All Forum Posts by: Jeremy G.

So bear with me, I'm a newb and trying to learn. I only own 1, 3 unit that I occupy. I will have roughly 120k(HELOC) for a down payment and roughly $25k for reserves. the new property is 8 units mixed use residential/commercial that currently has annual gross rents between $135k-$140k(rents could be at or below fair market) so total rent per month would be between 11k-12k. I don't have too many specifics because I'm shopping around and haven't actually gone to look at the property yet because I've been working a lot but it certainly caught my attention.

PITI=$4600 I figure around $1k/month maybe a bit more for vacancies/maintenance/capex so around $5600/month in expenses give or take a few hundred, again these aren't exact specific numbers I wont have those until I pursue it further. I'm wondering if it seems worth it to pursue and whether it would be a good candidate for a DSCR loan

Both lol I have no experience with DSCR loans or properties over 2-4 units

looking into getting a dscr loan 80% ltv.

$120k down payment

Debt service PITI will be $4600/mo

Gross rents $11000/mo

ratio of 2.39

My credit is 750 

Unless im missing something, i should be able to get a DSCR mortgage on this property easily?

Hey Lawrence thanks for the reply!

I have been checking out lenders in regards to a Heloc,  I've been able to determine that I can get a line of credit around $200k. 

But I have also been thinking... since I have over $200k in equity, and roughly 75k in misc debt that doesn't include my FHA mortgage, what if I just sold the 3 unit property, got rid of the FHA loan, paid off the 75k in misc debt. that would leave me with roughly $125k and I would be completely 100% debt free, then I could qualify for another FHA loan on a single family house with 3.5% down and I would still have roughly 100k I could use to invest in another apartment building or 2 with a dscr loan? granted, I wont be able to find a deal like this one I found 5 years ago, but based off what I'm seeing, I can still find a cash flowing property to pay for itself and a portion if not all of a single family home, especially if I have a decent down payment

Opinions? I feel like if I take the sell route to start over 100% debt free would be a lot less stressful than just continuing to add to the debt hoping it will all work out and I wont get in over my head once the repayment starts on the Heloc. I'm very inexperienced and I know if i sell i'll be losing 3 very cheap and easily rented doors that I currently own, but getting rid of the misc debt I have that includes autos, student loans and credit cards would be a huge burden lifted and would help my DTI a great deal I imagine?

Edit: Also I have been researching DSCR loans and they have them for 2-4 unit as well as 5+ unit properties, I kinda like the idea of 2-4 units as a small landlord because there are less rules and regulations

Hello biggerpockets!

I'm looking for some advice!

History + current situation is as follows

so I've owned my 3 unit property for about 5 years now. I recieved a down payment grant of $5k and put 0% down out of pocket for an FHA mortgage, infact I recieved a few $checks$+keys at closing. My credit when I first got the mortgage was around 650 but I have gotten it up to around 760 today. Current mortgage balance is $159,000, current value is $300k-$350k. It has been the best financial decision I have ever made in my opinion and I want to own more apartments. I've lived in the 2 bedroom unit and rent out both of the 3 bedroom units. The mortgage is $1,500/month and I collect $1,500+$1,200=$2,700/mo in rents. I make aprox $60k-$70k per year at my w2 job. I have about 80k in other debts not counting the mortgage which include: vehicles, student loans, credit cards and a roof that I just financed for 0% interest for 12 months.

I absolutely hate living in an apartment. So i am very eager to purchase a single family home, however I also want to buy another apartment building. Im trying to figure out the best course of action to take to accomplish both.. there is a 5 unit property that i am extremely interested in but am unsure of what directions to take.. my mortgage interest is 5.25% if i cash-out-refinance my interest rate will go up to 7+%. Ive been looking at Helocs and home equity loans to borrow approximately $100k-$140k, consolidate the 80k worth of misc. Debt and use the rest for a down payment on a DSCR loan on the 5 unit property im looking at, then waiting a few months or more and trying to get either a conventional mortgage or another FHA loan to purchase a single family property to move into then rent out the 2 bedroom unit I currently occupy. So I would then have 8 apartments hopefully fully occupied.

