All Forum Posts by: Nathan Maier

@Thomas Van aken Renting the other bedrooms and sharing the common areas of the house I live in is not my idea of house hacking. In that case, I have a way to boost your ROI; buy a beat up van for $1000, park it in front of the house, live in it, and rent out your bedroom too. Money talks, right?

The problem with house hacking MFHs in SoCal is that prices are so high that you can rarely break even, let alone make any positive ROI, even after you pay yourself rent. Until the market corrects, it is tough to do better than renting here in SoCal and investing your capital in assets OOS, and not liabilities here locally.

I would not start on Zillow. I think the best approach to choosing an out of state market is to start by researching market indicators such as population growth, job growth, median house costs, price/rent ratios, etc. Once you come up with a few potential markets, then you can dig deeper, look in to Zillow, talk to some realtors/managers, and so on. I would also recommend reading David Greene's book, Long Distance Real Estate Investing.

@Thomas Van aken I'll bite... I'm always looking for a house hack opportunity in one of the San Diego beach communities; PB, OB, La Jolla, Point Loma, etc. Not interested in renting out rooms, but instead looking for a MFH where I can rent out the other units. I can't find any properties where I can make the numbers work. I am open to hearing your experiences on how to make it work.

You have two options here really. You can either stick to your strategy, which sounds like buy and hold for cash flow, and invest in a market where that works. Or you can stick to your market, and choose a strategy that works. Not every investment strategy is going to work in every market. There are good investments to be made in SoCal, for example you can flip, or look in to short term rentals. But you aren’t going to buy and hold and meet the 1% rule. You won’t do that anywhere West of Texas really. 

@James Gates I'm very interested in hearing what CA lender gave you a 2.4% rate HELOC. What is the LTV? I'm going to close soon on a $60k HELOC at 6.5% and 80% LTV. It's not my primary so I expect a little higher rate, but 2.4% is phenomenal.

Aaron, I want to offer a counterpoint to your statement here. Many new investors (myself included) get stuck in this mindset that they have to invest locally so that they can manage their own rentals to save the management fee. This can be extremely counterproductive. First of all, do you enjoy managing properties? Are you extremely good at it? Is the time spent managing your rental worth more than $100/month? For most investors, we do not enjoy being property managers. It is usually much more productive to pay a good property manager and spend that extra time doing what investors enjoy and are good at; finding the next deal and building relationships. 

The second reason this is counterproductive reasoning, is that it forces you to stay in your local market, which may or may not be conducive to your goals. It sounds like your goal is cash flow. You aren't going to find much cash flow West of Missouri/Oklahoma. By freeing yourself from the mindset that you must self-manage, you open the doors to better markets that will better serve you in accomplishing your goals. There are markets where you will have better cash flow after paying for a property manager. Think about this. You can free yourself and your time from the burden of collecting rent, evictions, clogged toilets, etc and still have more cash flow if you allow yourself to think outside the box.

@Account Closed 

There is no perfect investment strategy that is the right answer for everyone. You have to evaluate your goals, risk tolerance, and opportunity cost of a higher down payment.

That being said, money is incredibly cheap right now. You can lock in a mortgage for 30 years at 5% and 75%-80% LTV. Think about this. Rent will almost certainly go up over 30 years. The house will appreciate. Inflation will surely continue. All of this is happening while your mortgage is locked in at 5%, for 30 years!

Would you loan someone a couple hundred thousand dollars at 5% amortized over 30 years? I sure wouldnt. My money is worth more than that. 

You mentioned you want to BRRRR this property, and that you have no idea what the ARV is and are very unsure about the rents. Those are 2 of the 3 numbers you NEED to know for a BRRRR, the other being the rehab cost. I think you should educate yourself, and spend time figuring out your market, and comps. Once you can nail the ARV and rents, then you will feel much more confident analyzing deals.

Not saying you have to BRRR this property. It might make sense as a conventional house hack. Either way, learn to get good at comps.

@Bob Romano is that projected $200-$500 cash flow factoring in the payment on the HELOC? Interest only at prime +1% on your $50k down payment is $270, and that doesn't even account for the $50k principal. TK is hard to make work if using a HELOC for the down payment and conventional financing for the rest.

Congrats, sounds like you got an amazing deal. The house looks great!