All Forum Posts by: Morgan Reinart

We've made an offer on a 2/1 home in Oklahoma City, and the seller has accepted our offer of $190,000. The house also has a detached garage with a 600 sq ft 1 bedroom apartment and a 300 sq ft studio apartment. I'm trying use a conventional mortgage through a local bank who has financed all three of my SFR and our primary residence; however, I'm running into issues;

1. The property is zoned R1 single family residence only. The home was built in 1925, and the seller believes the garage was built in the 50s or 60s. 
2. The City of OKC has the property as one unit, not acknowledging the two units in the garage
   1. They may or may not be grandfathered. Code Enforcement is highly unlikely to issue a citation, but if ever issued a citation, it would be my responsibility to prove the property has been a separate residence pre-1950 code
   2. If the garage is ever destroyed by fire, tornado, etc., we could not rebuild the the apartments without a variance. 
3. The underwriter cannot commit that the property is okay to go to secondary market because of the zoning issue. 
4. Instead of the 10% down $825/month payment I was anticipating, the local bank has offered two solutions
   1. 15 yr @ 5.75% of $1420/month - deal doesn't work at this number
   2. 10 yr/20 yr am with the rate fixed at $1,187 with a balloon payment at 10 year - deal doesn't work at this number either. 

Does anyone have suggestions on how to make this deal work? 

We are using it to house hack our way into the urban core of OKC, and this is the second deal we've come across the same issue. If we can make it work, we live nearly mortgage, tax, and insurance free with a ~11.5% cash on cash return after we move out. 

Man, what a terrible time to find out my forum notifications weren't set up correctly. Sorry for not posting back. 

I checked on the package of 13 duplexes, and they require a little more work than our timeline allows right now. 

Crazy twist to the story, I messaged a guy about a garage apartment he had for rent. 1 bedroom just for us to live in temporarily until we could find something. While talking to him, I was trying to sell myself and get him to not show it to anyone else until I could get there. I mentioned that I owned rentals. He then sent me a message back saying they've been looking at selling their property but hadn't listed it yet. 

2 bedroom, 1 bath remodeled house in the 35th and Western area with a two story garage that has a 1 bedroom apartment, studio apartment and 2 car garage. The 1 bedroom rents for $600 and the studio rents for $350. 

Hi all! We're in need of a little BiggerPockets help. The short story: My wife and I have decided to sell our house and house hack our way into OKC. We are searching for a house with a guesthouse, duplex, triplex or four plex in the urban core of Oklahoma City. The long story: We've sold our house in Alva and are moving 3 hours away to OKC for a new career. We had a 2 bed duplex within 4 blocks of the Plaza District under contract to house hack also with our two kids, but days before closing the deal fell through. We had previously made an offer on a 2 bedroom, 2 bath home with a 2 bedroom 2 bath guesthouse in the Classen 10 Penn neighborhood, but got into a multiple offer scenario and we were outbid. We move from Alva to OKC this week into a short term rental, which will allow us to look at properties much more quickly than when we were 3 hours away. We've looked at everything on the MLS right now, and none of them are actually a good deal or the good deals are moving faster than we've been able to get to. Anyone know of any off-market deals or ones that will be coming soon?

Originally posted by @Billie Miller:

We house hacked with our little family and I would totally recommend it. I've never 1031 exchanged so I can't speak to that, but house hacking is a great way to get a leg up in the real estate market when you first move to an area. We moved to Denver in late 2014 and had no idea where we would want to live long term. So we bought a duplex in spring of 2015 to give us a couple more years to find what we really wanted. 

We lived for free (with the exception of any repairs/cap ex items we had to cover while living there, but the duplex either paid us back for those items or we will get that money back out when we sell it) while we were living in one side. Now that we've moved out, we will collect $600 a month in rental income, while our tenants are paying for the mortgage and all expenses. It's a pretty sweet deal!

It's definitely a lifestyle that you need to think about before diving in, but the financial benefits are worth it, hands down.

 That's awesome! I'm definitely going to check out your blog for some more insight! 

The transition is something I think we're ready for. We've been talking about a minimalist lifestyle for a while now, and I've long been fascinated by the tiny home movement. It seems like this our way of testing them both out. 

@Ryan

With my knowledge at the time, they seemed to make sense. What I didn't know about was the little piece of information many left out of articles and other places outside of BP didn't talk about - CAPEX. Each was $100-$125/month cash flow without figuring it into the equation. We also planned on never moving and managing them myself so I didn't work property management into the number - Capex and PM will be calculated into all future deals.

Property 1: $600/month

Property 2: $650/month

-1918 home that will have some capital expenditures in the short future
Property 3: $650/month

With the OKC market I can definitely see things be tough to find right now. I'm hoping to build relationships in the area through meetups, friends, agents, etc. 

@Rhett

I think the houses are currently worth more than an investor would want to pay. I was looking towards the end of the tenant contracts so that I didn't have to break a contract in the middle of the semester, both houses have college seniors, or have them bolt for another place leaving the house empty until it sells. Just trying to find the best way to play it safe, but also capitalize on taxes. 

We (myself, wife, and two kids - 2 and 6 months) are making a move in the next couple months from a rural college community in Oklahoma to Oklahoma City. I'll be starting a new job, and my wife stays at home with our kids. We're opting for a pay cut ($60,000/year to $40,000/year) and better work/life balance over our current situation; however, OKC is a more expensive market than our current home. 

