All Forum Posts by: Laura Shinkle

North Carolina is a 'buyer beware' state, so any and all due diligence is on the buyer to discover for himself. The due diligence fee is paid at time of contract and is considered liquidated damages if the buyer walks away. That said, that fee does allow the buyer to walk away for any or NO reason whatsoever, so in that regard its more flexible than other states. 

I think a lot of people hear that and assume that buyers are just out there losing due diligence fees right and left. That's not the case. Make sure you have a good agent who knows/recognizes red flags when he/she is walking the property so that you can potentially avoid problem properties, whether you're local or not. 

@Bar Steinberger $150k all in is not a large budget for the Charlotte area. That will limit you on location and type of neighborhood. Honestly, this will likely limit you to Gastonia or Kannapolis areas, and those properties will need work. $150k properties don't exist in Charlotte in a class B neighborhood. 

I'm happy to chat more about your specific circumstances and perhaps figure out a way to allow you to invest that would be more realistic?

 So great clarification here. Getting right down to the point, I would still 100% recommend house hacking as a strategy, even though you're able to put more than 20% down. And I stand by that strategy for the same reason you mentioned, it eliminates part or all of your living expenses, thereby allowing you to explode your savings rate. 

If the rent by the room strategy will work to continue to cash flow, I think you've answered your own question. You could either do that to make sure you're not coming out of pocket, OR turn it into a long term rental and just be ok with contributing some money every month until rental rates come up. 

Now, once you're in this househack, that's when I would start potentially looking at other options for investing. Are you set on only investing in your area, or would another area be ok for you and get you a better ROI for investing? I think that's a great problem to have down the road, evaluate your options...but first, you're eliminating your biggest living expense, allowing you to save and invest that much faster.

That's how I'd go about it! Congrats on being in the position you're in, and good luck in your investing journey!

 Thanks for the response! Just some thoughts on this: 

1. Buying in a 'good school district' sounds like the best plan. However, I don't advise focusing on that unless you have children and are concerned about the schools they'll be assigned to in the next couple of years. The main reasons are because you'll be paying a premium for that house because of the school district and so your ROI typically is less because of that price. More importantly, though, CMS (Charlotte Mecklenburg Schools) is growing and therefore re-districting their school districts fairly frequently. So you may purchase one school district, and then you get rezoned and you're no longer in the highly desirable area.
2. That is a decent budget, however you are looking for a fairly large home in that budget. 
3. The suburbs are really developing quickly since land is at a premium. That said, everywhere in the CLT Metro area is appreciating right now, so there's not really an area where I wouldn't advise buying if the home met your above criteria. 

There is a lot of noise out there for what you should look at when buying a home and/or investment. The budget and the size of the home would likely determine where you would need to buy. I would hate for you to get stuck on a certain area because of the data you're looking at and then realize the home you're looking for is out of your price range and/or doesn't exist there. That was my only point in questioning the data search! 

@Caden Glenn Ryan is right, closing costs aren't a percentage of the loan or purchase amount. It's kind of a rule of thumb. Know that there are limits to how much you can get from a seller in terms of closing costs. If you're putting less than 10% down, then 3% of the purchase price is the maximum you can get. On a $100,000 property purchase, that would be $3,000. If you put between 10-20% down, then the max amount is 6%. More than 20% down, I believe the limit if 9%. Not that you'll likely be able to use all of that in closing costs, just figured I'd mention it. 

Whether that's common and/or doable is totally dependent on the market. If it's competitive and a seller's market, its tough to get a seller to agree to it. The appraisal also comes into play. In Ryan's example, that would only work if there aren't other offers and/or the it's the best offer for the seller to accept. So to sum up, the frustrating answer is it depends. 

Everything Katherine just said lol. I'll second that you want to make sure you keep a record of receipts and expenses (even potentially your time) for getting the property up and running as an investment. Treat it like an investment, not just where your FIL lives, and keep the expenses separate. That way when your Father in law moves out and a tenant moves in, you've got your systems in place :) 

Hey @William Edwards, I'm excited for your plan!! While I'm not in MO, I'm happy to help where I can!

My first recommendation, since you don't know the area, is to find a Realtor that can help you. They should be able to help you narrow down a location based on what type of neighborhood you're looking for, price range, and distance from work. That said, it doesn't look like Warrenburg is very big, and is a college town, so househacking might work best near the college for a steady stream of tenants. 

When you're about 4-6 months away from wanting to purchase, ask your Realtor for lender recommendations. I'm assuming you'd want to purchase with your VA loan to take advantage of that benefit. Most lenders are familiar with VA loans, and your Realtor can guide you towards one that has a great track record and will help you build your portfolio!

