All Forum Posts by: Michael Facchini

@Kiko Kudou, have you considered what down payment you're looking to put down, and target cash-on-cash returns?  Do you own a property now, and if so where?

@Bethany Oh, to be safe you would base the real estate tax rate at the new ARV - middle of the road estimate is 2% of that value. It's not up to the appraiser, nor does it have anything to do with refinancing. Rather, the County Assessor/Treasurer is the one that will bump that rate. Now, you might ride under the radar on a place that you buy low and don't do much work too. But once you buy the County looks at what price (compared to the value they assessed for the property previously), and then as you pull permits and make improvements, this tips them off to look at the value too. You can always contest your taxes, but ultimately they should catch up to the actual value of the property years down the road.

@Robert Trevor, as @Jonathan Klemm mentioned, the 2unit loan limit for FHA is $471k. How much were you looking to put down? If 15%, you can look at Conventional....which could also be a bit more with the row home aspect.

Seems to be a VERY hot topic right now with inventory at extreme lows.  Lots of investors and house-hackers out there looking to get into their first 2-4unit, or further build their portfolio....but low supply has the marketplace locked up.  One solution to increase your inventory is to find a value-add property and rehab it!  This goes for single family buyers too, which are having a hard time finding that right home.  There is opportunity out there, it just might need some TLC!

@Bethany Oh Welcome to BP! As echoed above, 203k truly is a great program if you have the right players. It can get a bad rap and you'll hear stories of it taking forever to close, but with the right partners and guidance, you can move through the process in 45 days or less, and with much less stress or difficulty than what you might hear/read. First, you need the right agent that understands renovation, namely the 203k program - that is especially true for 2-4 units. Multi-units are their own beast. Some agents dabble, while a select few make this niche their prime focus. Next, it's imperative that you work with a lender that is proficient in renovation and 203k. Not someone that does a few per year, rather a few per month and even invests and develops him/herself. The loan officer needs to be experienced, and the lending institution needs to also be reno-minded (IE, has to be a substantial amount of their business and have all the right departments to go with it). Next, there are good HUD consultants and "eh" consultants. They either add value or bring little to the table. Last but not least, you have the contractors. This is of course is a critical piece. "It's hard to find good help these days" has never been more true. You'll need to tap into the right networks and get connected with trusted, reliable, experienced, and responsive contractors. This is not only necessary during construction, but for the mtg approval process as well. If you have all of the above intact, as well as a good atty, this will be the difference. Any questions or if I can point you in the right direction, just let me know!

@Tim Sipowicz One possible way to maximize that $30k equity would be to take the funds and buy a new primary residence multi-unit. IE, house-hack a 2-4unit. You live in one unit and rent out 1/2/3 apartments. This could be done with minimal down payment ($30k would get you pretty far) on an FHA loan. This is really the only way I see you stretching the $30k further there where it sits now. Given the fact that you own the asset now and have transaction costs to get out of it and more to get into a new one, you'd really want to maximize the Cash-on-Cash....which a 2-4 primary should accomplish.

@Tim Sipowicz, in general I agree with turning a primary into an investment.  I've done that several times over and it's worked well.  To me, the transaction cost has already been paid, and most properties start paying more dividends the longer you own them....assuming they're not a money pit and they make for a good rental (given the price point, area, etc.).  So, why not turn a primary into an investment years later if the numbers work and you have the means to do so?  That's especially true in this lending environment where you can put low money down and get extremely low rates.  Money is cheap, and leveraging intelligently can work to your advantage.

That said, your question above is loaded with responses.  I could go on for hours depending on the specific topics you want to discuss.  To start though, I'd definitely consider this option....

@Laretta Young - all of the above are definitely considerations you need to factor in - but even with the higher taxes, stricter landlord laws, and lack of population growth, I am still more focused on Chicago than I am other markets.  Over the years I've been bit more in other markets, whereas Chicago I've found stability.  I play by the stricter landlord/tenant rules here, which once you know the rules of the game and play by them, it's not that bad.  The higher taxes aren't ideal of course, but the tenants pay a higher rent and the taxes are accounted for in those rents.  Lack of population growth hasn't been an issue in most A/B neighborhoods in/around the city.  There is a lack of property in Chicago with some of the lowest levels of new construction across major cities.  This has resulted in tenants almost fighting over my properties, which affords me the opportunity to be selective.  My tenants are most often young professionals, making good money, and are respectful and good to work with (for the most part).  For what it's worth....

Appreciate the shout-out @Jonathan Klemm!  @Rudy Ramirez, tell me a little about what you're looking to do....property type, general location, price-points, down payment, fix/hold or flip (and if flip, how long from acquisition to sale do you expect)?  Happy to provide you some high-level details!