All Forum Posts by: Derek Brickley

Most states will have down payment assistance and some lenders even have forgivable options!  Michigan (MSHDA) is a great option for those eligible and through us we offer to cover your entire downpayment up to 3.5% even on multifamily househacks!  Thank you for sharing your knowledge and educating people on options they might not know are even available to them!

Very informative!! To those not in Colorado, most states have a downpayment assistance program!  In Michigan, homebuyers can be eligible for $10k in forgivable downpayment assistance which is amazing.  Even on multifamily properties there are programs lenders (our company included) who have downpayment assistance on multifamily properties.  It is possible to have the seller cover closing costs and be into a property for little to no money out of pocket!!

Quote from @Mark Francour:

I am new to the Tampa area and looking to buy a small multi-family property to house hack this summer. I have begun analyzing properties in the Tampa, Clearwater, St. Pete area.

Being new to real estate and analyzing properties I feel like I am still "winging it." What advice would you give to someone that is starting their process of looking at properties? Would you use the BP Rental property Calculator, or create your own Excel Spreadsheet with formulas? Are there any specific expenses that are abnormally high or unique to the area?

Obviously, the current state of the market it has been tough to find many deals in the area. Is there cities/areas nearby that you would suggest to look at for properties? Areas that you see potential growth as the Tampa market expands?

Thank you!

I think the best thing you can do as a newer investor is use Biggerpockets calculators!  If you feel unsure, creating your own formulas in excel will only complicate things.   Find an investor friendly agent and lender that can help walk you through the process! Personal recommendation is Chris Mudloff for financing.

Quote from @Joshua Filkill:

@Allen Bannister There are loans that could be around 5% down and no PMI so check with local lenders. There may be area and income restrictions on those loans.

Yep!  Depending on your income there might be a 5% down conventional option.  Going this route leaves it open for more low money down options in the future if you plan on scaling.  If it might help, shoot me a message here or my phone number is (734) 645-7722 and see if you might be able to use the conventional route.

Quote from @John Warren:

@Derek Brickley so here is the issue. You are using an FHA loan most likely, and you are baking in really high repairs, CapEx and management fees. I would quietly admit that you will self-manage this building and remove that. Then I would look long and hard at your repair and CapEx numbers. We on BP are sometimes so conservative, that we push ourselves out of a good deal. Can you budget $50 per unit per month for repairs and still make the deal work? What about $75 per unit?

I would also ask other investors in the area if the deal makes sense. Here in Chicago, I would push you to buy in this scenario as long as the building was in solid shape. Once you refinance in the future and remove the PMI, the deal will make a lot more sense.

Thank you!!  Yes I am definitely very conservative with my estimates but I wasn’t sure if I am pushing away a good deal or trying too hard to make a deal work.  Using Brandon Turner’s calculators I was estimating $104/unit CAP EX and $120/unit Repairs.  I agree with PM, my family self manages and has been doing so for 20 years or so.

For me it makes sense to use conventional 5% down for this deal and then save my FHA loan for future use so with time PMI will drop off on its own. If I end up refinancing when rates drop I will most likely have to refinance as an investment property which would have its own obstacles. I was thinking of using seller credit to buy down the rate which could save $200 per month. If I use a buy down for the rate and reduce repairs to $75 per unit. I would be very close to breaking even (and as a househack first home purchase I would be happy with that).

Quote from @Chris Seveney:

Quote from @Derek Brickley:

Hi all, 

For the past few months, I have been looking for a house hack with a multi unit property. Already preapproved and working with an agent. One lead just popped into my radar, but I’m not sure if it makes sense. As a house hack, it makes perfect sense, and will save me money month to month over renting. My concern is that when I run the numbers given I’d move out and rent the other unit, the numbers don’t pencil out at all. 

In the house hack scenario, I would be living for about $750 per month, which is significantly less than market. When I move out and take into consideration repairs, capital expenditures, vacancy, and possible management fees. The numbers come in at -$500 per month for a cash on cash of like -40%. Of course I would be using a low money down strategy, but I don’t know if this one makes sense to go through with given the long term play.  There is not significant appreciation potential in the sub market where it is located.

Any thoughts are appreciated, thanks!

 Can you provide more information. What does the other unit rent for? What is your mortgage?

Reason i ask is something does not make sens, you are saying you can live there for $750 but if you move out you have a negative $500 per month. The only costs you will not have from living there now to when you move out is property management fees, which one could argue to still have a PM on the one unit so they know the building so when you move out they already know the property and tenant.

 Right, I guess I should clarify that when I run numbers for house hacking I am only including the expenses from the second unit.  The expenses for the unit I would live in I take as a cost of living.  Units rent for $750 but market is closer to $900.  My mortgage would be about $1,500.  Separately metered and tenants pay all utilities.

Hi all, 

For the past few months, I have been looking for a house hack with a multi unit property. Already preapproved and working with an agent. One lead just popped into my radar, but I’m not sure if it makes sense. As a house hack, it makes perfect sense, and will save me money month to month over renting. My concern is that when I run the numbers given I’d move out and rent the other unit, the numbers don’t pencil out at all. 

In the house hack scenario, I would be living for about $750 per month, which is significantly less than market. When I move out and take into consideration repairs, capital expenditures, vacancy, and possible management fees. The numbers come in at -$500 per month for a cash on cash of like -40%. Of course I would be using a low money down strategy, but I don’t know if this one makes sense to go through with given the long term play.  There is not significant appreciation potential in the sub market where it is located.

Any thoughts are appreciated, thanks!

You can definitely still be an owner of the property! Since both you and your fiance would both be owners a lender will look at both of your credit scores and take the lower of the two (mid)scores. An FHA loan is always a great option for househacking with 3.5% down or depending on your situation you could get in with 5% down and save the FHA for another primary/househack in the future. I'd be happy to explain more on that second one if it's any interest, but generally FHA is more lenient when it comes to Debt-to-Income ratios and Credit Scores.

Strong fan of a local lender as well!  They will be more likely to know good connections that will help you grow and scale.

Totally could put 20% down, but there really isn't any benefit to you to do so other than lower your payments from a finance side. Regardless of how much you put down, FHA, still mandates, MIP, or a mortgage insurance premium each month. The only benefit is once you put 10% down that MIP will drop off in 11 years. In this environment, though you are more likely to refinance out of it before then anyways.

In my eyes, that capital would be best used as reserves/repairs or put it towards another property!