@Sam Hatch here's the conundrum of all investors, whether you're buy and hold investments, BRRRR or househacking.

Interest rates have gone up and with it, your monthly budget for buying a home. In most places, the quick raise in prices over the last few years has outpaced rental rate growth. Most long term rentals don't cash flow unless you're putting at least 35% down in my area. So if you think about it, you're trying to buy something (presumably) with 5-10% down and then wanting it to cash flow as a long term rental in a year based on current rents? yeah, that won't work. 

Go back to the reason for house hacking. The reason it's so great is that the owner occupied loan options allow you to put less money down (ie buy a home faster) than if you were buying an investment. Then getting roommates reduces your biggest expense in your budget, your living expenses. 

No, it's probably not going to cash flow after year one unless interest rates plummet and you can refinance. OR, you can do what your market is telling you will work. Options: 

1. Stay in the home more than 1 year. Sounds like this is the area that you want to live in, so why not stay there? Saving in rent/mortgage will allow you to save at a much higher rate, so you can purchase a strictly investment property either in your area or out of state if you don't like the options in your area. 
2. When you move out, rent by the room. It's more work, yes, but if you'd prefer that to 'paying' for your investment a few hundred a month, then maybe it's worth the work. 
3. Make it a STR. These are known to cash flow better, but are of course more work if you manage it yourself.

Keep in mind that your ROI is guaranteed negative if you continue renting, so purchasing a home will always be the better bet in my book. And don't forget the other returns, such as tax benefits, loan paydown by your 'tenants' and appreciation.

Who knows, maybe in two years, LTR rates will go up enough to make it feasible. Maybe you can do the rent by the room for a couple years and then convert to a LTR. Trying to force a certain strategy in your market may not work, so let the market tell you what strategy WILL work. And go from there. 

Happy house hunting!

@Caden Glenn sounds like you need to find a great Realtor to talk to in your area! I'm not in Cincinnati, but these are all things I cover in my buyer consultations. 

1. You can do as little as 3% down as a first time homebuyer with a conventional loan, assuming you qualify. You can also do 0% down if you want to go the USDA or VA route, or perhaps could qualify for down payment assistance. Depends on your situation and what local options are available in OH.

2. Closing costs should be closer to the 3% than the 5%. If you were paying 5% closing costs on a $300k purchase price, I'd tell you to find a different lender. 

3. Inspections vary, and depends on what you want. In NC (no idea if it's different in OH), a standard mechanical inspection depends on the size of the property, if it's a crawl space, slab or basement foundation, etc. Typically they run $500-$1000 depending on those factors and any additional inspections your Realtor recommends. 

4. Appraisals are another item the lender may require to be paid prior to closing. In the CLT area, it's usually $500-$700. 

If you're gearing up to buy a home, especially since it's your first time, talk to a Realtor who can prepare you for these expenses, what to expect as far as deposits, as well as connect you with a fantastic lender who will be able to advise/guide on the lending side. 

Best of luck!

Hey Matthew, I'm not familiar with the Colorado market, but just some thoughts: 

1. The purpose of househacking is to lower your monthly expenses. It's still househacking if you're paying some money towards your mortgage. Not all areas are able to create cash flow or live for free with househacking. And that doesn't mean you're not doing it. 
2. The second purpose of househacking is to be able to buy an asset that is appreciating while also not paying for the whole thing. Even if you're paying $500 of your mortgage, you still aren't paying the whole mortgage, and you have an asset that's growing. 
3. Have you looked into different rental strategies? For example, a mid term or short term room rental? 
4. What type/price of homes are you looking for? Is there an area that is perhaps a longer commute but less expensive? Are you trying to force something to work in your market that doesn't exist? For example, everyone says how amazing multifamily properties are, but perhaps they're not prevalent in that area, so pivot to a different home type to make it work?

You can also find data through the Census Bureau. 

Honestly, every area within the Charlotte Metro Region is growing. The suburbs are expanding because they're more affordable than closer to the city. 

School districts vary widely, so check out GreatSchools.org and CarolinaSchoolHub.com. 

Some questions: 
1. Why are schools important? Is it because you have children or you just want to be in 'a good school district'
2. What is your budget? That may completely eliminate areas of Charlotte even if they match your other criteria
3. As a primary residence, where do you want to be? Ignoring that data, since you need to be happy living there. Also, if you want to be there, others likely will too (if you're looking for resale/tenant appeal). 

Those are great things to be looking at when you're looking for an investment and trying to narrow down a market. But for a first time homebuyer looking at a place to live (even if you're househacking/going to turn it into a rental in a year), that data may be overwhelming and/or unnecessary. 

Happy to talk about the areas of Charlotte more in depth if you need some thoughts from someone who currently lives, works and plays in CLT