All Forum Posts by: Kyle S.

They will if it's a good deal and the partner will use their resources. I'm advocating for you wholesalers to start building your own wealth, not making 5k here 10k there

Most people need active income starting out and rentals are passive income. That is why most people want to start with wholesaling. It's fairly cheap to get into and provides money so they can survive then they can invest in rentals for the future.

What about flips?

To me WAY too risky for a brand new investor, especially in this market. With most markets dropping in price and interest rates going up that's super risky. Even seasoned flippers have to be extremely careful/conservative in this market or they will lose money.

0 Votes

Quote from @Eliott Elias:

Quote from @Kyle S.:

Quote from @Eliott Elias:

Quote from @Chad Otsuji:

@Eliott Elias partner how? Find deals, bring them to buy and hold investors, and exchange it for equity in the deal?

Bring a money partner and split the profits 50/50

Not many money partners want to give money to someone with no experience.

They will if it's a good deal and the partner will use their resources. I'm advocating for you wholesalers to start building your own wealth, not making 5k here 10k there

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Quote from @Caroline Gerardo:

You paid 1.75% for the PMI on FHA and likely 3.5 down. There is probably not enough equity to refinance conventional OR get a HELOC. To refinance conventional and get rid of mortgage insurance you need 80% loan to value. You can refinance to conventional at 90 but the mortgage insurance is often higher. You will need to go down in rate for it to be sensible to an Underwriter. Also the costs of two loans at $3000 or more each is added to balance.

Say you buy a $600000 house and you owe $585000 in a year you owe $584996. You will need the value to be something like $740000 to refinance and do another low down payment government/conventional loan. Markets are not increasing like that so you will need to add square footage to make the appraisal higher. $585000+ 6000 costs

Your departing property is appraised when you buy another low down payment property. The departing property also needs market rents to cover the PITI plus any HOA for you to qualify. Also you will need to write a letter of explanation such as job transfer or growing family size for it to make sense. If market rents don't cover the PITI (which is typical) that loss hits your debt to income ratio. In a year you need higher income or less debt if your ratios were tight. Not impossible but unlikely plan considering values are not increasing.

HELOC you need 721 score and goes to 90% which will be hard to hit in 2023 as you owe 98% from the start.

Would he have to pay the 1.75% PMI at closing?

0 Votes

Austin, Texas

Quote from @Kevin Sobilo:

Quote from @Alex Pepe:

Quote from @Kevin Sobilo:

@Alex Pepe, I don't believe there are any prepayment penalties on FHA loans. So, yes in theory you could refinance after a year.

The question is, is it likely to make sense? Typically people use an FHA loan for the low down payment. In order to refinance into a conventional loan the house would have to go up in value by almost 20%. Very unlikely to happen in 1 year.

Also, with an FHA loan these days, I believe you pay a chunk of PMI at closing and then a monthly PMI as well. By taking out a second FHA loan you would be paying that chunk of PMI at closing twice.

You are likely better off using a conventional loan for the 2nd purchase. If its for a primary residence, you can probably find a loan with a 5% down payment albeit with a limitation of 3% seller assist.

You mention a HELOC. What equity would you use for a HELOC? With an FHA loan you likely put little down, paid very little off within 1 year. You likely have no equity you can tap with a HELOC at that point.

If I were to buy a fixer upper prop for 250 with 3.5 down, in a neighborhood were most properties are in the high 300's to low 400's. Rehab the property while living in it and increase the value to low to mid 3's, (maybe even convert the garage to a unit) I would be able to increase equity enough to refi?

@Alex Pepe, typically you can't buy a fixer upper with an FHA loan because they require the property to be in good functional safe condition for someone to live in.

Couldn't he do an FHA 203k loan if it was a fixer upper? I know those can be a ton of paperwork and you have to get a contractor that is okay with doing it. But pretty sure it's an option.

1 Vote

Austin, Texas

Quote from @Eliott Elias:

Quote from @Chad Otsuji:

@Eliott Elias partner how? Find deals, bring them to buy and hold investors, and exchange it for equity in the deal?

Bring a money partner and split the profits 50/50

Not many money partners want to give money to someone with no experience.

0 Votes

Why wouldn't you keep it as a rental long term? To me for house hacking that makes the most sense. So, live in it a year then move out and do it all over again with another property after a year. Then rinse and repeat. Also, with the market softening not sure you would make much in equity to do a 1031 exchange over the next 18-24 months as well.

1 Vote

Dallas, Texas

If you buy it I would make sure you leave a fairly large amount for repairs/maintenance because like some have said things will break with a house that old.

If it was me I would do my best to steer clear or make sure you get a screaming deal on a home this old especially for your first investment property.

2 Votes

Pretty sure you can only have 1 FHA loan at a time.

I believe if it's an owner occupy you can do a conventional loan for 5% down. That is the

route I would take. I think plenty of people move every year to build their portfolio this way.

Think only tricky part is getting a loan as have to qualify with the DTI for another property. I do

believe some lenders take into account some of the rent from the first place.

1 Vote

Grand Rapids, Michigan

I rented a big place in Chicago (Wrigleyville) in my late 20's that was rented by the room. One of my big mistakes was not trying to buy the place. The upper unit had 5 bedrooms and the downstairs unit had 4 bedrooms. The owner was making a killing on it. But it worked out well. To start it was all friends but towards the end we got roommates off of Craigslist and that worked out great too. Get to know the person from Craigslist a bit before you let them move in. We took them out to drink and hung out with them to get to know them a bit. We had 4 people we found on Craigslist and they all worked out great.

1 Vote

Chicago, Illinois

Quote from @Matthew DeMichele:

Quote from @Nicholas Coulter:

Quote from @Matthew DeMichele:

Hey everyone!

I'm finally in a great position to get that first property under my belt. I have access to around 20k for a down payment. I work remotely, so I can move literally anywhere in the US where there's a great deal. I'm looking to househack either a single family home with multiple bedrooms or a duplex. I have a number of markets in mind, but I'm open to anywhere where I can cash flow a bit or at least break even. I'm looking to close on something within the next 2-4 months.

Would love to know if you have any lenders and/or real estate agents that you'd recommend in areas where you've personally invested? Would appreciate any recommendations! Thanks!

Eric is a great resource to chat with about this up in Seattle!! Happy to connect you guys

@Eric Yu

Thanks for the connect Nicholas! I'm also looking in markets outside of WA as well. Would love to chat about Southern California areas as well if you're interested.

That's an even more expensive market than Seattle in most parts. I lived in Huntington Beach for 5 years and moved around 2 years ago. Love southern California but it's so darn expensive.

1 Vote

All Forum Posts by: Kyle S.

Kyle S. has started 3 posts and replied 62 times.

Post: Starting Out - Wholesale

Post: Starting Out - Wholesale

Post: Getting out of FHA Loan after HouseHack?

Post: Getting out of FHA Loan after HouseHack?

Post: Starting Out - Wholesale

Post: Multifamily FHA Loan - Down Payment Assistance Program

Post: 110 years old duplex in Cleveland Ohio with CoC 10.5%

Post: Best way to acquire 2nd property?

Post: Has anyone found success House Hacking in Chicago/suburbs?

Post: Best market for a househack?