All Forum Posts by: Karim Baker

 @Karim Baker that is inaccurate. The lien is tied to the loan and will be removed with a refinance WITHOUT the balance of it being applied to the new non-NACA loan.

 @Karim Baker that is inaccurate. The lien is tied to the loan and will be removed with a refinance WITHOUT the balance of it being applied to the new non-NACA loan.

My wife and I are looking at going through NACA to get a multi-unity with the intention of living there for a year and refinancing. Some in the forum have said that refinancing out of the loan is not that easy after a year. I believe one contributor said it is not possible unless the home has 20 to 30% equity. Is there anyone that has gone through NACA and got a multi-unit and was able to successfully refinance out of the loan after a year, or is it more realistic to plan to have to stay in the home for 3 to likely 5 years? I couldn't exactly tell by reading the qualifications handbook, but it seems that there are some stipulations in being able to sell and refinance out of NACA that may not make it as easy as simply refinancing the property. Can anyone shed any light on this or share their experience with buying a multi-unit with NACA and later refinancing out of the loan?

@Nicholas R Foster I used the NACA program to buy my triplex back in 2019. I put next to nothing down but IMHO NACA's program in reality is very frustrating. The workers are great but under trained, over worked and under paid so getting timely communications, complete answers or clear next steps is a challenge to say the least.

Basically, its a great program but it is not designed for a great customer experience. If you can get through it though, it will set you up well. I now live for free in Los Angeles and have been since 2021. 

My last full gut: similar size sq ft, but built in 60's, cost about $135/psf and we were GC.  Quotes from GCs tend to be about 20%, so that bumps to $162/sf in Cincinnati, OH.  $200/psf doesn't sound too extreme for San Diego.

But when you say full gut, do you also mean all new electric, new plumbing, new roof and gutters?  What about window replacements, siding, etc?  

Sometimes I wonder, if this is just a "generic" 80s built tract house, would demo and new construction be cheaper?  I truly don't know, but if the gut is extensive and you are going to hire GC anyways, it might be worth throwing some numbers around to see what you can get.

My threshold on a BRRRR is that the value increases twice the cost of the value add. This is because they are work and have risk. I will add that finding such properties in San Diego is a challenge and I have not purchased since Dec 2021 (purchased $4m that month).

Using your numbers and always using the more conservative of the range yields $750k (ARV) - 2 * $200k = $350k.

If you want to extract all investment, the cost including rehab must be 70% of ARV (70% rule). Again using your numbers and taking the more conservative numbers yields $750k * 0.7 - $200k = $325k.

If I was purchasing to obtain a full extract of investment, I would need to purchase at $325k.   however, I am ok not extracting all of my investment and would be willing to pay $350k. 

Note I am not finding many properties that meet this buy criteria in San Diego.  Investors in San Diego are willing to be aggressive because the appreciation and rent growth has been so outstanding.  This likely means that some investor would pay over the $350k that I would be willing to purchase it.  If you desire a quick sell at $350k, contact me.  

by the way, What is the source of your ARV? The average home in San Diego is $1m. This implies a freshly rehabbed home value would average over $1m. Your ARV may be low

Good luck