All Forum Posts by: Josh Day

I’m a recent college grad with approximately $204K in student loan debt. I was your typical American until I discovered BiggerPockets. Definitely would’ve taken out less student loans if I knew what I know now. Fortunately we have no other debts. My family and I want to house hack, but are having issues with our DTI ratio since FHA uses 1% of your student loan balance and my income is around $70K/year. We have 2 kids under 3 so my wife stays home with the kids. I know FHA allows 75% rental income to go against your DTI, but it still makes it pretty hard to find a decent duplex-quadplex to purchase. Has anyone with a large amount “good” debt like student loans and a high DTI found a way to be able to purchase a multi family house hack?

@Andrew Kerr that's exactly what we were thinking and why we were considering southern FL (Tamp, St. Petersburg, Ft. Myers, Sarasota, Naples) or an area like Charleston. Our only worry with Charleston is that the winter still gets kind of cold. We are also considering areas in Texas (Galveston and Corpus Christi). 

@John Vietmeyer thank you for the recommendations. Do you invest in Charleston? 

My family and I are looking to move to a warm beach area and purchase a property that we can live in for a year (low down payment) and use as an investment and repeat this process for a few years. We are open to house hacking a duplex-quadplex or SFH that we can rent or airbnb (vacation rental). We've been thinking southern FL, but are looking for area recommendations if there is a better market. I'm a physical therapist so I can get a job anywhere we move.

@Jorge Ruiz A little late to this post. I found about them through the Clayton Morris podcast as well. Was hoping you could give me an update on if you decided to move forward with Fund and Grow? If not, why? If so, how are you able to get the money off the cards?

I am using a spreadsheet to help run my numbers. My family plans on buying a duplex-quadplex to house hack in Memphis (property taxes and insurance are high here). My assumptions are: 

Asking price $299,500 (Duplex 38104) 

Rent/month $2,350 (both units rented, really $1,200 while we live in one unit). 

Mortgage/month $1,422 

Vacancy 9% rent/month $212/month 

Maintenance and repairs 5% rent/month $10/month

Capex 10% rent/month $20/month

Property management 12% rent/month (for when we move or don't want to self manage) 

Property taxes 2.1% purchase price $524/month (I know you can find the exact numbers, but this spreadsheet is meant to examine other properties and that is the average based on multiple properties). 

Insurance 1.15% purchase price $287/month (I know you can find the exact numbers, but this spreadsheet is meant to examine other properties and that is the average).

Tenant pays utilities 

Cash flow $2,350 (rent) - $2,757 (all expenses) = -$407/month 

What am I missing? Am I overestimating some of these expenses? I know the best way to make the numbers work is to pay less for the property. But in order to cash flow $105/month, I would need to pay $231,000 for the above property and with the market how it is, I do not think that would happen. When I update the spreadsheet for a SFH, I still get negative cash flow. Everyone says Memphis is a buyer's market, but I'm not seeing that based on my numbers.

My wife and I plan on moving to the Tampa, Clearwater, St. Petersburg area around March 2018. My family and I would like to house hack a duplex-quadplex. From what I can tell it seems like multifamily might be overpriced. What are the areas we should be looking to buy in? Is multifamily a good investment in the Tampa area? Should we be looking at SFH instead? All advice would be much appreciated!

Ali Boone I agree with your strategy and have similar goals with cash flow and leverage. Newbie question, could you tell me which markets in particular are better for cash flow than Memphis? Seems like most of what I've read on BP is that Memphis is one of the best markets for cash flow.

Fred Jung Kim yes it's called an FHA 203K loan and rehab costs are rolled into the loan amount. Also remember the advantage of FHA over conventional is 3.5% down on 1-4 unit properties whereas with conventional you can get 5% or lower down, but that's only good for SFH. It goes up to 15% for duplex and more for tri/quadplex. My advice would be talk to a lender knowledgeable on this. I'm not sure where you are at on student loan debt balance, but FHA does 1% of your student loan balance regardless of if you are on an income based repayment plan, which can really affect your DTI ratio quickly especially on a 50K/year salary. The reason I know this is because I am in similar shoes right now and about to buy my first property to house hack in February. Congrats on saving 10K/year that's impressive. If you haven't yet read Scott Trench's book Set For Life I would highly advise reading it. Let me know if you have more questions.

Curt Davis we plan on house hacking 1-2 multifamily properties in the first 1-2 years. Then we plan on doing a live in flip on a SFH that we will convert to a rental when we move after 2-5 years. I know that Memphis is great for cash flow, but I've read that Memphis does commercial tax rates for more than SFH. Is this true? Also, do you know any investor friendly real estate agents that would be willing to help a newbie look for a multifamily in Memphis? I have a few spreadsheets to run numbers. I would just need help finding a property because I haven't found much on Zillow or realtor.com. Thank you for any help!

My family and I are planning on using an FHA loan to house hack a small multifamily property (2-4 units) before May 2018. My job as a physical therapist allows me to pretty much work anywhere in the country, so moving to the best market should not be an issue. Our goal is to achieve financial independence through real estate investing. Cash flow is our primary goal with a market, but some appreciation would be nice. Also, we do plan on using an FHA 203K to put some rehab and equity into the property. We are currently living in Memphis, which is great for cash flow on SFH, but seems to be overpriced for small multifamily properties. Any advice on markets would help.