Am i dreaming? Or does this sound reasonable and possible? Bad idea? Good idea? Am I missing anything? Are there any other options I should look into?

I was thinking I should lock in a Heloc now even though interest rates are so high, before property prices drop, because if I wait till property values plummet I won't have any equity.

I've read mixed information regarding dscr mortgages, some say equity lines and loans can be used for down payments some info says they can't. I have yet to speak to any lenders regarding the situation because I'm the type of person that wants to have as much information as possible before I jump into things and make a fool out of my self because of ignorance. Which is why I'm coming here after doing a ton of searching on the web.

also, it is thanks to bigger pockets that I found out about house hacking and the main source of information that helped me decide to go this route. So thank you biggerpockets!

Thanks everyone i really do appreciate the replies. I just want to clarify that i would not get confrontational with these people as i have learned how to interact with authority through out my life. police and i for example get along great. I fully intend to be respectful, welcoming and comply with everything as nervous and as paranoid as I am. I have no other choice. I spoke with the inspector and he seems nice enough and as i expressed to him that my intent is to improve the property and community. He says to me "you and i will get along just fine" i asked whats involved in the inspection and he gave a short list. Smoke detectors have to be interconnected and where they need to be placed, are any extension cords being used improperly, are the outlets all working properly. That was about it. Then he emailed me a self checklist. And the very very last check box on this inspection paper says the following

"Lead paint has been abated or is not present" 

Does this mean they are going to test for lead? Im assuming thia building along with tens of thousands of other buildings in the area do in fact have lead paint as all these old farm houses are 100+ years old, i am worried about this check box on the inspection sheet. As i was not informed of any lead being present when i purchased the property, and everything im reading about it says its mucho dinero

I guess i should have just left the apartment a crap hole and rented to some of the local heroin addicts and adopt a slum lord way of doing things... Le sigh

that doesn't even scratch the surface of why now all off the sudden they need to do an entire property code inspection now when i try to pull a permit.instead of in july when the previous owners pulled permits. Or any one of the many years located within the many decades that this building has been in the previous owners hands and how many repairs and remodels and turnovers and replacements they've done... No wonder all the handy work in the property is so bad... No one from the city ever inspected the place probably because they were friends with the inspector aka fire captain... Mmmm hmmm small town politics.. Absolute garbage

Well i had 4 months of reserves. i inherited 2 tenants one moved out and i rented that unit out it was only vacant for a couple weeks. Had the other tenant of 17 years stop paying rent once i told him he cant use the property as a laundry mat that was 3 months rent i missed out on, plus an attorney retainer for the eviction. Now im doing a ton of work to the apartment to remodel it which i can afford just like i can afford the mortgage and everything else but every month im losing the rent money from this apartment and i truly thought i was legally allowed to do at least the plumbing myself because i live in the property i dont see why having a licensed plumber would matter if the building inspector needs to inspect the work before and after, if its up to code its up to code.... I live in the property im not about to risk something happening to my child or anyone elses because i cut corners.  But i guess bureaucrats gonna be bureaucrats. the property is clearly not making money with a vacant unit, me living in one unit and the other unit covering 70% of the mortgage but it sure beats paying all of the mortgage by myself.. I thought on of the benefits to owning property was to be able to fix things yourself and learn new skills while trying to build a legacy. Instead i have a bunch of bureaucrats enforcing ridiculous regulations... I have to pay a licensed plumber to move a drain 3 inches and install pex... its not like I'm screwing with gas lines here. Seriously... This is what owning a multi family property is like? Nonsense! I fix everything ive been fixing things since i was a child i was an auto mechanic for 6 years and industrial technician/ mechanic and process technician for 7 years now i supervise mechanics and technicians, ive been building and fixing things with my hands for as long as i can remember. Now i have this small town bureaucratic govment insisting i pay people to do things for me all the while trying to refer me to plumbers they personally know.... REALLY?? This has nothing to do with my cash reserves or buying the wrong property this has everything to do with principal and small town bureaucrats   getting their piece of what isnt theirs..