We're looking to house hack our way into the downtown/historical OKC area with either a duplex or, more likely, a house and guest house. Surprisingly, my wife is actually pushing to minimize to the point where we can live in the guest house for 1-2 years and rent out the main house. After 1 or 2 years, we're looking at either moving into the main house and renting out or AirBnB'ing the guesthouse or moving on with both as rentals. 

We currently own 3 rental properties in college community; however, I don't want to manage them from 2.5 hours away and didn't figure property management into my numbers when purchasing (I've learned a whole lot since buying them). 

Here's what we're working with; 

Home

Mortgage: $90,664

Market Value: $130,000

Equity: $39,336

Property 1

Loan: $43,909

Market Value: $70,000

Equity: $26,091

-Leased through 7/1/18

Property 2

Loan: $55,430
Market Value: $75,000

Equity: $19,570

-Leased through 12/31/17

Property 3

Loan: $53,200

Market Value: $80,000

Equity: $26,800
-Vacant & on the market

Auto Loan: $13,596 (First ever auto loan, and I hate every second of it)

Here's a rough plan of what we're planning to do; 

• Sell Property 3, use a 1031 exchange, and use it for the down payment the investment property/multifamily we're going to purchase. I know this is a tricky topic, but from what I've read it can only be used toward the portion that will be occupied by a tenant. I'll be consulting someone local who specialized in this to guide us through the process. 
• Sell our current home, which we've lived in for 2+ years, pay off the auto loan, giving us ~$25,000 tax-free. Am I looking at that correctly?
• Properties 2 & 3 are up in the air right now. 

Any recommendations on 2 & 3; 

1. Cash for keys to break the contracts and walk away with the equity, but taxed?
2. Sell each of them when the contract is up and try to 1031 exchange into other properties
3. Sell each of them when the contract is up and take the taxed cash. 

We're really excited at this opportunity for a few reasons; 

1. Even though the new job is a pay cut, it has the potential for growth at a much quicker rate than my current position
2. Having a tenant pay our mortgage, insurance and taxes drastically increases the ability to make the move and save at the smaller salary. 
3. Wipes out our $250/month auto loan. 
4. Quick cash on hand boost to invest locally and keep for reserves/emergencies.
5. Downsize and live minimally. We're in a 4 bedroom, 3 bath house now, and it's way too much for us. We're both ready to live simply. 
6. It gives us a fresh start financially by rethinking/decreasing our housing expenses and future investments. 

Other Questions:

• Any OKC locals know of a property that fits the bill?
• With our particular situation should I worry less about cash on cash return for future rental projections and more on covering all current housing expenses? Especially with using all the proceeds from Property 1's sale towards the down payment instead of doing a 3.5% FHA loan.
• Anything else I'm missing? 

First, please excuse my misspelled title. I rushed it and didn't spell check. 

Zoning is residential, but many people are looking for something in our area for self storage or personal use. 

I'm currently checking with an agent and others on rent prices for similar properties or even the possibility of turning it into an accessory dwelling. 

I just received an email update from a local realtor with a ~20'x30' shop with alley access listed for $30,000. This shop is located directly behind a single family rental that I own. It's insulated, has electricity, and a loft. 

My gut reaction was to look into the property to add value to my rental. The future could be one of two routes for this property. 

1. I continue to rent the house and I could rent the shop out as well. 

2. I've thrown around the idea of selling the property later this year or next year (1031 exchange) to pursue a small multifamily. 

Any suggestions?

Yes, we have the formal contract and must purchase by the 6 month mark. Financing the deal isn't at all an issue. 

Instead of keeping the property as a buy and hold, I was just curious if I could wrap another lease option with my contract for deed. At the end of the tenant's 2 year lease, they would have the option to purchase it  

I am just looking at options. I have my eyes on a couple off the market multi families in my area that would be nice to have the profits from this property to potentially fund in 2 years. 

I've recently purchased a new investment property through a seller financing/lease option hybrid. Here are the details; 

Purchase price: $60,000

3 bedroom, 1 bath

2 car detached garage

Financing

• $5,000 down payment
• 0% interest (not a typo)
• $450/month payments for 6 months, then I will be purchasing the property. No option, I will be purchasing it. Terrible cash flow for 6 month, I know. See below. 
• All payments go towards premium
• No early pay off penalties

I am currently seeking at tenant at $650/month. We are in a college community, and I took possession of the property during the middle of the semester. It'd typically be a $700-725/month house. 

QUESTION: Can I lease option this property? Could I sell it prior to actually purchasing it?  If I did <$2,000 worth of work (new kitchen & bathroom flooring, painted finished basement, and a few little things), I think could sell this property for $75,000.  

*Explanation of cash flow & financing*

While it's not great cash flow, the 0% interest for 6 months won me over. At the end of 6 months, the principal amount will be $52,300. Even if the house only appraised for $60,000 when I finance it, I will only have to come up with $1,300 + closing costs while having tenants pay for $2250-2475 (5-5.5 months) of my down payment. The bank I use finances 85% of the appraised value of the home, not the purchase price, which should leave a $340 mortgage on the home.