All Forum Posts by: Matt Smith

I bought a 3/2 newly renovated SFH in New Port Richey for 265k. My plan is to house hack. For those of you unfamiliar with the area, its an up and coming area due to Hillsborough and Pinellas counties being too expensive. So everywhere near New Port Richey is being developed and moved into. Lots of growth expected in the next 5 years. I can expect to get tenants in each room for around $800-$1000/m which would be really close if not cover my mortgage. I also plan to either airbnb or rent out my current home which should generate around $600-$1000 cashflow. Thoughts?

4 Votes

Quote from @Josh Green:

Quote from @Matt Smith:

My name is Matt and I'm looking for my first true investment property. I'm currently living in the Tampa Bay area and have been in my primary residence for 10 years. I recently took out a HELOC of 150k. I've been doing my own research, networking and figuring out the best strategy to get into REI in todays challenging market. I just listened to the most recent BP episode with David Greene, Henry, and Rob and they all talked about how house hacking kick started their journey. After listening, thats the route I want to take. What are some considerations I should be aware of when house hacking? Loan type? Do I use my HELOC? Where? How many bed/bath/sqft? SFH or MFH? etc. Any and all advice is appreciated. Thanks

Hey Matt,

I've done 3 house-hacks myself and several for in-state and out of state relocation clients in the Tampa Bay area in the recent months. For a house-hack it comes down to a few things:

1) profitability to comfortability index you want

2) your current cash and financing situation

3) your short and long term goals

I think house-hacking is an excellent way to invest in real estate and luckily, here in the Tampa bay area, there are a ton of different avenues you can take. Examples:

-House-hack a house and rent by the room

-House-hack a Multi-family

-House-hack a Single-family that has an ADU or Guest house

-Buy a Single-family house, have the garage converted to a studio and house-hack

-You can do a mixture of the above with: short-term, mid-term, or just long-term renting strategies to make more or less from your investment

There's a lot of considerations with each strategy above from a financing standpoint, cash standpoint, sweat-equity standpoint, start-up time stand point, and management standpoint. It really comes down to what your situation is and where you want to take things.

Awesome. Thanks

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Quote from @Lawrence Potts:

Quote from @Matt Smith:

It depends on your market and what your goals are! I have a client who is house hacking a 3 bed house to traveling nurses while he is living in and converting the garage into his studio. He put locks on all of the doors and they each have their own fridge in their rooms. I live in a 4plex and rent out the three units to LTR. It’s up to you and it’s up to what makes sense in that market. You can use your HELOC as a down payment and go 3-5% down conventionally on a SFR. You need to talk with a lender and make sure that your DTI still qualifies though since you’ll be highly leveraged using a loan to purchase and as a down payment (100% leveraged). But I agree, house hacking is a great strategy for getting started. Here are a few other notes:

1. Identify your target audience (who you want to rent to).
2. Find out where they want to live.
3. I use apartment.com to collect rent, etc. Very easy to use.
4. Put everyone on a lease! Treat everything and everyone professionally as if you are running a property management business.

keep asking questions here! All the information you need to succeed can be found here. If you can’t find it, ask! Hope that helps

Awesome. Thank you

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1 Vote

Quote from @Gina Stern:

Yes after the initial HELOC "teaser" rate, you are looking at around 7.75% currently, cheaper than hard money lending, but still high considering you were paying 3%. Do you perhaps have a family member that could help you and charge you around 3% if its for a short term loan, or offering them a little "sweat equity" in exchange for a 0% interest loan, just a thought, good luck!

I dont. Its not a good deal and I'm going to back out. Its already been rehabbed, and you dont rehab a rehab. Theres really not much meat on the bone left. I think the seller was trying to liquidate his assets, and cut his losses. He needed someone to come in and take it off his hands. Comps in the area are going for 300k+, but I dont see what could be done to this one that will bring it up 40k to bring it up to ARV. Punting this one, learning from it and finding the next one

0 Votes

Quote from @Paul Defngin:

Quote from @Matt Smith:

I just purchased a property in Tampa today. Got it for 239k cash only deal. It can be used as a rental or an easy flip. Its a 3/2 1260sqft block home. ARV is 360k with estimated repairs being only cosmetic at 10k. Rental comps are between 1800-2200. Bounced it off a few investor friends and all said it was a great deal. The part I need help with is the financing. I'll be using my HELOC for the down payment and rehab budget. The HELOC is at 3% right now until June 1, then it jumps to prime rate. I'm using hard money to carry the remaining balance of the loan. The interest rate on the hard money is 11%. I'm not crazy about that rate. That puts me at roughly $1900/month payments on the hard money and 53k due at closing. Should I shop around and look for a better rate? What should I do? Thanks

I'm confused. You paid $239k cash on it but then you need HELOC for the down payment? Did you mean to say you paid cash of $239K, and now are using your HELOC and hard money to do the rehab?

Usually when I hear someone say that they paid cash for a property, I automatically think that the property was purchased with no liens against the property, meaning you paid CASH for the property, but maybe I am just confused.

That said, if you did pay cash for the property and reading from what you wrote; you only need about $10k for cosmetic repairs, which seems pretty, pretty, good, if that is realistic, then I would say, ask someone in your network or SOI for the $10k that might be able to get a better rate on their money but less than 11%. Although, I would say that 11% for hard money that you noted seems pretty good, but that's just my opinion.

In any case, congratulations on the property and best of luck.

The seller wanted a cash deal which would eliminate a conventional or DSCR loan. My HELOC is for 150k. I used it to cover the closing costs and repairs. Sorry I didnt make that clear originally. The hard money will be used for the purchase.

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Quote from @Ryan Kelly:

@Matt Smith if the repairs are only $10k, why do you need hard money? I presume your flip is going to be much more expensive than that. Are you planning to refinance and keep it? If so, will you be able to pay off the HELOC and hard money? Make sure you have your numbers rock solid and your team ready to go so you can complete the remodel quickly.

My HELOC is only for 150k. Also my realtor and I discussed using it for only the down payment and repairs so that wouldnt drain the entire amount. The hard money would carry the rest of the purchase amount. We also overestimated on the repairs and took a conservative approach with our numbers. I was cautioned by some family members who have never done this before so I'm apprehensive to listen to them. Wondering if I could use a DSCR loan at a lower rate instead of hard money

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Quote from @V.G Jason:

You can't afford this deal.

Explain please

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Quote from @Bud Gaffney:

@Matt Smith rent it out and refi.

Does the 11% concern you? And how soon can I refi?

0 Votes

1 Vote

All Forum Posts by: Matt Smith

Matt Smith has started 16 posts and replied 41 times.

Post: House Hack in Tampa Bay area

Post: House Hacking considerations 2023

Post: House Hacking considerations 2023

Post: House Hacking considerations 2023

Post: 1st investment property purchased. Help needed on funding of deal

Post: Questions on first deal. Using a HELOC and hard money

Post: 1st investment property purchased. Help needed on funding of deal

Post: 1st investment property purchased. Help needed on funding of deal

Post: 1st investment property purchased. Help needed on funding of deal

Post: Questions on first deal. Using a HELOC and hard money