All Forum Posts by: Matt Anderson

Is it small enough that it is actually supposed to be a walk-in closet? I am no expert on requirements, but I would think calling the town to understand requirements and process would be a good first step. It may be slightly different town to town?

@Kirk R. I admittedly have not gone down the youtube rabbit hole yet to determine my comfort level. I suppose now is as good a time as any while I am stuck inside!

@Kurtis Delahooke Great point, I definitely do not want to be in a position where we have are forced into working with the only contractor available, I hadn't thought of it quite like that. I think I am leaning towards waiting another month or two. Why risk depleting my cash reserves with no return now, if I can mitigate that risk by waiting just a little while longer!

@Joseph Cacciapaglia Thanks for the alternate view, you raise a good point! I am definitely confident we would make the $10K back in value-add to the property, but won't be in a position to do a cash out refi, since we bought with a 0% DP medical professional loan and will still have low equity. To me, I can get the best of both worlds by waiting out the storm in the short term, and taking advantage of that 100%+ return once things settle down a bit. Feels like the best way to manage the risk, and I do not want to be relying on the social safety net if things do indeed go south.

To house hack, or not to house hack? That is the (leading?) question.

My fiancee and I moved into our new place at the beginning of March, right before the COVID-19 activity started to get serious. We were so excited to house-hack, because this house has a walkout basement that is already partially finished (walls, floors, overhead lighting), but needs a 3/4 bath put in, along with a small kitchenette in order to be rent ready (that is all our local market demands). Plan was to rent on Airbnb, but obviously right now that is not a good plan, so we are looking at trying to fill with longer term tenants (at least month-to-month).

Some details:

- Expected rental income = $1k-1.2k (based on neighbors with same setup doing same strategy)

- Quoted cost to install bathroom and kitchenette = ~$10k (based only on one contractor estimate so far, tough to get more to come look at the job right now, also we plan to keep costs in check by doing some work and sourcing materials ourselves)

- We made sure when we bought the home that we could comfortably make our mortgage payment without any extra income from the basement, so we are not forced into doing the project or collecting rent to stay afloat.

So, my question is this: should we do this project now, while we are home with more time on our hands due to social-distancing, or do we keep our cash on hand and wait for the storm to pass before taking on this project?

My gut says to wait and hold our cash because by my (back of the napkin) math, it would take 8-10 months (being fully rented at the rates above) to make our investment back, and it seems likely that it will be much harder to rent units during times like this. There is added risk of potential income loss from a layoff or pay reduction, if the current climate continues to worsen. We have reserves such that we definitely would not be broke if we did the project now, but it feels impossible to say that any amount of reserves is "sufficient" right now.

Would anyone think about this situation in a different way and/or come to a different conclusion?

@Justin Tahilramani

Thank you for the feedback, I appreciate it!

@Susie S.

Thank you!

@Derrick Dill

Further to this point, there are also loan products for medical professionals that are 0% DP, no PMI up to $1.5M. Not 30yr fixed, but 15/1 ARM and very competitive interest rates. My SO and I are about to close on a home with this product that we will house hack (for our particular loan, the limit was $750k). We don't plan to stay in the house much more than 6-7 years so the 15/1ARM felt low risk.

I have also seen options like this for 30yr fixed but lower limits and slightly higher rates.

@Mindy Jensen

Does anyone here worry about giving out the code to the lockbox and someone knowing the code and being able to come back to get keys to property after their stay?

I guess this is the same issue as hiding a key under a rock (people can make copies and/or know where your keys are), or using a standard key pad that is cumbersome in terms of changing combo after every stay.

Is a WiFi lock the best way to manage/mitigate this risk?

@Susie S. Perhaps a silly question, but can I get the rider from a different provider then I get my homeowners policy from?

I ask because I’m looking at lemonade for homeowners, and they are way cheaper than other for similar coverage, but they don’t support AirBnB right now.

Also, I think a part of the original question was not quite answered: do I NEED the additional coverage, or is Airbnb’s coverage going to be sufficient, or is this just a question of risk tolerance?

Thank you!