All Forum Posts by: Josef Hardi

Hi Sam, 

I am just starting to invest, and about to rent out two of my properties hopefully within the next month. The strategy that I have been reading up on dictates that credit score is really important. DTI score on the applicant is also equally important. A couple of questions for you:

1. Is the area you are renting can be considered a B or C class? Can you pretty much expect low credit score from most the applicants?

2. How long have you put this unit on the market? From my research, it's best to wait and let the unit be empty for a bit longer but ensure a higher quality tenant. If waiting is not an option, you can also start lowering the price to get a better pool of people. But do keep in mind rent control rates. I have read somewhere that it's best to structure it as a discounted first year and the true price (starting second year) will not be considered a rent hike.

All the best!

I personally don't think it'll be an issue. I think lenders are going to be too busy to check on things like this. But in case they do check, will you have some supporting documentations such as utility bills, bank statements, etc to show you are indeed residing there as your primary house?

I refinanced my primary residence, and then asked the same lender when would be the soonest I can purchase another primary residence, and they said 6 months. So seems like they are pretty flexible with the primary residence terms.

All the best!

Hi Christie, 

I plan to raise rent annually, nothing too crazy (3-5%), to get it closer to market rate. 

But yes, if you are not comfortable with the negative cash flow, then don't even spend any more time on it. I find that it's too emotionally taxing trying to make certain property work. Since we are trying to run a marathon, I try to be really conscious with the effort I spent analyzing each property.

I do revisit my strategy after about a month or so. If it hasn't been successful, then I tweak it a little bit. I went from:

1. Wanting to invest out of state (in Detroit, Indiana, Chicago)

2. To looking for SFH to BRRR

3. To looking for SFH to ADU (need to add kitchen, bathroom, partition)

4. To eventually finding a duplex

Just gotta keep finding a strategy that works best for you. You got this!

hi Kevin, 

Wow, you have a lot going on. First of all congrats on the baby girl and sounds like your start up is growing nicely. 

It sounds there is pressure to leave and find a place asap. Is it possible to alleviate this pressure? I find that I don't make the best decision when time is limited. Is there any possible way you can discuss extending your stay another 6 months comfortably, or is that out of the option? 

You are about to make one of the biggest purchase of your life, I think you need to strategize well and not be carried away with emotion. Easier said than done, I feel like I've been on a roller coaster trying to secure a duplex this past couple of months. 

Another point to think about is exit strategy. How much is the appreciation rate of a coop in that area? If you were to sell that property in 5-10 years, what would be the best / worst case scenario? Can you do short term rentals on the co-op? Are you allowed to rent it out? To me i need a solid 1-2 exit strategies in case my deal was a mistake and I need to get out of it within the next year or so.

In regards of the lottery scenario, I heard from one of the BP podcast to be focused on the current numbers. Don't let future scenario influenced you too much, because it may not play out.

I personally try to avoid any investment that introduces an increasing cost (such as coop fees or HOA fees). And I try to remind myself not to settle for less.

All the best!

Hope that helps!

hey Garrett, 

I would recommend getting in touch with a broker or lender, example: https://www.the1brokerage.com/ and they can give you that info.

Or maybe try a local credit union and see if they offer DSCR and what are the terms. To my knowledge, every lender has a different rule for their products.

Hopefully you'll be able to find one. Best of luck!

Hi Christie, 

I don't have any knowledge of FL, but I feel the same pain over in So. Cal. It's hard to find a property that will cash flow from the first year. However, properties in So Cal can easily appreciate 5-10%, so I am okay with having a negative cash flow for the first year. For example, first year cash flow will be -$3k, but appreciation is $40k. 

But this works for me only because I can afford the negative cash flow. Just another perspective to consider. 

All the best! Stay patient and don't give up. 

Hey Rahul, 

Have you looked int DSCR loan product? It's a type of mortgage that does not take DTI into consideration. Not all lenders offer this, but you can get in touch with https://www.the1brokerage.com/ to see if they can help you.

Hi Long, 

As a new investor I can relate with this question. I work as a software developer, so I do have the flexibility of wfh, but I'm about to take on a few contract works. Afterwards, my work hours will probably be closer to 60 - 80 hours.

Time management is crucial. Every day I would set aside time to do investment related activities:

1. First trying to answer what kind of property am I looking for?

2. Where do I want to invest?

3. What strategy do I want to pursue?

Once I feel comfortable with the plan, I continue to set time to look for properties (either analyzing listing or open houses). I try my best to move on if the numbers do not work. We need to be almost mechanical about it. 

If I do find a property that looks promising and I am about to make an offer, I also contact a property management that passes my initial interview (you can tell a lot with just a 5 mins conversation). 

I think once you've done your homework, as long as you have a good team behind you, it'll be very low maintenance on your end. 

Remember, you can always take it one step at a time. 

Hi Brian, 

Have you reached out to https://www.the1brokerage.com/ specifically to look for DSCR loan. That loan type will not look into your DTI. Although the interest rate would be higher than conventional loan.

You can also look around for lenders that offer this type of loan to see what rate they can offer.

Hopefully that helps!

Hi Thomas, 

As a new investor, after going through numerous investment strategy specific for my area in So Cal. Here's what works for me:

1. Since I have a capital restriction and I don't have a good network of contractors, I tend to look for properties with minimal rehab and closer to turn key investment.

2. Knowing my limitation above, in order to be competitive, I look for properties that allows me to put a 15-20% downpayment for a conventional loan. 

3. If I find properties with the above scenario, I am open to negative cash flow as long as the appreciation will cover it annually. For example, negative cash flow of $5k on first year, but conservative appreciation rate of 4% amounts to $20k will more than cover it. 

4. I also can afford a year or two of negative cash flows, but knowing that it will start to cash flow afterwards. Considering as well, appreciation will make this a stronger investment as time passes.

If I find properties that fit my scenarios above, then I reach out to my realtor to see if we can proceed with the deal. I am still fine tuning my strategy of course, but hope that helps!