All Forum Posts by: Jason L.

Zillow is also trying to sell their inventory privately to other institutional buyers, so it's not even like a wave of listings is hitting the MLS in all of the areas Z was buying in. It's just more inventory for Blackrock to buy off-market.

I'll also add that you can often get away with charging a fixed utility cost to your tenants, even when the property doesn't have separate metering. I have a duplex a few minutes away from there that my PM charges $60/mo to each tenant, which is just shy of being at cost. I'd check the leases to see if it says anything about the tenants being responsible. If nothing else, I think the rents are that duplex seem on the high end for the area, so you could at least argue that cost was being passed down through the higher rates anyway.

Question you might need to ask yourself in advance of this (or any other deal): what happens if your numbers are wrong? Either it appraises low or your reno budget goes over (as it often will). 

It sounds like your plan is use a hard money loan to buy this house with the hopes of refinancing, quickly paying off the hml, and then you own the house as a rental without any of your own cash invested. This type of deal might not be feasible, especially in an unprecedented sellers market. That's not to say that the numbers you laid out don't sound really appealing, but it just depends on your expectation here. You might end up needing to leave $5-10k in the deal after the refinance, which likely still works out to a great cash on cash return but might require another 2-4 years to return to net $0. You might need to lay out where that liquidity would come from in the event your refi doesn't cover your hml in full.

I bought my first OOS property in Indy in September 2020. Happy to share my agent and property manager if you DM. I was also really lucky to meet some really helpful local investors in Indy through BP, and quite frankly it sounds like @Nick Giulioni has a lot more local knowledge than I would and I'd definitely take advantage of that if I were you! 

@John Underwood @Lance Friesz @Alan Lacey

Thank you all for clarifying the 2 year rule. Guessing that means if I can't offset the STR income for awhile then the only other way to buy a new primary would be to offload the debt from my current primary. Good to know that in advance.

Curious what you underwrote for insurance? 

I don't know if you live in Florida where you would know this already or if this would be OOS, but normal home insurance rates in Florida have been SKYROCKETING the last 2 years since Hurricane Irma. Just had my second post-Irma renewal come up on one of my rental properties, and the premium increased 50% for the second straight year (i.e. it's doubled in 2 years). That's without having made a claim or being in a flood zone.

Speaking of which, I am also assuming you would need flood insurance to be that close to the ocean. Not trying to scare you. Just saying it's probably going to cost a ton to insure a beach house like this. 

I'm looking at buying my first STR in the near future using a secondary mortgage. My goal is to then hopefully buy a new primary at some point afterwards in 2022. My lender is unsure if income from a secondary home would be permissible to be written off against the mortgage when I went to try to apply for the new primary. To be clear, I know that future income can't be used when buying the secondary home itself, but I'm talking about using the receipts after buying the secondary to show additional income when I went to buy the primary later on. Can anybody help us out here?

Furthermore, if it is allowed to be written off, how long do I need to be able to show AirBnB receipts for before a lender would accept it as income? Would I have to wait for the following year's tax return or can it be done sooner?

I went into forbearance last year on my primary when I lost my job. I finally got a new job this year and began the process to get out of forbearance (you must make 3 successful payments before you're considered to be out). The bank offered me a modification to my loan, which would extend my mortgage from 28 years to 40 but reduce my monthly payment from $1325 to $1110 (interest rate from 3.99% to 2.875%). 

After they assured me this would not impact my credit, I accepted the modification and began the 3-month process to get out of forbearance. However, it turns out that they lied about the credit score because my credit report now shows "this loan has been modified" even though it was never actually late. Therefore my credit immediately has gone from 810 down to 665! This is particularly unfortunate because I was looking into refinancing 2 of my rental properties, which I was then told by the mortgage broker that because of my huge credit loss that I was likely looking at paying an extra .5% in interest on each loan.

My 3-month period is now over and technically my forbearance ends on August 1st. However, I still have an opportunity to not accept the modified terms and go back to my old mortgage. This would likely cause my credit to go back to 800 again, which is great for the 2 refis, but would cause my primary mortgage to be $215/month more expensive. I'm considering if perhaps it's worth it to decline the modification, and then instead look to refinance my primary as well. I would be out of pocket whatever the closing costs are to refinance down closer to the lower interest rate that I was getting on the loan modification (I owe $190k on probably ~$300k house). That would allow me to keep my credit high and save on my 2 rental refis, but it would cost me the extra money in closing on an additional refi for my primary (which is otherwise free if it is a forbearance modification). I'm guessing this might cost a few thousand?

I'm wondering if perhaps there's another angle to this that others could think of? The goal obviously is to balance the money out of pocket across the 3 mortgages while also trying to maintain my credit.

That is a fair point. I guess I could also see the side that if the evicted tenant's debt is headed to collections, then the SD would probably be needed to be applied there first (at least for the tenant's sake in potentially paying it back). Like I said, I wasn't going to rock the boat over $65 regardless, but I am glad to hear that you could justify their perspective. Thanks.

You always have the inspection period to back out of a deal. You could put it UC, get a virtual walkthrough by your PM or realtor when you have the exclusive window (or god willing you could fly in, although I think this is totally trivial with today's technology), and then still get out of the contract if it turns out that you don't like what you saw. I've successfully done this a few times myself. People needing physical walkthroughs of every property in today's market are going to get dusted by more confident investors. Once you have that exclusive inspection period, then that is where you can afford to take your time.