All Forum Posts by: Kevin S.

@Nicholas Morgan Since it's your first purchase, you're going to want to keep your agent. There will be some of those same pitfalls along the way with this property that you ran into in your last one. Additionally, you'll need someone to walk you through all the paperwork, etc. so why not just pay your realtor the commission so she can do that for you? I had the same issue a month ago when I bought a duplex and though it probably cost me a little more, it saved me time, stress, and helped maintain a great relationship with someone who could potentially steer future investments my way. Just my 2 cents

@Josh Crockett I think your vacancy is low, typically I use 8%-9% as over 12 months that gets you to about a full month's rent. CapX at 5% also seems low, but since the property was renovated in 2011 maybe it's appropriate, just be careful there. After taking into account an increase to 8% for vacancy and 10% for CapX you're basically just buying cash flow. If you fully financed the $168,300 @ 5.375% you'd be looking at around $942/month in P&I, which when taking in conjunction with the increases I mentioned in vacancy and CapX basically leaves you net $0. Just my thoughts on it, since I'm not familiar with the property in question

@Justin Lee don't forget to include vacancy, repairs, and CapX expenses when doing your calc

@Justin Matesic one other thing to point out is that properties listed on the MLS will often (but not always) have lower cashflow than properties you find that are off-market deals. Additionally, you'll hear about people who analyze hundreds of properties, make a hundred offers and only actually close on one deal, so don't get discouraged just because you haven't had any luck yet. If it was easy, everyone would be doing it. Good luck!

@Account Closed Okay that makes sense, sorry for the misunderstanding about what the "25%" represented. However, you can't really call that a con, as there's no requirement for you to buy a non-owner occupied rental if you are rent-hacking.

@Account Closed Disclosure: I am currently house hacking a duplex so my response will be bias toward that lifestyle.

A couple things you didn't address: Pro for house hacking - appreciation and potentially mortgage interest tax benefit (we'll see come March 2019 if this is still a benefit).

Also, if I understood you correctly, your rent hacking strategy was to find someone else with a rental property that will rent to you and allow you to sublet part of the property, so why would you need 25% down if you aren't purchasing it?

Additionally, while you can BRRR a house hack property, that doesn't mean you have to. I recently bought a duplex that needed minimal work. It currently reduced my rent/mortgage and when I move out and rent the portion I'm living in now will cashflow just fine. If you're comfortable living with roommates you could also do a house hack and rent out any spare bedrooms on the side you're living in to further reduce your mortgage.

@Patrick Fraire I'd counter at $330k + 1-year of rent for this friend with the contingency that the friend sign a lease agreement with you, which would basically be a pre-paid 1-year lease. Put wording in it that after the one-year period she can renew at $xxx and just know going into it that she won't be able to afford this. 30-days prior to the end of the lease (or whatever CA requires for notice) give her notice to vacate and (assuming she doesn't fight it) she's out and you can get new renters in. Definitely document everything in writing and have her sign it all, not the people you are buying the place from. Also make sure it's clear to her from the get-go that you're raising to market rents after her one-year is up so she needs to be prepared.

@Nicholas Butler I'd second what @Jack P. said about using an agent for your first property purchase to walk you through the whole processes. That being said, you might call a couple of agents in your area (check BP as there may be agents on here in your area or people in your area on here that can recommend someone) and see if they'd be willing to help you close for a flat fee rather than a % of sale (to save you some money) since you already found the property and they won't have to do as much legwork. Good luck!

3% for repairs seems low and you don't budget anything for CapX which is typically budgeted somewhere between 5-10% (usually 10%) depending on how new all your big ticket items are (roof/AC/etc.)

@Kevin Krysty Jr. Sure thing, you also might see if you can talk your landlord into seller financing, there are lots of articles on BP about the pros/cons of seller financing so make sure you read up on it.