I have no idea why i posted this to begin with maybe just to vent but other than call another plumber which ive done Thanks for all the kind words and advice. Big helps

Purchased property in august 2018 as an owner occupant with a HUD NHHFA loan. the property is a 3 unit. I inherited a scum bag tenant that lived in the property for 17 years who destroyed the apartment with all his amazing handywork and stopped paying rent when i told him he couldnt use his apartment as a laundry mat. Eviction ensued and the dude left.

Now im in the process of demo and rehab of this unit. Had to gut the bathroom and decided to install a nice stand up shower instead of a tub. I thought i was allowed to do the work myself because my daughter and i live in the property. But when i went to pull a permit they inform me that because it's a 3 unit i have to pay for licensed contractors to do any plumbing, electrical or hvac..  One of the many reasons i purchased this property was because i was under the impression i was allowed to do the work to the property if i lived in it. Apparently i was wrong? This is not good because ive already had a plumber give me a quote for nothing more than moving the drain 3 inches and installing the shower pan... $2200!?!?!?!?!?!  I can not afford to own this property if i cant even legally do very simple minor plumbing work... And to top it off, me attempting to pull a permit prompted them to tell me they now want to do a code inspection of the entire property... Its a 120 year old property they say they have never inspected it. Yet the previous owner in july of 2018 had brand new furnaces and water heaters installed and had to pull a permit... So why wouldnt that have prompted this code inspection back in july of 2018?  

The sellers and i had a falling out at closing where they screwed me out of 5 grand and i left calling them scum bags. Maybe they were friends with the city and this is retaliation? Probably just my paranoia but im so irritated.. Now im worried what they will find in the inspection... Lead perhaps and forcing abatement? What in the world is happening.... This is all nonsense what should i do? Im hemorrhaging money

I purchased the property in august 2019, home inspection was good and pretty much everything wrong with the building(multifamily) was taken care of and fixed by licensed contractors before closing as part of the deal.

I just evicted a tenant for non payment of rent, who decided to move out right before he was served by the sheriff, he changed the locks to make sure I couldnt get in, stopped paying rent, then I started hearing sawing, hammering and power tools and oh boy.. he removed walls, railings and insulation from the barn attic storage area he had that's attached to the apartment, he apparently replaced the bathtub surround and put a new one on but didn't seal it to the tub... and continued to take showers, I just had new tenants move into the apartment below this trouble apartment and there is now wet ceiling in there kitchen right under this said bathtub...this was not damaged or wet when I showed them the apartment which was the week he was moving, I heard him just running water for a couple hours one day, Im sure he did this intentionally to cause damage. It's a 119 year old building It's easy to hear things.

he also painted over wall paper and now its falling off in huge strips, he put holes in the drywall, he dumped grape juice or wine on the carpets and they are ruined. He left several thousand pounds worth of junk that ive been removing. 

none of these things were an issue when I purchased the property, none of these things were an issue when I had the home inspection done, none of these things were an issue when I did my first or last walk through before the sale

He was late with rent ever since I inherited him but always ended up paying so I could not evict him, Ive been trying to find a way to get him out, then I noticed he was having people over even when he wasnt home, using his apartment for showers and laundry, multiple people, all the time, different vehicles. I confronted him and gave him notices he then stopped paying rent and I started the eviction process, he decided to leave right before I had the sheriff serve him, but it was about a 3 week process from the first notice to him texting me saying "the keys in the door" and "TY have a GREAT day :)" 

My attorney said it probably wouldn't be worth bringing him to court.  Maybe insurance will help? maybe I should get a new lawyer? what say you bp? I'm hemorrhaging time and money