All Forum Posts by: Michael Craig

@Caleb Curry if you are in a well desired market and you can rent your house to qualified tenants you may want to consider holding on to the property. Have you looked into refinancing into a 30 year mortgage? By refinancing, you may be able to get this property to cash flow positive even when you account for taxes, insurance, reserves, vacancies, management fees (you may be able to find a good management company for less than $250/month), lawn care, etc.

@Kyle H. a renovation can vary from replacing floors and painting to a complete gut renovation. With that said the BRRRR method can very easily be used on a house hack and it is probably the best way of getting started.

I would go about this by first knowing how much I have saved for a down payment and closing costs. Also, see how much can be borrowed from the banks for a mortgage. Because you are considering a fixer upper, consider looking into an FHA 203K loan - this loan allows you to finance the renovation. Once you have your funding secured and know what you can afford start analyzing deals in the market.

Disclaimer FHA loans are only available in the US

@Mike Leising Simon is correct you can use conventional loans (I used an FHA for my first BRRRR). FYI, Conventional lenders typically won't lend you more than 75-80% of the homes value when you refinance.

I run the application, credit report and background check all through Cozy.co - $35 fee last I checked. Applicant pays fee. Be sure you include rental criteria so only qualified applicants apply. 

Zillow, Craigslist, Cozy.co, Trulia for posting the add - just specify rooms for rent in listing.

@Katie Jensen not the cheapest to operate but electric baseboard heaters (240V) are relatively inexpensive, easy to install and are safe. 

@Steve Koller I inherited my first tenants July of 2017, one was evicted soon after that the other is still occupying their original apartment. 

First thing you want to do is get very familiar with their existing agreement (is it month to month, who paid a security deposit, who pays the utilities, etc.). This way when you introduce yourself they can't jerk you around (ie. they might say old land lord paid garbage when in fact tenants paid. Another example may be, they claim they paid security deposit when they haven't, etc.)

Next, you want to introduce yourself to the tenants and let them know you are the new landlord. I found with existing tenants they feel as though they have seniority since they have been there longer so just be straight up with them and set the expectations - You are the property owner. 

You will want them in agreement with you ASAP (not with the old lease), so if they are month-to-month and you decide you want them living on your premise, be sure to have your own lease drafted and ready to go under agreement - this will convey the message that you are the new landlord. Follow local laws to have existing month-to-month terminated and get them under your agreement. You may want to continue month-to-month in the beginning since you haven't screened them and you don't really know the type of tenant they are. This will make it easier for you to evict them if they turn out to be problematic. If they are not month-to-month then existing lease is still in effect.

@Mike S. something like a refinance may not require a broker (cut the middle (wo)man out). Quicken Loans is having a holiday cash promotion and Caliber Home Loans is what I used for my first mortgage (both great to work with and have their own sales team which do not charge commission). 

Maybe a broker can find you better rates but it doesn't hurt to make some calls of your own.

@Oscar Beteta @KK A. find above

4155.1 4.B.2.b FHA Requirement for Establishing Owner Occupancy At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied. FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrower’s principal residence within 60 days of signing the security instrument, with continued occupancy for at least one year. 

I'd speak to a mortgage provider though and let them know the scenario as there is usually wiggle room, especially since the lease expiration is relatively close to the 60 days. 

@Aaron Diehl Good questions. This really depends on your market and the condition of the home. If you are buying a turn key property, I wouldn't expect to have positive cash flow while occupying - subsidized rent, principle pay down, management / RE experience and tax benefits still make a purchase worth while.

When I analyzed my property that I house hacked, I made sure that if I walked away from the property the next day, rent out each unit, the house will cash flow positive. The more units the property has, the more return you are likely to get (I recommend buying a 3 or 4 family home if you will be utilizing an FHA loan).

With that said, purchasing my home was the best financial decision I have made. Keep analyzing deals and you will know which property makes sense to purchase. Lastly, I must have made 15 offers before the offer for my house got accepted. Good Luck