All Forum Posts by: Nate Burnett

Waiting impatiently to hear on our first investment/house hacking deal. Already have a game plan in place to get it cash flowing better.

Previous owners bought it in 2008, and only painted the exterior, plenty of deffered maintenance.  We will be occupying one unit, fixing it as we live in it. New kitchen, bathroom and flooring in the 2nd/3rd floor unit (3 bed 1 bath). Once we moved down to the first floor unit it should cash flow $1400, this should carry our entire mortgage, tax and insurance payment. Second unit, as it has a walk out basement and full height egress windows, we will convert to a utility room and additional living space. As it is 2/3rds above ground I would try moving the kitchen downstairs and doing a sitting room. Upstairs (ground floor), would then be converted from a 1+ bed to a 2+ bedroom with a larger bathroom. Once we decide to move out my ballpark, conservatively is $1275.

This is in Dover, NH and right now the NH Seacoast has a housing boom, so who knows what rent prices will be in the next few years. But as it stands, after accounting for vacany, our mortgage will be paid by the 1st floor (un-updated unit) by about 85%.

Anxiously waiting, hoping it is a quick accept as it has sat on the market for months on end. 

@Nicholas Commerford, we're going for a mix. We're starting with this property as a BRRRR, When we decide to move on to the next property I'd like to have this one positioned to cash flow a decent return. Granted, as it has some acreage, I could see us building a SFH towards the back of the property as a potential next move as well. As far as keeping them, our market is in a big flux, lower end rentals are going out the window as people in Portsmouth get pushed out to surrounding cities and are willing to pay more in the markets that previously. Granted lower end rentals will always be needed but that isn't my target market.

@Sandy Hatch I haven't heard anything about them but I've read a lot of good thing things about http://www.thertastore.com/ and have been researching them. The offer both RTA and pre-assembled, they're also having a big sale this weekend. They will ship you sample doors for a deposit as well. 

@Derreck Wells, good points, I have never had a lease since living in NH. Mostly renting from friends, and it was a "live in the unit and rehab it and you can pay less rent" kind of deal. I figure if we close on this one, I'll approach the tenant with a schedule of rent over then next X years, explain the situation and deal with it one way or the other. The area is not hard to get a replacement tenant. 

@Max T. , as it sits, it should get $1600/month. If I put $20,000 into rehabbing the unit  to modern standards and make it towards the mid to upper range, we could potentially get $1900-2100 depending on what we do to it. (If budget allows, we have space for an additional on suite for one of the rooms) So we'd be looking at 3.5 to 4.5 years to recoup that money with the increased rent not accounting for rate increases/anything else that comes up. Personally, I'd like to concentrate that money elsewhere on the property to add a third unit (more modern, better laid out one for ourselves), move to the new unit ourselves and then rent out the other original unit after updating kitchen/bath. Which would next us about $1400-1500 additional a month with the extra unit.

Hi all,

We're looking at a property that has been owned by the same person for 40 years, they've had a tenant in the other unit for 10 years. Market rent is about $1600+ for the unit and they're paying $1200.

I don't want to be the big bad person coming in, jacking up the rent and possibly evicting them.  The unit hasn't been updated in decades and I'd love to be able to get more of its rent potential.  I also don't want to displace someone from their home. While it's a people business I'd like to also be more comfortable and have it be fair on both sides. I wouldn't jump to $1600, but as they're a month to month tenant... what would you do? 

If we end up with the property I was thinking about asking them to sign a new month to month lease and have a 10% rent increase on a yearly basis. The other issue is, the Tennant has no security deposit.  Is it appropriate at the new lease to ask for one? My concern is, most of their furniture isn't work moving if they move on. Its all clunky, cumbersome furniture that may or may not fit out the door so we may get stuck cleaning it out.

This is in New Hampshire so laws are on my side as far as increases go.

Thanks!

@Trent CurrieI guess I didn't think of it that way being that for now it'd be our only building until we get #2 in the works. As far as legal obligations, I just don't want them to be able to go after us personally for whatever reason, does using the LLC as a property management company essentially leave that entity liable for most anything that could happen?

Hey all,

We're getting really close to closing on our first MFH. We plan on doing a BRRRR strategy, as well as house hacking combined in. We'll occupy one unit as we renovate and flip the unit moving onto the next.

I know with our FHA financing we can't have the mortgage under an LLC, but is it worth it to have the rent and lease under the LLC? Is it even legal to do that? I'm more thinking about minimizing legal risk, if we can structure it where there's a "building lease" from us to the LLC and then the renters sublet from the LLC and pay into those accounts.

Is there a better way to structure this?

Well first thing,  are all your tips reported correctly/taxes paid? If you have unreported income that helps the $2000/month it won't help you. 

Do you know your DTI? I believe FHA wants a mortgage to be about 30%, and credit score has to be above 600

So you're looking for not a whole lot compared to what it is. You could try a lender like OneMain financial and do it as a secured personal loan using the house as collateral.

Do you know the homes actual value yet? You could possibly get the owner to temporarily "finance " so you can get the title in your name and the  use it as collateral. Otherwise do you have any other property like cars, boats, RVs etc to leverage on a loan?

Hi @Justin Rancatore, welcome aboard. Hope you find the information here plentiful, having your skill set will be an asset to any team in the area. 

As we close on our first BRRRR MFH I'm sure we'll need some electrical work. My biggest peeve is the overhead service lines from the pole which I'm sure I'll bury.