All Forum Posts by: Jason Porto

Thanks for the responses! They're all good answers that matched the "it depends" mentality that I was expecting. In general I'm saving for repairs to the property, but we all know that this covers a wide spectrum. In the end it's my responsibility to forecast any big projects that may happen in the next few years and make sure I'm covered for those. In my case it's probably going to be the roof. Beyond that, any excess cash I have will either go into investments or into savings for a down payment on my next property that I can house hack again.

I've been house hacking my place (I rent out a 3-bed 2-bath residence and live in a small in-law unit in the back) for just about 3 years and have been setting aside money each month for my reserve fund. I'm getting to the point where I have a good chunk saved and am wondering what guidelines people follow to know when they can start tapering off the contributions or stop them altogether.

What rules of thumb are out there that people use? Let me know your thoughts.

The house hack has been going great so far! It took a bit to find my tenants, but I was patient and am very happy with the family that lives here. I also love that I'm not cash poor like so many other homeowners in the bay. I found the property through an agent of David Greene's and had a very good experience. The property had basically been flipped by the previous owner and the ADU had been created from the existing garage so all I had to do was move in. It's cozy in here but it works for now until I figure out how to get the next place. I've definitely seen other houses for sale around here, and one down the street was recently stripped to the studs so I can see that the area is still sought after.

Thanks for the reply Andrew. I'm looking at Richmond, CA though.

Hello all! I recently moved from Oakland to Richmond, but don't see a dedicated forum for my new hometown. Is anybody in this group investing in Richmond? If so, let's connect and chat about it. I currently am house hacking a property (renting our main house while living in ADU) in the North and East neighborhood and strategizing on how I can buy my next one.

Chris, I feel your pain. I live in the SF Bay Area and have had an incredibly hard time getting started. It took me a long time to save up for an adequate down payment but just recently bought a place and am house hacking it because it's the only way that it works for me. Here's a quick list of a few things I did that made it more affordable and ultimately made it possible for me.

1. Look for FHA loans because their down payment percentage is so much smaller than the typical 20% route. Since a 20% down payment out here is sizable, this opened up a lot of possibilities for me once I realized that I didn't have to drain all of my accounts just to make it work..

2. Like Logan mentioned, I found an agent who specialized in investing and house hacking. It was actually David Greene's outfit since he's local and it worked out very well. My agent targeted properties that I was interested in (mostly du-tri-quad-plexes so I could house hack) and ran quick numbers to make sure it would pencil out before they would even show me a place.

3. House hacking is the biggest reason it worked for me because it would be tough for me to afford the mortgage all on my own. I bought a SFR home with an ADU in the back, and I live in the ADY and rent out the main house which is 3 bed/2 bath. That pays for a huge chunk of my mortgage and allows me to save up money for my reserves and strategize for the next place that I want to buy.

It seems like you listen to the podcast regularly so you probably know much of what I laid out, but hopefully some of it was helpful.

As I attempt to buy my first duplex/triplex/quadplex, and seeing as I currently have no frame of reference, I'm having a difficult time knowing if my expense estimates are accurate. I'm currently looking at a place that should bring in $5,500/month in rent after I move out, and am using the BP rental calculator to run the numbers. The range of recommended percentages are 5-15% for repairs, 3-10% for vacancy, 5-15% for CapEx, and 7-12% for management. If I use the upper end of the spectrum, I would need to set aside $2,860 per month, and if I use the lower end I would need to set aside $1,100 per month. The $2,860 scuttle the analysis for me but the $1,100 is much more palatable so I'm wondering what other people's comfort zone is when analyzing a property. Any thoughts?

Also, after actually owning a property, what do all of you see that you spend on it on average over the long-term? Do you have any hard data to share and compare against the percentages in the BR calculator? I'd love to be able to see how their estimates match up.

Thanks for any responses.
  

Hi all. I'm looking at a duplex in Oakland with 2 legit units plus one nonconforming (low ceiling, lack of egress is some rooms) basement unit that is vacant but has been rented in the past. Without rent from the basement unit the numbers don't work for me so I'm trying to understand the ramifications of having a unit like that. What might the be consequences if the city decides to say something about it? It sounds like many people seek these things out, but everybody's risk tolerance is different. What would you do? Go for it or pass? Any thoughts are welcome. Thank you.

Not to change the subject Abel because I think that is a very good question and hopefully someone responds. But, I spoke to lender the other day and they mentioned something that I've never before. I told them that I am looking for a multi-plex up to 4 units, and they said that the rules are different for duplexes than tri- and 4-plexes. There apparently is a cash flow requirement where 75% of the rental income has to be greater than the mortgage, and the lender said that she has only seen this work out once. Have others heard of this and is it as difficult of a threshold as I was told? Or, maybe that requirement is easy to meet if you actually have a good deal on your hands. Thoughts?

Also, don't let my post overshadow Abel's question. He deserves an answer too. :) 

Joe and Patrick, thanks for those replies. Running the numbers so that it cash flows in a year or two once I move out is definitely the way to go and something I should include if I plan to move out soon. I hadn't done that so thanks for that reminder. Unfortunately, I can't make the numbers work for anything in my area (SF Bay Area) and am trying to make sure I'm not being too conservative with my expense estimates. On that note, I still want to clarify your thoughts on expenses for the house in the two scenarios below.

1. Duplex with 2 units that rent for $1500 each. If both are occupied by tenants then expenses and CapEx would each be $300 per month if I base it on 10% of the gross monthly rent of $3000 as suggested by the BP rental calculator.

2. Same duplex but I live in one of the units. Technically my monthly income is now only $1500 from the other unit, and I pay any losses at the end of the month and consider it to be my "rent". In this case, should my expenses and CapEx each now be $150 instead of the $300 from above? It's still the same house with both units occupied so I would think that expense estimates would be similar even if I occupy one unit.

I'm not quite sure which scenario is more accurate so let me know what you think.