All Forum Posts by: Kevin Klaas

@Brian Eastman

Thanks for the clarification. 

@Jason Wray

Thanks for your input. Never heard of CHENOA but I'll check it out. The Home Possible loan seems to be my goal since the mortgage insurance does not stay on for the life of the loan. I think it drops out after 20% equity is acquired as opposed to the FHA MIP staying for the entire loan.

@Dmitriy Fomichenko

Thanks for your feedback, Dmitriy. I'm starting to think that liquidating my IRA account might be a viable option despite the 10% penalty plus taxes. Basically I want my retirement money to get better returns through buy-and-hold investing.

Hi BP nation!

Newbie investor here.

I've been saving money in my retirement accounts (roth IRA, traditional IRA, rollover 401k) through Vanguard. I've done some research on self-directed IRAs and was hoping to open a SDIRA (or Solo 401k) and use the money to purchase real estate.

My goal is to get started house hacking with a HomePossible loan 5% down or maybe FHA 3.5% down in downtown Chicago (ideally 3 or 4-flat MFH). I wanted to finance the purchase (down payment, closing costs, holding costs, rehab, etc) using my retirement accounts. Unfortunately, I've since found out that using an SDIRA to fund a house hack breaks the rules of an SDIRA since I intend to live in one unit and rent out the others.

Some questions I have:

1. What are some alternatives for using retirement accounts to fund a house hack? Which leads me to this question - are retirement accounts off-limits to finance owner-occupied homes?
2. I also have a business partner that intends to house hack as well. Would I be able to finance his house hack split 50/50 (and I would not live in the MFH) with my retirement accounts through an SDIRA?

Any help is greatly appreciated! 

Thank you,
Kevin


 

@Andres Bustamante So just to be clear, it is legal to do a 50/50 house hack and not live on the property? As long as the loan is under the name of the person living in the house? Maybe it depends on the lender and/or local laws. Thanks for your input. 

@John Lyszczyk great advice, thank you. I think it can be very easy to overleverage with such a small down payment with owner-occupied loans. We plan on having a healthy amount of reserves (6 months PITI). Hopefully we can buy under market value to lock in some equity to hedge against a downturn in the market as well.

Thank you! @Sarita Scherpereel @Twana Rasoul

Hi everyone, newbie investor here. 

Was wondering if anyone has done a house hack with a partner? And if so, is it required that you both live on the property? Would love to hear some thoughts. Any help is greatly appreciated.

Thank you!

Newbie investor here looking for advice. 

Any thoughts on investing in areas with new construction through buy-and-hold? What are the drawbacks/limitations?

To me, it seems like a win-win scenario. Fewer cap ex and repair costs to worry about and rents would be higher. I would imagine the profit margins would be thinner since there are fewer value-add opportunities through the BRRRR strategy. But as a first time buyer, it seems the risk would be significantly reduced.

Would love to hear some thoughts. 

Thanks everyone!

@Joe Norman

I agree that Baltimore is a place to invest for cash flow but not appreciation. Currently, Baltimore has one of the highest homicide rates per capita in the country. That being said, there are still opportunities in a handful of neighborhoods, in my opinion. 

I've been living Baltimore for the past three years so I feel like I have a good sense of the area. 

Some neighborhoods to consider would be Federal Hill, Locust Point, Fells Point, Hamden, and Canton just to name a few. These tend to be some of the safer neighborhoods and where many students and young professionals choose to live. I currently live in Locust Point and really enjoy it.

Let me know if you have any specific questions and I'll do my best to help! 

Appreciate the feedback, Zac! 

I agree with everything you said. I have read that book and highly recommend it but I still feel overwhelmed with rehab estimates. But it's certainly a good place to start. 

I'll try to jump in and get more involved because that to me seems like the best way to start.

What are your goals in REI? Would love to provide some feedback or advice as best I can.

Also, any thoughts on investing in areas with new construction through buy-and-hold? What are the drawbacks/limitations?

To me, it seems like a win-win scenario. Fewer cap ex and repair costs to worry about and rents would be higher. I would imagine the profit margins are smaller but the risks are lower as a first time purchase. 

Thanks everyone! 

Thanks everyone for the support! 

@Zac Hall

Currently just reading anything and everything I can get my hands on. I'm starting to understand how choosing a niche is very important. Simply overwhelming at the plethora of information. 

One specific issue I've had is how to estimate rehab costs without a GC or inspection? And I understand speed is the key to landing great deals. But I feel just totally lost on how to estimate rehab costs within a few thousand dollars. That seems to be my biggest issue when running the numbers. 

I would imagine it would make sense to jump in and help someone out and provide value. Just not exactly sure how.