All Forum Posts by: Keith Morrison

@Kaitlyn Beard

I am a veteran myself, and I'm weighing the option of using VA loan, which would make the out of pocket really close to zero, but then I'd have to have 6 months of PITI in reserves.

Really what I was hoping was to add the ADU in the near future, and along with appreciation, build in the 20% equity, and then refinance to Conventional. And move on to another property.

Little caveat is, you can only use this program once. So even as a veteran, you can't get around that. But you are correct that FTHB is 3 years without ownership in a property. I own 1 STR so technically I am using the veteran advantage.

Have a great idea, that I will be using myself, to get into a house hack for very little out of pocket. Hopefully this can help someone else get their investing career started too! 

Florida has an amazing First-Time Home Buyer program for Down Payment Assistance called Hometown Hero's.  It gives 5% of the home value, up to $35k for assistance towards down payment and closing cost.
It's a government program open to all full time (35hr+/week) employees of a Florida based company. Must be a primary residence. 640 min credit score. Program has a low fixed interest rate. There are income restrictions, but they differ by county, and are around $130k max. And cannot exceed max loan limit by county. **Veteran's do not need to be First-Time Home Buyers!! 

This is not free money, but a 0% interest loan in the second position. And it must be repaid if you move out, refinance, or sell the property.

With all that being said, here is my idea....

Buy a multi-family property w/ 2-4 units using a FHA loan with 3.5% down. Some reserves will be needed for FHA for a multifamily property. Typically 3 months PITI. and FHA must past self sufficiency test. (this means the market rents will be more than PITI)

Use proposed/current rents to qualify for the largest property possible. 

My goal is to find a property that has a detached garage that can be converted in the near future to livable space. Create an extra unit, to move into, rent, or STR, increasing cashflow even more.

...

So if the Down Payment Assistance covers 5% of the home value, then that covers the 3.5% down and leave 1.5% left for closing cost. Obviously that won't cover everything, but probably leave you with 1.5% left to pay. So on a $500,000 home, maybe $7,500+ out of pocket. 

What do you guys think? 

P.S. - I'm a lender in Florida who has this program if you like the idea and want to see if you qualify! 

I have a similar situation with my Mom. She was staying with me for a few months and I got her listening to Bigger Pockets Podcast everyday. She has always loved real estate and even help on a flip of mine, she was the painter! Now she's hooked and wants to get into investing at the age of 74!!

My mom is downsizing from a 4bed/3bath. She owns it outright at $430k value. Hopefully we find something under $350k. Everything is high still. Sell high to buy high, even though she is stepping down.

If DTI isn't an issue for your mom, maybe considering renting her current home out, and using a FHA 3.5% down for another primary for her.

You have 2 options if you're going to sell. 1.) Sell and pay cash for a new house, and then the extra cash can be used for an investment down payment. or 2.) Sell and if DTI allows, use the proceeds for 2+ properties. Her new primary (FHA 3.5% down), and 1-2 more 20% conventional investment properties.

Last one was awesome.  Can't wait! 

NFCU has a good loan product and allow to lock the rate and even change it if it goes lower before closing. 

I had a VA loan with them.

But all lenders rates change daily with the market. 

The lender I work for, we have an admin fee and processing fee that total around $1400, regardless of loan size. 

I did recently purchase a STR through a broker and they hit me with a 3.5% origination fee.

Mostly you see the origination fees with brokers. My company does loans in house so that is why we don't have a fee. 

What state are you purchasing in?

When setting up an LLC for STR in another state, do you set up the LLC in your home state (FL) or the state the property is in (NH)?

Reasons why? or why not? 

And I'm sure at least someone will say "talk to your CPA" lol .. So can someone recommend a good CPA? I'd really like to have the ball rolling in the right direction from the start. 

What has been everyones experience with using the rent estimator and then getting a DSCR loan and getting the rent appraisal? Has it been close, comparable, or way off?

And if there has been a difference, how much was the difference and why do you think it was?

@Eric Goldman awesome advice about standardizing colors. I’m for sure going to do that for all future properties!

@Colleen F. I’ve made the mistake before in my own home about the white on white. Such a good point.

I think my biggest question/issue is how to find the happy medium between getting the highest ARV and using economic finishes.