All Forum Posts by: Matthew Brill

Congrats @Connor Ong. Love the strategy.

I would put as little money down as possible as long as the income covers the expenses (particularly when you would move out). Lower DP decreases cash flow but increases ROI. Also, equity in a home can be difficult to access. You are better off keeping that capital for reserves and using for next investment/house hack.

Paying your student loans down would not help your DTI. DTI is based off the payment, not the outstanding balance. I have LOTS of students loans as well (double yours) and I refinanced them to a better rate and lower down payment and use the increase in cash flow to arbitrage the interest rate vs a higher investment return. This strategy is different to everyone (I don't have much of an adversity to debt). If you are a good steward of your money (sounds like you are) I wouldn't pay it off and better to invest it. If you do want to pay it off ASAP the best way to do is to save the money in an interest bearing account and they pay it off in lump sum once you can cover it all. This way you have control of the money (as opposed to making extra payments the money is gone, you can't get it back in an emergency, and it doesn't change your payment). You may pay a tiny bit more interest in the end but is worth having the control.

You should think about what your plans are with investing and long term goals. If you work backwards with the end in mind it will be easy to create a plan to meet those goals.

I second what @Landon Bleau said. They general concept is to buy a property and generate income from it to offset your living expenses. There are a lot more granular details. Happy to talk more if interested.

I'm not familiar with any lenders in your area. You can can ask your agent for a recommendation if you are working with one. You could also do an internet search for local banks and credit unions as they usually are the best to work with. Talk with a few (including some big box banks like Wells Fargo and BoA) and you will get a feel of the best way to go. Hope that helps!

Hey @Brock Stubbendeck

Welcome. Sounds like you have a nice plan. And good for you for realizing quickly that wasn't the life you wanted and doing something about it. I would be consuming information. Another thing is thinking about what your end game is and coming up with a rough estimate of how you want to get there. That will help you focus more on the sources of knowledge to focus on. You can also start talking with agents and lenders (but be honest with them about your timeline since their time is valuable). After you narrow down a market and area where you want to house hack, I would then keep an eye on the MLS there and start analyzing properties to get practice. That way when you are ready to go you will know a deal when you see one and be able to pull the trigger.

I would house hack as well. It's a good intro into buy and hold investing. I agree with others to consume as much info as possible. Build up cash (for down payment and reserves). Talk to some lenders to see where you stand with being able to qualify for a mortgage. Get your finances in order to be able to get pre-approved before making offers.

@Jamary Taylor

You can definitely get a triplex or quad with an FHA. They probably only pre-approved you for a duplex because of the FHA sustainability rules (basically the non-owner occupied units have to provide enough income to "sustain" the mortgage) that come into play with triplexes and quads. This makes the ability to be approved for these properties more deal specific. The lender should be aware and be able to give you details. There are some FHA sustainability calculators floating around out there too. I wouldn't be worried about PMI, just make sure you include in your expenses when running your numbers (the lender will).

You might have to find a commercial insurer because of the salon. What kind of loan did you get? Did your agent or loan officer have any recommendation for you?

It depends on what you are actually trying to structure and what you are trying to optimize/accomplish. There is also how efficient you want to be. Adding more entities and structures will add complexity and cost. Can you be more specific?

For me criteria number one is making sure the property meets my standards once I move out and turn the property into a traditional rental with a 1 year+ lease. This involves looking at net cash flow, cash on cash return, return with CoC + debt pay down, and return with CoC + debt pay down + appreciation. After that I assess how much I would save/earn compared to renting a similar situation (in your case, you would be comparing your net cash flow to how much it would cost you to rent a similar room). I also look at this from a cash flow plus debt pay down perspective. There is also the tax savings but that is harder to calculate and different from person to person.

Definitely worth it. There are different levels to the strategy but the general concept is generating income from your primary residence to decrease living expenses. I have done it twice and helped others. Let me know if you're interested in talking more about it.