party, which I totally agree with. What other general rules do you use when going about running the numbers on properties you will rent by room?

I think I've concluded that I want to start out house hacking by buying a sfh and renting out each of the rooms, I think it will do fairly well as I also live near a college and can rent out to students to get higher cash flow than a traditional 2-4 unit. Another reason I think this is a great move to getting started as all of the 2-4 unit properties are much more expensive in my area. Only issue is when I'm trying to practice running the numbers all the videos continuously make an arbitrary number up and say we'll just charge this and never really explain too much. When using tools like Zillow they estimate rent based on renting out the entire house to one person (or so I believe). Other sources just say go and compare and use some rent estimate tool. I think its hard to use these pieces of advice as using the rent by room strategy doesn't really take in account the fact that your renting a room along with an entire house so it doesn't really compare when looking at other rental listings. Maybe other people are talking about other rental listings with the rent by room strategy (I can't find any) and or I'm not looking hard enough and not looking in the right places? Maybe there is a certain metric to use when regarding square feet? I honestly don't quite know and am obviously a little lost on this topic. 

Quote from @Kevin M Kiesel:

I would contact a bank or mortgage company to see how they will handle your situation. Oh yeah, since the consigner wont be living in the home, then you will need to be on the loan too. 203k loan was difficult to qualify for. Just charge figure out the correct amount to charge for rent, when it comes to high interest. I would have to figure out which route will best fit my goals and situation. 

Have you worked in property management?  

Ok, I was thinking with the high interest rates it might work in my favor if they maybe drop here sometime in the next few years to refinance. What are your thoughts on the interest rates and if they are ever gonna drop? Also, with the 203k loan it commonly takes longer than a conventional loan or an fha loan by 20-40 days according to what I've read, do you think this posses a big issue when getting deals closed as maybe they fall through more commonly?

I have not worked in property management.

Quote from @Kevin M Kiesel:

Quote from @Jared Dewey:

Quote from @Kevin M Kiesel:

Quote from @Jared Dewey:

Quote from @Melissa Hartvigsen:

Jared,

What a great plan!  You would not be able to obtain a loan on your own until you meet the following:

1. Are at least 18 years old.

2. Have a steady income for at least 24 months.  

3. Have a credit score of at least 640. (The higher your score, the better your interest rate will be). 

Or you need to have a qualified co-signer. Generally speaking, the bank providing the loan will require the co-signer to also be on the title to the property with you.

Here is some basic advice:

1. Becoming a realtor. Most realtors are self-employed, and write off a lot of their expenses. Writing off everything you can might be tax smart, but does not help you qualify for a loan. I would suggest getting an entry level W2 job at a local real estate brokerage. You can learn a lot and possibly have your license paid for. This can be a reception job, marketing job, transaction coordinator, realtor assistant etc. 
2. Build your credit. One way to instantly get credit is to have a responsible adult with good credit and responsible credit card usage add you as an "authorized user" to their account. If this option is not available to you, you can get a secured card through your bank or credit union. They basically have you set up a savings account that will pay the bank if you default on the credit card. After 6 months to a year, you may be eligible for a regular credit card, and then they would close the account and send you the savings deposit back.
3. I recommend reading Dan Sheeks "First to A Million: A Teenager's Guide to Achieving Early Financial Independence. It will give you a more in-depth plan on all of the above.

Good luck! I think it is brilliant to start so early! :)
Melissa

 If I'm able to find a qualified cosigner then would that build up my loan history with the bank? Finding a qualified cosigner would also allow me to qualify for a property even with myself having minimal credit history is what you are saying? 

If the cosigner were to not live on the property and had another residence separate to this one would I not be able to qualify for an FHA loan or just a conventional loan?

 Yes, there would be no reason to have you on the loan if you are not able to qualify, unless your income is the source that is being given for your debt-to-income ratio. 

Have you thought about getting a real estate license? 

 The reason I would want to be on the loan is to build up my loan and credit history to buy more investment properties later and eventually get more money from the bank to take out bigger loans. I want to get as many good properties in my name asap to start that compound effect.

I hope to get my real estate license very quickly after I turn 18 to be a real estate agent for some time.

 I completely understand. I know when I would sell mortgages, I would use the lowest credit score of the people on the loan. If one of the people might be have a lower credit score, they can work on their credit and when they refinance in a year or so, that is when the lower credit score person should be added back. You will pay high interest if you try to stay on the loan. There are ways to have your name on title of the home, I would highly suggest a contract between all parties involved. 

That will be great! Save on that commission! Good luck with all!

Ok gotcha. I was planning to do maybe a 203k loan with a qualified cosigner but househack to be eligible for that loan as my consignee would not live in the residence. Would it still be a bad idea to do so as you are paying higher interest or would it be worth it to take a little bit of a hit with the interest but make some improvements with that 203k loan and then refinance it after 20% equity and switch to a conventional loan? That was my original plan as it creates a higher nwroi of the property because of the less cash in but with your point on the higher interest I'd like to hear your take if it is still better to go the traditional route with a 20% conventional loan then refinance later and become added to that loan down the road.

Quote from @Kevin M Kiesel:

Quote from @Jared Dewey:

Quote from @Melissa Hartvigsen:

Jared,

What a great plan!  You would not be able to obtain a loan on your own until you meet the following:

1. Are at least 18 years old.

2. Have a steady income for at least 24 months.  

3. Have a credit score of at least 640. (The higher your score, the better your interest rate will be). 

Or you need to have a qualified co-signer. Generally speaking, the bank providing the loan will require the co-signer to also be on the title to the property with you.

