All Forum Posts by: Jonathan Holmes

You do not need to refi as long as you lived there a year and a day. That’s generally considered the minimum a person can live in a house and not be considered in violation of the mortgage terms. You may need extenuating circumstances to purchase another property with another FHA loan. As far as renting or selling it depends on your goals and your numbers. Add up the cost of your mortgage payment, taxes, insurance, vacancy, repairs, cap ex, and management if you will use it. Then subtract that from your potential rent. Be conservative with your rent estimate. If you have a positive number afterwords that’s your potential cash flow. If not then you won’t make money on this property. I use 25% of the rent as a rough and dirty number for repairs vacancy and cap ex. My guess without knowing your payment and such is that this will be a low to no cash flowing property. That would make me vote sell.

I would run the numbers all three ways. You should have a minimum acceptable cash flow per door already in mind. If any of these policies push your cash flow below that number it’s off the table. I would go with the 60k market value as long as I still met my cash flow goals. You are not going to want to rebuild unless this area is highly desirable and has limited opportunity to purchase in. I doubt this is the case with your purchase price and after repair values. The 60k cash value will pay you well if something should happen and allow you to reinvest in a new property. Also make sure you are carrying significant liability coverage. It’s worth it in my opinion.

I’ve done it and it worked out fine. Tenant was messy but nothing that couldn’t have happened with any tenant. You want to make sure they both pass all your screening requirements and are both named/sign on the lease. I would assume they tenant will beat up your unit a little more than normal but you never know they might be great.

Seems tight to me. Assuming your sale number is conservative you have a 35k profit margin. With taxes, closing costs, paying another agent at the sale, and assuming something will go wrong that will increase the repair cost you're getting pretty tight. Even if it all goes as planned that is a significant risk for a small gain.

I wouldn't have an issue with your partnership. One person bringing the money and the other handling the deal seems reasonable to me.

A few thoughts on splitting utilities. 1. Local laws may prevent you from putting water in a tenants name so you may have to bill back even once it’s separately metered. 2. If the building wasn’t built as a true duplex you may have cross wiring issues and even cross plumbing. Both of these would require a significant amount of work to separate. You will also probably need a new fuse box installed and you may even need to pay for an upgrade from the pole to the house if you put in a high enough amp service in each box. 3. Assuming you don’t have electric heat you may need to run new gas lines and add a second furnace. Conclusion: I would only consider doing this if I was doing a significant enough rehab that I would be tearing out walls anyway and if the deal was good enough to cover the cost. You may wish to move on and hold out for a property with split utilities.

I’ve never done one as a investment but the organization I work for did a partial rehab on a historical home. The short answer is it depends on the local government. I know we did all new electrical, new vinyl siding, new vinyl replacement windows plus some other items. However, I have read stories on BP about local governments stipulating what type of siding can be used and all sorts of stuff. My advice is to call the municipality that the property resides in and ask them to direct you to the law on historical homes. It can be very restrictive. As far as things to look out for in the home, electrical, plumbing, lack of common amenities and everything possibly being past it’s useful lifespan.

If you don’t have a primary residence you are in a good position to house hack. Look for a duplex, triplex or quad with a lay out and in an area you’re comfortable living in. If the numbers are good buy it and live there until you’re done with your residency. You’ll get your feet wet landlording have a low down payment and be able to increase your savings dramatically. Once you get your income boost you’ll be golden for debt pay down and to continue investing.

The answer is most certainly yes unless it happens to be no. There are some privileges that come with being an agent as well as some upfront costs. Many investors get their license but just as many don’t. It all depends on you and your strategy.

I’d sell it and reinvest the profit in a better performing property. If you are sure about the value you should have a good chuck of change. Even without the PMI you will still be tight on cash flow. In fact I suspect you should be cash flow negative now and would remain so. Are you saving for Cap Ex items down the road? If not when it comes time for a new roof or furnace you are going to have to inject more money into this house to keep it going. Sorta defeats the purpose of an investment in my opinion. You could end up with close to 50k in your pocket. That’s a down payment that will get you a cash flowing property probably even a small multi family if the price of this SFH is any indication.

I agree Thomas. I didn’t write the whole conversation out that I had with her but it did lead me to believe she was legitimate. However I’m on alert now. I will certainly take it farther when or if it becomes necessary. I think the number one rule of success is to try to be proactive.