All Forum Posts by: Nate Burnett

Hi All,

One of the properties we are looking to start our REI journey with is a rather large duplex. It has 2 - 4 Bed, 2 Bath units, large kitchen/living areas (1500sq feet each). The layout lends itself to dividing the space in one or both to 2 bed 1 bath units and still be decent sized. Currently the units rent for $1500 each. So with our down payment/mortgage/tax/insurance we have about $200 cash flow a month.

If we guess and look at similar areas with similar sized units we could probably rent a 2 bed 1 bath for ~$950/month. So that would increase either $400 or $800 a month.. Due to the layout, I'd say each unit would take 15-20k per duplex to subdivide, and payoff could be as soon as 4 years. 

Do the risks of opening things up and dividing the units outweigh the cost of doing this? The lot is large and would allow for a decent parking lot to allow parking for 2 cars each and still have a yard. The exterior has asbestos siding so risks of it existing inside are higher but there's no old tile/heating ducts. 

Should I leave as is or explore this more? I think I'll move on the property regardless as our first adventure into house hacking.

Thanks all for the feedback. I guess my creative financing skills aren't that great yet ;) We'll get in an get this unit getting us some nice cash flow and refinance once we have the value up then to get rid of the PMI.

@Zack Karp, I was undere the impression that once it hit 78% of the value the lender had to remove it, even from an FHA mortgage, is that not the case? I was reading similar links to the ones below. And so are you suggesting that by lender credit, something similar to a 203k Streamline?

http://mymortgageinsider.com/how-to-get-rid-of-mor...

Hi All,

I just was wondering what others though of this idea. My husband and I got approved for an FHA mortgage, it requires 3.5% down. Unfortunately with FHA they also require PMI until we owe less than 80% of the loan.

Now my thoughts are, what if we can talk the owner into financing 20% of the purchase? 

Could this get us around the PMI requirement and allow us to have an overall lower payment which would result in more cash flow immediately?

The price we're looking is about $250,000, so a 3.5% downpayment would give us about a $230/month PMI, is there a way to structure it with owner financing to make it a better deal? OR should we tough it out to accelerate the payments so we can get below the 80%? The property with us occupying one unit, at least the one we are looking at is $300/month cash flow positive after estimated maintenance/bills

I'd like to have more cash in hand so we can flip the units and increase rents (all the units in our area for sale are horribly dated).

Thanks!

@James S. it's been a fun time but not exactly "home".

As far as towns, I'm primarily looking at Dover/Dover Point, there are a few duplexes in our price range, unfortunately around Broadway St, they look in "ok" condition from what I can tell from the internet, our agent will be doing a preview for us and we have a friend on the ground who can do a walk through to see if we should nix it from the list or pursue. 

While the Broadway St isn't great, I think if we start with one there and add a few to our portfolio in the long run, gentrification will win out. As people are priced out of Portsmouth they're moving to Dover, so hoping that rents will increase in the long term. 

Somersworth and Rochester are a tad... troublesome, as far as residents. 

Long term plans as well is to get the units and be able to manage everything in terms of services provided to it as well (bundled cable, internet and solar). As a technical professional, I see value in being able to modernize and provide solutions to not only improve property value but income potential. I've got a solar provider that is self install that per panel it's is around $350/installed, plus costs of electrician and battery units. Probably all a bit ambitious for starting out but with NH energy prices and the instability of the power infrastructure during storms, I figure adding something like that in will add value to a renter's prospective as well. 

@Mark Bradford, as someone just starting off, have you looked at cozy.co? Free to landlords and the tenant can setup an ACH draw, you can have it pull direct from their account to yours. It may be less of a legal hassle than going through an employer draw. 

Hi all,

My name is Nate and I'm a young professional in the IT industry that is hopefully purchasing my first multi unit to owner occupy and start my property profile. 

My husband and I have been living in Ireland for the last year and are returning to the NH Seacoast in April, we're looking at purchasing our first home and become landlords in the process to essentially live "mortgage" free. 

We're doing the calculations now and are hoping that with an FHA mortgage and lower down payment we can invest more cash into a "lower" end multi-plex and increase rent . Once we maintain a good solid income stream from our first I'm hoping in 2 years to move on and purchase a second multi-plex and do the same. I'm hoping to stay under 4 units for now.

I look forward to networking and meeting more from the community as we get going.

Thanks! 

Nate