All Forum Posts by: Michael Goldsmith

Here's a very bizarre scenario that I'd like to bounce off of all of you.  I'm looking at a property that has a house, and 2 duplexes on some acreage.  Three of the 4 units are already rented, and the 4th isn't currently habitable.  I think they started to do a reno and kind of lost interest in it or something.  

Conventional wisdom dictates that the property has 5 units on it (even though only 4 can be occupied), and therefore it wouldn't be able to be financed through a conventional mortgage, and would need to be commercial... which I all kinds of don't want to do. I was planning on buying a place FHA, or some other low down payment type program when I stumbled on this property in my digging.

So... is there a way around this? Can I break up the parcel into two pieces- one with the SFH and acerage, and one with the two duplexes, thereby qualifying for some flavor of conventional/ residential mortgage? I believe it's all zoned residential, and the duplexes are some sort of grandfathered into something since they were originally built in the 60's.

I know I need more info on the property to say with any certainty, but before I spend the time digging, is this even possible?

Thoughts?

Oh.  You're right.  My bad.  I misread the OP.  I thought he was house hacking a duplex and wanted to move his ex wife into the second unit, which I think would be very reasonable in it's own right.

@Mike Dymski I disagree with you there.  I think there are definitely some benefits to having the ex wife as his tenant.  They're not necessarily easily quantifiable, but there's a lot to be said for not having to shuffle kids back and forth.  It's a little strange, but it gives the child a "better" sense of normalcy than having to go through the hassle of this week being at Mom's, and next week being at Dad's.  Conversely, you have to vet and deal with a stranger living very close to you, whereas if the ex moves in, that's a known quantity.  Financially... no, it's not much different than having a different tenant.  But not every benefit is about dollars and cents.

Buying a property at a discount only matters in two instances- 1) when you're trying to sell it relative to the current market value (ie. how much money you MAKE on the sale over your cost) and 2) what your overall mortgage is.  

In this case, you're doing a very strange kind of house hacking.  The numbers make sense.  Instead of you paying to pad someone else's pocket, you're getting equity in return.  It doesn't cost her anything, and you get a benefit for your alimony payment.  

If I were you, I would only resort to quantifying it as a last ditch effort if she doesn't care about the numbers, or at least a final side note.  You're doing this for the kids, so they don't have to get shuffled back and forth every week.  As long as it's not inconveniencing her in some additional way- lower quality of lifestyle, longer commute to her job, etc. she should be ok with it.  My biggest suggestion, though, would to just be honest with her about it.  Don't try to hide anything.  She'll figure it out, and if she thinks you were trying to hide something, she'll be pissed.  And that doesn't end well.  Just lay it out for her.  "I'd like to buy this property and move you in.  It will be better for the kids.  It will make both of our lives easier.  And doing this will give you the benefit of adding equity, instead of you just paying to pad someone else's pocket, which helps your net worth, and will allow you to take care of her and the kids better in the long run."  That's how I'd approach it.  If she needs the numbers, then break it out.  But if she doesn't care about real estate, the numbers will only bore and annoy her.

Just my opinion.

LOL  You know, I've been using that line for years and that is the funniest come back I've ever heard to it.

But yeah, I'm happy to help.  Drop me a line with the address and I'll send you what I can dig up on it, and you can compare it to the agent.  Bet you a dollar the comps are spot on.

The inaccuracies I've found in the software are more along the lines of something not showing up on the market yet.  But comps are past sales.  So unless the comps you're getting are on sales that were super recent, then I think I should have access to the same info that your agent has.

@Deb R. Propstream is an overpriced software program that I'm paying for that helps me find properties and run comps without having to bother a real estate agent for them/ having to wait, blah blah blah.  It does a bunch of other stuff too, including direct mail marketing etc.  I haven't really delved too deep into that just yet though.  I'm kind of buying an SUV for a cupholder, but I think I get enough value out of it to justify the spend, at least for a little while.  It's not perfectly accurate- sometimes the data's a little outdated, but sometimes it's spot on.  If you want to send me the address, and your email, I can run it through for you and see what it spits out for you.

House hacking is a little weird in how you work out the numbers.  Yes, you're saving $700/ month in not paying rent, but you have to put aside double for capex/ repairs, etc.  You're still going to be negative in your actual cash flow, no matter what, because "not spending" isn't necessarily the same as "earning" from an accounting standpoint.  it's a different pocket.  It all gets reconciled to basically mean the same thing, but it is different in how you account for your expenses.  Now, that's not necessarily a bad thing, at least for a little while, but it's something you need to take into consideration.  That said, have you done your due diligence on the property condition?  How old is the roof?  If you need to replace it in 5 years... that may be problematic, especially if you're negatively cash flowing.  If it's a new roof and you've got 25 years before you need to replace it... you've got some time to finish your rehabs, move out, and start cash flowing on it better so that you can put that money aside.  Food for thought.

I think you should dig a bit deeper.  Look into both comp rents and comp property values in the area. If you don't have access to the finer details, I have propstream, so I can help you a bit.  You may need to look up the property in the county appraiser's office.  

One thing I'd like to caution you about.  It's very easy and fun to just play with the numbers to make the report say what you want, but you have to be very careful when you do this.  The more you play with it that way, the further you travel from a realistic expectation.  If their asking price is 279, and that's actually the market value, then they probably want that much for it, and it would take a hell of a salesman to get them to knock off 30%.  That's about 84K you just made disappear on your report.  It's good to know where the number is that makes it work for you, but don't change the experiment to bias it to fit your hypothesis.  Know what I mean?

I think these calculators are good for what they do.  Your particular use case is a bit nonstandard.  Average them out maybe?  Without doing the calculations by hand, all you'll be able to get is a rough estimation.

Hey everyone!

I'm looking for a house for myself, and I'm having an extraordinarily hard time finding something that ticks all the boxes, so to speak.  The problem, I've found, is that for my "settle down and raise a family" home... I'd like a few features that I'm having a hard time describing in search criteria.  I know these properties exist.  I've seen them.  What I've seen hasn't been for sale, but I know they definitely exist.  

So what I'm looking for is a house that has a large external workshop/ garage.  And I don't mean a little 2 or 3 car detached garage.  I mean like 1200+ sq ft minimum.  Something big enough to put a home office in, and have plenty of room for my shop/ storage.  I have some rather large tools/ machinery for my hobby/ side hustle/ whatever- I like to build stuff, some of which ends up being fairly sizable.  Searching for "garage" doesn't cut it.  Searching for "workshop" doesn't seem to help either.  I know I could just buy a property that just has some open land and build... but that just seems like a waste of money to build new when I'm sure what I'm looking for is already there... somewhere.  I have a bunch of other boxes I'd like to tick, but this seems to be the one that I'm having  the most difficulty describing in a form for search criteria.  Any suggestions?

Conversely, if there are any Florida REA's who are a little bored and want a real challenge, hit me up, because what I want isn't going to be easy to find.  That said, one saving grace is that I have a decent amount of flexibility in location (give or take a couple hours drive), so I can at least cast a wide net to find something oddly specific.