All Forum Posts by: Jennifer M.

Thanks @Juan Reyes! I will look around to make sure the FHA would be the best approach. I can do more then the 3.5% but would like to hang on to capital for the next property and have some cash reserves.

Regards,

Jennifer

Hello @Steve Carlos,

Thank you for your response. You bring up a great point! I looked into what is required in Morristown for change of ownership/new tenant. Based on the information I found you need a Certificate of Habitability. I looked at the form and that does not have any field for number of bedrooms. With the COH you need a Rent Registraction From as well. That is done by the landlord and there it has a space for number of bedrooms. 

http://www.townofmorristown.org/vertical/sites/%7B0813EA2E-B627-4F82-BBB0-DDEE646947B5%7D/uploads/Rent_Registration_2017.pdf

http://www.townofmorristown.org/vertical/sites/%7B...

I hope I got that right.

If I can not market that rental as a 3br that may impact rent. Comps look similar to that rent with 3br. I will have to look into if I can only have the 3rd bedroom as an office what the comps would be. Also I am not sure how the rent control works in Morristown? I think that is just based on if you already have a tenant and how much you can raise the rent?

I appreciate you feedback on my analysis this is one of the first I have done I wanted to see if I was in the ballpark.

Now learning about all the forms you have to fill out for tenants I had no idea there was so much stuff. Does the RE agent help with this or do you have to research this all on your own before purchase?

Best regards,

Jennifer

Hi Adam,

Looks like its all separate utilities (electric, gas, heat and water) for both units.

I agree, I think that I would have to add some value to the property or pay down the mortgage to have enough equity in 2 years. I'm trying to think ahead. I would like to get this property or one similar to house hack for a bit as my first investment property. However, I want to have my next plan in mind so I am thinking about time line.

Thanks!

Jennifer

Hi @Brian Spatz,

I think I may have had the FHA terms with occupancy wrong. I was under the impression that with an FHA loan you had to live there for a year for the loan itself and you could not rent out under that loan. Looking up the requirements now it seems that you have to live there for a year before you can rent it out. I hope I got that right!

So instead of me living there two years then refi'ing out of the loan, I could just fulfill the year occupancy requirement then rent out under those loan terms. Once I have equity then I can refi out of the loan to loose the PMI if a good rate is available.

I have been looking up the 203k that is another option too, it seems that that has similar requirements. Rehab makes me nervous especially as a first property however, if there is a property in a decent area under market value I would also give that a shot. 

I now do understand the refi with the LTV % for a conventional loan like you said, 75-85%. I would love to have a referred lender, please feel free to PM me if you would like to pass on their contact information.

Thanks again for the discussion, it was very helpful and allowed me to firm up some of the things I did not think of initially.

Jennifer

Hello @Jason Patrizi,

Thank you for your reply. That is a great point, I just now looked it up to make sure I'm under the NJ Cap for that county.

I see the 2017 Caps for Morris County NJ Duplex $814,500 (way higher then what I expected).

Thanks for bringing that up!

Regards,

Jennifer

Hello, @Brian Spatzthank you so much for your reply. My initial thought was to House Hack with the 3.5% down with an FHA loan and live there for two-three years. Then refi to get out of the FHA so I can rent out the property.

Thanks to your comment I realize that I was so wrapped up in figuring out if the numbers work I did not think about not having enough equity in the property to do the refi.

I do see a lot of posts on BP about using this very same strategy house hack with the 3.5% down on an FHA, then a refi and renting the other unit out. Do you know how they are doing that? Maybe they are doing some rehab to get that equity up before refi? In your experience how much equity would you have to have to do a refi typically?

As far as your note about the rates going up, assuming a bank let me do a refi after the two years if the rates went up maybe 2% I would loose the PMI with the refi wouldn't that wash or go up slightly?

Sorry for the newbie questions I am trying to work on my analyzing skills and finical strategies to see what I have to further study. I have never owned my own home so this is all very new to me having never done any of this. I am trying to get the theories down.

I very much appreciate any advise.

Best Regards,

Jennifer

Hello,

I am running an analysis on a property I am looking to House Hack in the Morristown area. I have attached the link for the property and my analysis. I would like to see if I am way off base with my analysis. Any feedback would be helpful.

Purchase price: $425,000 2fmy,separate utilities (need to confirm comps)

Financing: FHA loan 3.5% down $14,875

Closing costs (not sure which % to use I hear 2-6%): 6% $25,500

Rehab Reserve if needed: $10,000

Total cash in: $50,357

Est. Rent for tenant: $2,600 (I see 2500-2700 for 3br rentals)

Tax: $850 per month (10k per year)

PMI: $352 per month

Lawn/Snow removal: $100 per month (over estimating)

Vacancy 10%: $260 per month

Repairs 10% (5% Cap Ex 5% Repairs): $260 per month

Insurance: $166 per month (2k per year?)

Total Expenses: $1,988

Mortgage & Interest $2039 per month

NOI: $2600-$1988= $611

$2039-$611=$1428

So my "rent" would be $1428 to cover the mortgage.

Live here for two years , refi then rent out the other unit for what I hope to be a cash flowing property. My numbers there show $400 cash flow, 7% Cap Rate and a COC 9% (with the same rent for both units).

Any feed back would be amazing, I am most interested if my estimates look good and if one would consider this a good property for a first investment.

Thanks!

http://www.zillow.com/homes/for_sale/NJ/pmf,pf_pt/...

So looks like the picture or file of my analysis did not get posted. I will write out the numbers manually:

Purchase price: $425,000 2fmy,separate utilities (need to confirm comps)

Financing: FHA loan 3.5% down $14,875

Closing costs (not sure which % to use I hear 2-6%): 6% $25,500

Rehab Reserve if needed: $10,000 

Total cash in: $50,357

Est. Rent for tenant: $2,600 (I see 2500-2700 for 3br rentals)

Tax: $850 per month (10k per year)

PMI: $352 per month

Lawn/Snow removal: $100 per month (over estimating)

Vacancy 10%: $260 per month

Repairs 10% (5% Cap Ex 5% Repairs): $260 per month

Insurance: $166 per month (2k per year?)

Total Expenses: $1,988

Mortgage & Interest $2039 per month

NOI: $2600-$1988= $611

$2039-$611=$1428

So my "rent" would be $1428 to cover the mortgage.

Live here for two years , refi then rent out the other unit for what I hope to be a cash flowing property. My numbers there show $400 cash flow, 7% Cap Rate and a COC 9% (with the same rent for both units).

Any feed back would be amazing, I am most interested if my estimates look good and if one would consider this a good property for a first investment.

Thanks!