Here is some basic advice:

1. Becoming a realtor. Most realtors are self-employed, and write off a lot of their expenses. Writing off everything you can might be tax smart, but does not help you qualify for a loan. I would suggest getting an entry level W2 job at a local real estate brokerage. You can learn a lot and possibly have your license paid for. This can be a reception job, marketing job, transaction coordinator, realtor assistant etc. 
2. Build your credit. One way to instantly get credit is to have a responsible adult with good credit and responsible credit card usage add you as an "authorized user" to their account. If this option is not available to you, you can get a secured card through your bank or credit union. They basically have you set up a savings account that will pay the bank if you default on the credit card. After 6 months to a year, you may be eligible for a regular credit card, and then they would close the account and send you the savings deposit back.
3. I recommend reading Dan Sheeks "First to A Million: A Teenager's Guide to Achieving Early Financial Independence. It will give you a more in-depth plan on all of the above.

Good luck! I think it is brilliant to start so early! :)
Melissa

 If I'm able to find a qualified cosigner then would that build up my loan history with the bank? Finding a qualified cosigner would also allow me to qualify for a property even with myself having minimal credit history is what you are saying? 

If the cosigner were to not live on the property and had another residence separate to this one would I not be able to qualify for an FHA loan or just a conventional loan?

 Yes, there would be no reason to have you on the loan if you are not able to qualify, unless your income is the source that is being given for your debt-to-income ratio. 

Have you thought about getting a real estate license? 

 The reason I would want to be on the loan is to build up my loan and credit history to buy more investment properties later and eventually get more money from the bank to take out bigger loans. I want to get as many good properties in my name asap to start that compound effect.

I hope to get my real estate license very quickly after I turn 18 to be a real estate agent for some time.

Quote from @Melissa Hartvigsen:

Jared,

What a great plan!  You would not be able to obtain a loan on your own until you meet the following:

1. Are at least 18 years old.

2. Have a steady income for at least 24 months.  

3. Have a credit score of at least 640. (The higher your score, the better your interest rate will be). 

Or you need to have a qualified co-signer. Generally speaking, the bank providing the loan will require the co-signer to also be on the title to the property with you.

Here is some basic advice:

1. Becoming a realtor. Most realtors are self-employed, and write off a lot of their expenses. Writing off everything you can might be tax smart, but does not help you qualify for a loan. I would suggest getting an entry level W2 job at a local real estate brokerage. You can learn a lot and possibly have your license paid for. This can be a reception job, marketing job, transaction coordinator, realtor assistant etc. 
2. Build your credit. One way to instantly get credit is to have a responsible adult with good credit and responsible credit card usage add you as an "authorized user" to their account. If this option is not available to you, you can get a secured card through your bank or credit union. They basically have you set up a savings account that will pay the bank if you default on the credit card. After 6 months to a year, you may be eligible for a regular credit card, and then they would close the account and send you the savings deposit back.
3. I recommend reading Dan Sheeks "First to A Million: A Teenager's Guide to Achieving Early Financial Independence. It will give you a more in-depth plan on all of the above.

Good luck! I think it is brilliant to start so early! :)
Melissa

 If I'm able to find a qualified cosigner then would that build up my loan history with the bank? Finding a qualified cosigner would also allow me to qualify for a property even with myself having minimal credit history is what you are saying? 

If the cosigner were to not live on the property and had another residence separate to this one would I not be able to qualify for an FHA loan or just a conventional loan?

I'm very new to the real estate scene, I turned 17 about 3 weeks ago but want to get my first property very shortly after 18 maybe even 17 if possible. Considering I don't plan on going to college after high school to wait another 4 years to get a good paying job (I plan on being a real estate agent for 5-10 years) how would getting a loan work considering I don't have any real steady flow of income from the past two years that is significant along side the fact that I have 0 credit history, but around 15k in savings. Would it be possible to cosign alongside family and own the property in my name and start to build up a loan history and credit? Sorry if this may have been weirdly worded and confusing if you have any questions let me know in the comments below. Thanks.

Pretty new to the game of real estate here. People talk all the time about amazing strategies and then others chime in with their opinions that the strategy is dead, it doesn't work any more, etc. etc. My question to you guys is: What is the next best strategy? What are some strategies that are dead and or strategies to steer clear away from? What is the tried and true method? Let me know your opinions in the comments below.

I'm brand new here as well, but I suggest starting out with reading some beginner books on real estate and TAKE NOTES! Reading is half of the work but you need to be able to read it, analyze it and write it down. This helps cement the information into your brain and if you need to look back you have tons of notes to reference. How to Invest in Real Estate by Brandon Turner and Joshua Dorkin taught me a ton and its for beginners so it explains everything like you know absolutely nothing about real estate before going into it. Another great book is The House Hacking Strategy by Craig Curelop, it goes over the best entry in to real estate: house hacking. In any spare time where you aren't reading something you should listen to the BiggerPockets podcasts or any other real estate related content, if you are constantly emerging yourself with this type of information you'll pick up all kinds of strategies and the slang they use pretty quickly. With all this information you have developed from consuming content you can go out and start networking on here or other platforms like Facebook groups, Linkedin, etc. then you can even go to in person meetups! Good luck.