All Forum Posts by: Nicholas Armstrong

You're going to house hack a SFH?

Also, be cautious with condo's. Investors either love condo's or hate them due to HOA's

I'm not an expert, but I am 22 and I just purchased a duplex to "house hack" so we're somewhere on the same page. haha.

I was in the same situation. The duplexes I was looking at were in bad parts of town and I wasn't about to live there. I found one about 30 miles away from where I was looking though.

So I'll tell you what I was going to do before I read about "house hacking".

I was going to purchase a stinky old house in a great neighborhood with a 203(k) loan.

After live-in flip with the k loan, Refi as investment property after a year or so and rent out. Then Move to the next one.

Hello all,

I have posted about this topic before, but never got into the specifics of it.

I have purchased a duplex with one unit being occupied by a long term (5 year) tenant. The issue is that the long term tenant never had a lease agreement, he's been paying 1/2 of fair market rent and he doesn't have an actual job. He is a photographer, and builds LED lights for ATV's. So in other words he does odd and end things to make money. He's also a 40+ year old bachelor who smokes and drinks.. alot! (I have nothing against either, but his entire unit is filled with empty vodka bottles so it makes me wonder) Also during the inspection today a giant cat ran out of the closet and the tenant replies "I hope you like animals!"

So needless to say he will not be staying. Smoking and animals are no go's for me.

Here is my question:

A. Should I request the property be vacant upon closing to start fresh? And if so how do I do that at closing? or,

B. Write up a 3 month lease raising his rent a couple hundred dollars. This could give him a little while to find another place and maybe he will not destroy his unit out of hatred towards me.

I worry that if I ask for the property to be vacant he will destroy his unit out of anger.

But on the flip side I really don't want to live by this guy... or be his landlord for 3 months. (I will be occupying the other side)

Thoughts?

 It was an fha Alabama housing loan. Your state should have something similar. I would ask some investors near you about it. The closing costs went up about 3k. But that didn't bother me bc the sellers paid for all the closing costs. 

As far as driving for dollars,

I would definitely suggest getting a loan approval for $x so people and realtors will take you seriously when your out shopping. 

Hope this helps! 

 I'm not a creative financing expert. But I've heard of several different ways to purchase without involving a bank. 

Private money lenders being one.

I've also read about people using HML's to purchase commercial or residential property and refinancing after rehab is completed. But I would recomend getting your feet wet before dealing with hard money lenders (HML's) or atleast I'm not going to until I'm a little more confident in myself finding a REAL deal.

There's also something called a "refi takeover" I'll copy and paste this process here (I did not write this):

Seller “Refi” for Takeover

This no-money-down technique is as amazing as it is simple. Ask the seller to refinance the property for your offered price, (for 30 years fixed at no more than X%) subject to a one-time qualified assumption by you. Take over their loan at closing. The seller walks with cash, and you buy with no money down!

If a seller has equity in the property and has been unable to sell it, ask him to get a loan on it, let all parties know that once the property is refinanced, you are going to assume the mortgage with a release of liability for the owner.

An alternative; the seller pulls as much cash out of the property from a refinance as he can and the investor takes title subject to the new existing financing.

The seller has the cash and the investors has the property.

Another alternative ---- ask the seller to give you X$ for repairs at time of settlement.

Another alternative --- agree to give the seller a Hybrid bonus once the property is sold....10- 20 - 30%.

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You could also try to find a partner or two to fund your ventures. 

There's also companies on BP's that do JV partnerships. Funding 100% of purchase price and half or all of he rehab costs. After property is sold you split profits as much as 50/50. This could be a good way to gain experience while making some cash to fund your own project.

I would suggest learning as much as you can here on BP about Creative financing.

You could also read Brandon's book about purchasing houses with low or no money down.

Hope this helps!

I'm no expert in the least. But I searched a 30 mile radius of where I live on Zillow, realtor.com, Craigslist and any other site I could find. I also spoke with a few realtors in the areas I wasn't quite fimiliar with and looked at several properties that weren't even on the MLS yet that I would have never seen. I also networked with a few contractors/PM's in the area as well to see if they knew any areas to search.

The deals are there you just have to find them. "Driving for dollars" is a great way to locate properties as well as. I found one just yesterday on my way to the gym that I had never seen before. 

Yes the piggyback was an FHA loan, the duplex I purchased I'm house hacking. But I have very little of my own money tied to the property.

Welcome to BP!

Your plan is great!

To answer your closing question. I would assume paying cash would shorten the closing period. ;) but considering this is a financing post I'll continue.. hah.

Im somewhat confused by the funding question. I would assume by what your asking that it would depend on the purchase price. If you cant do a 20% down payment on a $50,000 rental then you should purchase a $25,000 rental. But I recently purchased a duplex and found a company to piggyback the down payment. I only paid 1% of the purchase price and got a great interest rate. Im a believer in using OPM ;)

Hope this helps!

 Great things to think about..

I would probably take the refinance cash out proceeds to purchase another property. Maybe live-in-flip? Or possibly purchase another multifamily to owner occupy or BRRRR?

That's the thing. My duplex is in a higher end SFR neighborhood. And I couldn't find any other duplex's to comp the property. You have a great point..