All Forum Posts by: Derek Brickley

Hi Chris! That's a great strategy, and the benefit is that those all would qualify for residential loans. Depending on what you have available for a down payment, you have a few options. As you know, for the first fourplex, you could look at conventional or FHA. FHA 3.5% down but with Mortgage Insurance, or Conventional for a 4-unit would be 20-25% depending on the program. Since you are looking to soon acquire more properties, 3.5% down with FHA would free up more capital for the acquisition of the duplexes. For the duplexes, there are a few options I see. You could go conventional investment property, which would require 20-25% down anyway, or depending on the deal you could get a Debt Service Coverage Ratio loan where they base the loan off the income the property generates. This way they don't look at your DTI ratio or individual income. Of course the property has to positively cashflow (generally 1.25 DSCR but some companies offer lower). Are you acquiring these properties for the equity paydown/appreciation potential or the cashflow the properties would generate? In all reality, these are just a couple options, but your BEST option is to discuss your options with a licensed Loan Officer. Gold Star Mortgage has a branch in Tennessee with a wide range of products for residential loans, and they do offer DSCR products as well.

Personally I haven't heard that FHA would deny you if you currently own a primary. Surprisingly, FHA is not a first-time homebuyer program so anyone can use it and the normal issue is that you cannot have multiple FHA loans at the same time (with some exceptions). I would definitely find and ask a licensed loan officer and see if they know of any stipulations with current residences. I believe that as long as you plan to occupy the property, the FHA will insure the loan. They will definitely consider your current payment though, which will have an impact on your debt to income ratios.

But yes, you are correct about the conventional loan LTV limits.

The benefit to a HELOC is that you only make payments on the equity you use. Similar to a credit card, say you have 60k available in a HELOC but you only use 40k, you don't make payments or pay interest on the 60k you have available, only on the 40k that you used. So for that reason trying to get the max amount as a HELOC limit gives you more access to your equity, but doesn't necessarily mean you are going to have to pay more to get that. As I believe was mentioned above, you are qualified for a HELOC based on the interest-only payments. Now eventually you will want to pay it off, but the minimum required payments are interest only.

Hi Sebastian!

A few people have responded about the PMI and I absolutely would agree with them. As a househack and starting your real estate journey, ask yourself if you are seeking cashflow or appreciation. If your main goal is to decrease your monthly expenses, then if you have the extra money to buy it out that would be the best way to do so. If you don't mind paying more each month, you could put that money elsewhere and maybe make more from it! I would say it is important to consider the opportunity cost of your choices and look over your goals.

With respect to the downpayment, I think again weighing your goals is important. The best bet is to probably discuss this with a loan officer who (hopefully) can give you more information about the exact costs. I'm not sure what your local market (Reston, Sterling, Herndon) is like, but certain markets are in a position where they may see housing prices decrease in the coming months. Putting 10% down may give you more of a cushion against this and again (if your goal is cashflow) you would have a lower payment all around with your PITI and PMI. On the otherhand, putting 5% down frees up more of your capital for other investments (perhaps adding the ADU) which would generate more income in the long run.

So no straightforward answer, but I would strongly reflect on your goals and your willingness to accept risk and decide with those in mind!

@Shiloh Lundahl that’s great info for sure! Is this home in the beach a new construction or an existing home?  Also, where did you find financing available?  

I totally agree, I have never been bored in Costa Rica (my profile pic is my girlfriend and I surfing in Nosara) and I really like your perspective!

I would already like to give a huge thanks to those who have responded!! Great insights.  And yes, I will admit “attractiveness” was not a great word, but really I am looking to see if it has helped with efficiency and benefited the owner/management!

So much great advice already!

I am currently debating whether smart home updates will increase the attractiveness of a beachfront STR. This article by Stayfi includes a few recommendations for STRs, but is a little outdated. Here are some of the major categories covered in this article:

Best Smart Home Tech For Vacation Rentals
Noise Monitoring
Smart Locks (Keyless Entry)
Smart Thermostat
Home Security
Digital House Guide

What smart tech is a must-have for STRs, what is an add-on bonus, and what should just be forgotten altogether?

Thank you in advance!

Also great areas of CR are Guanacaste Region, Playa Flamingo and Playa Grande are amazing.  Then Nosara was a lovely trip as well.

To my knowledge, the problem with investing in Costa Rica is that there is no financing available. The only way to purchase property (for a STR) is through cash. Does anyone else know of financing options there?