All Forum Posts by: Konstantin Ginzburg

It will really depend on what kind of loan you are looking to get. If you are getting a conventional loan, then this many hurt you since you decreased your claimed revenue which would have an effect on your debt to income ration and in turn, the max loan you would be able to qualify for. If you are using other loan products such as a DSCR, bank statement loan, ect. where your claimed revenue is not looked into, then you should be fine. Will just need to find a lender who is willing to work with you and find you the best financing package that will work for your situation.

I think you are doing things very well. The only thing that I would be cautious of at the moment is the current slowdown in airBNBs in many market due to over saturation and possible legislation that can limit STRs in the future in your market. I don't personally know of any upcoming legislation that is planned for Panama but there are more and more cities that have began to do so. I am actually in the nearby market of New Orleans and also have one unit I airBNB. I was aware that there was regulation already set forth for STRs a few years ago so it was a hot-button issue in the city. One way I protected myself was to ensure that any property I purchased in the city would work as a long term rental as well as an STR so I would have the ability to shift strategies if needed. If you want to try to protect yourself a bit, you could try to space your STRs out more such as to the nearby markets of Destin or Pensacola. If you ever want to connect, feel free to reach out. I would love to hear from you. I actually have plans to expand my real estate investing into the Florida panhandle market in the future and would love your opinion on that area.

I think it will depend on how severe the negative cash flow is. Since you are using an FHA loan, you will get a larger monthly mortgage payment due to your low down-payment. This is combined with you paying PMI on an FHA loan which will drive the monthly cost up a bit more. If your negative cash-flow at the moment won't be too severe, then I would say it can still likely be a good deal. You can lower your living expenses by having a tenant paying off most of your monthly mortgage while having them build equity for you at the same time. If you run the numbers and find that the cash flow is still negative if you are renting out both units in the future, then I might rethink that property. I wouldn't count on a huge rental increase in the near future as it seems like rental prices have stabilized from the drastic increases that have been happening in the last year or two.

My best tip for getting started would be too continue to read more of those books and begin networking within the market you want to invest in. Get to know lenders, insurers, contractors, property managers, wholesalers, realtors, etc.. Begin build your real estate team. 

My personal preference would be to ensure some cash flow in any property that I get since I like seeing a return on my investment and help save for additional properties in the near future. I do not personally invest in the California market but I am aware that coastal market tend to have less cash flow with increased appreciation being the trade off but $2,000 to $3,000 is a pretty large negative cashflow and not one I would personally take on. There are so many unforeseen things that can go wrong such as a bad tenant, property damage, capital expenditures, increased insurance rates, ect. that will put your break even point further and further out. If you need to wait years to break even on any investment, then the return on your investment either needs to be incredibly substantial or there are likely better places to invest your money while you look for a deal in your target market that has a more immediate return on your investment. If you keep looking, you will likely find those deals. Don't be in a rush and wait for the right deal. One mistake you don't want to make is sinking your capital into a bad deal and not have that capital available once a good deal does finally come your way.  

Look into the STR regulations in your area. The cut-off between short and medium term rentals is 30 days which is why most medium term rentals have a 30 day stay minimum. Short term rentals are a great way to increase revenue however many areas are regulating short term rentals more and more such as restricting the total amount or requiring license's to operate an STR. Medium term rentals are not regulated in this manner. So it would really depend on what is and isn't allowed in your neighborhood.

@Augustine Maldonado

I might be able to help you on two fronts. I'm also in the oil field now and a real estate investor at the same time. From personal experience, I can tell you that oil field is extremely cyclical. There are boom and bust periods in the industry that happen on a 5-7 year cycle. We are currently in a boom period and it is very possible to make a lot of money in oil at the moment but those busts periods often come with a lot of layoffs and work being in very short supply. My advice would be to enjoy the boom period in the current oil field at the moment but keep reading, studying, and begin your initial investing right now so that you can setup a solid base. Use the money you will be making within the oil field and put it towards building a real estate portfolio with sold cash flow that you can use as supplemental income once the oil field turns and money is harder to come by again. When this happens, it could be the time you look into jumping into real estate full time either as a wholesaler, contractor, realtor, or any other option that personally interests you. Also from personal experience, if you plan on investing in the area you are working in, be cautious since oil field towns are also very boom and bust. So there might be great rent coming in during oil booms where rent is in high demand but those rents can quickly drop and leave you with vacant units when the oil turn happens. If you can, protect yourself from this by trying to invest in areas that are not driven solely by the oil industry and are more diversified. Since you will be away from the area for work, I would also begin networking with property managers now so that you can find one you feel comfortable working. They will be crucial for your team for those weeks and months you are on a rig and can not look after your properties personally. 

The ARM is an adjustable rate loan so the rate will adjust to market after a set period of time. So even if the ARM initially has a lower interest, it can become higher than the conventional if the rate readjusts prior to you be able to refinance it. Look into how long the interest rate is set before it is scheduled to readjust (5/1 is common which means the interest rate will readjust in 5 years). If the readjustment isn't scheduled to happen until after you planned on refinancing anyway, then go with the ARM. Just be careful to make sure you don't put yourself in a position where you are not able to refinance and wind up with a heavily increased mortgage payment that you were not expecting.

This might a question that is better taken to a local real estate attorney in your area since tenant protection laws are very different from state to state and even city to city in some cases. Personally I am not sure of what paperwork you can provide that would show that she lives there but not as a tenant. Since the house will be in your name, you have full ownership of the property and all the rights that go along with it. She isn't renting which means she won't need a lease or other document and to the best of my knowledge, there is no standard "room mate paperwork". If anything happens to you though, she would not take over as the landlord. The property would go to whoever you outlined the property ownership should pass too in your will. That person would become the new landlord by default and will have control over what happens to her and the other tenants. 

My personal advice would be to use financing in order to purchase a property. This way you will get a foot in the door of the new market that you are moving too while also keeping a fair amount of cash in reserve if additional opportunities come up. If you plan on using a house-hack strategy, this will make it even easier since this would qualify you for using owner-occupied financing which generally have lower interest rate options. Options such as an FHA loan could keep your down payment requirement as low as 3.5%. I would look for a multifamily house (4 units) in an area of town that you like that would cash flow or at least meet your mortgage payments. One thing to be cautious of in the Florida market at the moment is the insurance rates. They have gone up a lot in the last two years due to the recent string of hurricanes that have occurred in the region over the last few years.