All Forum Posts by: John Leake

@Chaka Dolomite Credit repair is a process of time more than anything try not to get discouraged when it doesn't happen right away! You're welcome if you come across more specific questions feel free to reach out!

To build a good game plan get ahold of your actual credit report and see what is actually negatively affecting your score. If you can clean up some old balances that are hanging out there bringing you down, those would be the first I would go after. Next you can reach out to places where you have some higher balances and see if they will settle for a lesser amount and mark the amount as paid on your credit. If negatives aren't as much of a factor for you some general criteria for your credit score are credit utilization, on time payments, and age of accounts. I would recommend signing up for something like Mint to start tracking your net worth. It also has some good information based on the accounts you link and trends it gathers. Hope that helps!

I would check the lease for where you will be renting first many have exclusions for doing any sort of subletting. You will also want to check local ordinances that can often be pretty strict against short term rentals. However those being said the cashflow can be great on STR you'll just want to stay out of trouble. I would look for other rentals in your area and run your numbers to see what you should expect as a return. For the landlord you would be renting from they are going to get back a nice unit back because you're going to have someone come clean and maintenance it when there is turnover. You could also reach out to other folks in the area doing AirBnb to see if they have recommendations. BiggerPockets also has a book Short-Term Rental, Long-Term Wealth which was a great read! https://store.biggerpockets.co... 

@Dan Quirk Could you get the seller to have it rezoned as the 3 unit? That could potentially solve your concerns as well. You may even be able to contribute to the cost of that. If the city could give you an idea of the expense of that and a time line you may be able to save your deal. If that is the route you go, work it into your contract for purchase. Depending on how quickly they need to sell the property it might be an option. Honestly I would offer that on this deal and the price you are willing to pay as it is and then start looking for a different deal. Don't become so emotionally attached that you blind yourself to other opportunities!

The tax implications of spending the money are best determined with your tax person. You'll want to make sure it isn't better to take them over a longer period of time as depreciation instead of just as an expense in the given year. The electrical should be done by a licensed individual. That being said are the units currently metered separately? If so you could do them one unit at a time and spread it out some time. I would also do the drywall/ mudding tapping as well as paint work yourself. Sweat equity is a good thing when you are starting out especially if you are worried about the expense. 

I would check around for who will give you what rate and terms that are most appealing for you! I eventually found a contact at my credit union that I have been really happy with and do almost all of my business through them. As far as the loan goes when you do a cash out refinance you pull equity out of the property. You will be getting a loan for an amount greater than what you owe for example if you owe 100,000 on a property that is worth 200,000 you can pull out typically up to 80 percent. You should take on a new loan of 160,000. you would pay off your original loan of 100,000 leaving you with 60,000 of cash. Your payment will go up to reflect the borrowed amount but as long as it still cashflows you now have the 60,000 to work on another deal! Usually there are also no taxes due on this amount because you received it through a loan (its not actually income because it has debt against it). Hope that helps.

I would reach out directly to the city on being able to work on the zoning the property. I also believe the limits for an FHA loan change on the number of units but so should the appraised value. You should be able to go back and negotiate with the seller because it wont appraise as a 3 unit. If you think its a great deal.... Can the seller finance the deal for you? Can you partner with someone else to purchase the property? Can you get a hard money loan and still cashflow with a higher interest rate? Just some thoughts hope this helps!

@Manveer Atwal You will likely be looking at 25% down for a commercial loan with a rate adjustment every 5 years. For a traditional house hack 4 units or less are ideal based on being able to qualify for conventional financing (low fixed rate and longer term) I'm not trying to talk you out of an opportunity just don't think this will be the only one! The mentality of how to make something work is far more valuable than only focusing on why it wont! Good luck with whatever you decide.

The pictures definitely help! I wouldn't be overly concerned about the siding while its a little ugly to have the bubbling but water intrusion isn't possible unless its so poorly installed it blows up in the wind and allows access to the wall behind. There should also have been hose wrap installed when doing the siding to help with insulation. When working on inside renovations I would tear out the lathe and plaster to insulate exterior walls from the inside and update the electrical. It will be some extra money but can be done over time unit by unit. You can do the sheetrock/ drywall yourself just make sure that you put the insulation behind any pipes you come across you don't want to insulate them from the heat but the cold. This should help with the heat bill. 

As for water leak concerns they should be your primary concerns water intrusion from the roof and the flashing should be remedied as quickly as possible to prevent extra damage.

Regardless don't get down just take it a step at a time as @Greg Scott said investing is a journey not a trip it'll take time!

It would be an interesting method of investment you could be the bank in that scenario and get a return based on the interest you are having them pay you. If you owned all of the units you could also just rent them which is the more common method. I also think that for most conventional financing it has to be 4 units or less. Five or more units is considered commercial or they bank may look at each condo as its own unit. Likely you would need a commercial loan for your purchase of all of them at once.