All Forum Posts by: Nick Foundas

Hi Victor, as a first step I would consider reaching out to some local banks to get pre-approved for an Owner Occupied Investment Property.  As you mentioned you are fresh out of school with limited savings but as an owner occupied rental property owner you can qualify for lower down payment requirements (somewhere between 3.50% - 5%) and the Bank will take into account the anticipated rental income as part of your income so you will most likely be able to afford more than you think.  

If you purchase a 2 or 3 unit, you could rent out the additional bedrooms in your unit to friends/tenants and then of course rent the entire 2nd & 3rd unit out as well.  You may not cash flow very much, if at all but you are living for close to nothing while at the same time having tenants pay down your mortgage, increasing your net worth, accessing additional tax benefits and hopefully gain some appreciation.

Starting at such a young age would be amazing for your long-term financial future and will set you up very well.  Eventually you could consider borrowing against the equity in this property to acquire more properties down the road.

I live in the Metrowest area (Natick) so down the road (after speaking with a bank) if you need help looking for properties let me know.

@Bud Gaffney I havent used the Banks listed below but I have heard from other contacts that they offer HELOCs on investment Properties.  I heard Pen Fed may have the best rates/terms out of the group so you may want to start with them.

Pen Fed, Central One Federal Credit Union, TD Bank, Lowell Five, Enterprise Bank, Bridgewater Savings, Citizens, Fidelity Bank, Bank of Canton, Century Bank, Naveo Credit Union

If you just opened a new HELOC then you will probably be charged a fee/penalty if you close it under 1 year of having it open. The fee is probably a couple hundred bucks (you can probably see what the fee is on the banks website under the fine print).

As Dan mentioned you can definitely get a cash out refi on an investment property, you just need to spend some time calling around small/local banks or credit unions to see who will offer you the best rates and LTV. You also just need to make sure your new loan/mortgage payment after the Cash Out will be supported by the rental income and still gives you a decent cash flow.

You could ask around other local investors to see who they have used for a cash out refi on an investment property and you will get several recommendations

Hi Michael, welcome to MA, I feel like Denver and Boston are always trading people back and forth :) My best friend moved to Denver and from what I hear your Market is just a nuts as it is here and prices aren't all that off so I think you will still feel right at home. :)

As mentioned you can pretty much take Wayland, Newton and Weston off your list for that price point (those are extremely expensive markets). Framingham would be your best bet and Natick would be a long shot. You should also consider Ashland for that price point. Ashland, Framinghan and Natick all have the train/commuter line going into Boston.

is your Mother in law going to be staying in Unit 2? And are you happy with staying in your Quincy apartment for the time being?  If your mother in law is moving out then you could rent unit 2 at fair market value and you should also increase the rent for unit 1 to get closer to fair market (if they are good tenants always paying on time and take care of the property then you could consider increasing rent incrementally in an attempt to keep them). You should then have a really strong amount of cash flow to satisfy your main objective which is to pay down student loans. If your Mother in Law is staying then you should look to increase rent to full market value to use towards debt. 

With regards to the lot next door, if it's too small to build a house/sell to a builder then maybe look into building a garage/carriage house with a 1 bed unit above the garage for additional rental income.

Is your only goal to pay down debt or is it to also build up a rental property portfolio? If you are interested in building a rental portfolio and owning property, then you should consider speaking with a local bank to set up a HELOC and pull out equity to use towards the purchase of an additional house hack multi family property. Not sure what you are currently paying for rent but the hope is that the rent you receive from the tenants in the house hack property will offset a solid chunk of the mortgage resulting in a lower payment than what you're your currently paying for the apartment and allowing you to throw even more money towards student debt.

@Sean Maiden as others have mentioned I think your best bet is to find a multi family house (preferably 3 units) and house hack.  You can rent out the other units and also try to get some buddies to rent out a bedroom in your own unit.  

Have you spoken to a bank yet to get pre-approved?  If you tell the bank what you are looking to purchase (an owner occupied multi family property) I think you would be pleasantly surprised that you can afford a higher price point.  As Charlie mentioned, the bank will take into account 75% of the projected rents of the property and add that # to your income which will increase your purchasing power (I wouldnt be surprised if you could get pre-approved for a price in the $400s or $500s, although I dont know your full profile including credit and income).  Also, keep in mind as an owner occupant you would be able to put less than 20% down on the purchase.  

You may not find a situation where you will cash flow very much (you may even still have to pay a couple hundred bucks/month) but at least you are now owning a property, not throwing a large chunk of your money away in rent (assuming you rent now), your tenants are paying down your mortgage, you are gaining equity each month and gaining tax benefits.  You will be able to add to your savings each month to use towards a future purchase.  If your house gains equity over the years you could pull out some equity to use as a down payment towards your next house hack and repeat the process while backfilling your previous unit with a new tenant with the goal of turning the original property into a positive cash flowing property.

For starters I would suggest playing around with mortgage calculators under different scenarios to see what the monthly payments would look like at different price points, down payments and projected rents (dont forget to add in taxes, insurance, repairs/maintenance etc) and then speak to some local community banks or credit unions to see what sort of pre-approval you can get up to.  Once you have a solid pre-approval you can begin to consider towns that may work (off the top of my head I think Framingham, Marlboro are two solid areas that could possibly work and gives you a decent commute).  I think the biggest problem you will find is the majority of the inventory will be 2 families making it more difficult to make the #s work and majority will need some sort of work/cosmetic upgrades.  

Bets of luck and if you need help getting into any properties let me know.  

-Nick

I have not dealt with Boston but in my opinion the use is still multi family, you arent really changing the zoning. In terms of FAR, you should be grandfathered in and shouldnt have to reduce sq footage. If you were tearing the house down and building new construction then you would need to follow current code. Again I'm not 100% certain if this is the case for Boston but a meeting with the City is still the best bet to get a definitive answer.

Hi Mark, I would be interested in seeing/hearing about any development deals you come across. I dont think I can post my email in this thread but feel free to PM me.

Russell, just curious what are the general risks for representing yourself in your own transactions/properties? I typically see lots of Agents listing their own properties and disclosing in the listing that they are owner or part-owner of the property, so was just curious what sort of risks you were considering

Hi @Dan K. Curious as to what the Condo Ordinance/Regs are for Somerville, would you mind summarizing? And does it apply only to New Construction condo/townhouses or also to existing 2/3/4 unit multi family homes to be converted?