All Forum Posts by: Patrick McCann

Quote from @Ed Huntington:

If you have the funds I would replace now before you get a tenant in there. If the heat goes in the winter it will be an emergency and you'll be scrambling to replace it while also having to put your tenant up somewhere temporarily that has heat. You won't be disrupting a tenant now vs. later. You would have peace of mind knowing it's a large capex item you won't have to worry about for a while. And you could even use it in marketing the unit "Brand new high efficiency heating and hot water units, low gas bills!" I can only imagine the disaster if the oil tank corrodes through and leaks hundreds of gallons of diesel into your basement. 

I plan on replacing it as soon as possible, already trying to schedule it, just not sure how soon I can get someone in there to do it after I close 

Quote from @Nathan Gesner:

Quote from @Patrick McCann:

I would try to replace the system before renting it.

That’s the goal, have a few other things I’d like to do to the unit beforehand as well 

I’m on track to close on my first property/househack/rental in a few weeks in Dover, NH. The house is a duplex with the upstairs unit on a newer natural gas system with instant hot water and that’s the unit I intend to occupy. The downstairs unit is currently on oil and the system is currently functioning but the tank has corrosion and the furnace is in rough shape. There is already a second meter for natural gas set up on the property so I plan to convert that unit to natural gas as well. I’ve already reached out to some HVAC contractors I know just to kind of get the ball rolling as I know often they can be scheduled out well in advanced. Would you recommend I get the system replaced before renting out the unit in case the contractors can’t get to it right away or wait till I have the system replaced? Thanks!

I see the suggestions for Nashua and Manchester and agree with that there would likely be more Spanish speaking people but I’d say they’re at the lower end of great places in New Hampshire to raise a family. There is much better towns nearby just outside those cities though. Like others have said what is important to them? Do they like the ocean? Where do they plan to work? Do they like an area with a lot of datura ge and stores or do they prefer a more rural town?

Quote from @Michael Teagarden:

I have been looking at purchasing a side by side duplex to house hack in the greater Minneapolis area but the numbers don't work based on current prices and rates. I am analyzing the deal to see what I would pay while living there and how it will perform when I move out. While I live in the unit it would cost more than what my current mortgage is and when I move out and rent both sides it will negative cash flow. Every deal I analyze has a significant negative cash flow and at very best has low negative cash flow (-$50/mo).

Am I analyzing these deals wrong? Should I be factoring in something else when analyzing these deals? Is anyone else experiencing the same? 

I would like to get into a house hack but from what I am seeing in the numbers it just doesn't make sense right now.  

Thanks,

Mike

I’m coming up with similar numbers as you looking for a duplex to househack here in New Hampshire and a lot of it has to do with the increased interest rates making the mortgages alot higher. My realtor who is also an investor gave me some good advice though that if I buy then at least I’m paying down equity that could be 1031 into my next house hack with more to put down so the numbers should work better on that one, alot of the properties in my area are mismanaged too (below market rents, landlord paying utilities, room for renovations) so possibility for forced equity is there too. Also I do need a place to live so that being said if I find a property were I can afford the expenses I’m going to pull the trigger regardless. Or maybe in the future the rates will go down and could refi and the numbers will work. The one offer I did put in we asked for the seller to buy points at closing to lower the interest, unfortunately the deal didn’t go through because the seller was worried the property wouldn’t meet the fha inspection requirements, the property had been on market for nearly 40 days and the listing agent said I was the first to put in an offer. There was 2 4 units both listed for the same price in the same area but I passed because the the in place leases had rents way below market that just didn’t make sense. Perhaps you could consider mid term rentals to squeeze a little more income out of the property? Good luck!

Hi, 

Is there any sort of calculator for a house hack deal? Rules of thumbs? Based of market analysis?

For example I'm going to look at a 2 family in Southern New Hampshire that I would plan to buy with a FHA loan. The house is listed for 419,000. The house has two 2 bedroom units and a detached garage. Lender is figuring around 7% interest. Disclosure shows one unit is currently rented for $1300 a month, seems low to me but I'm still checking comps. Seems as though I'd still be left paying a good part of the mortgage. Ideally I'd like have rent cover a good part of the mortgage but seems nearly impossible in the current market situations i my area with high property cost and high interest rates?

Quote from @Jaylan Archer:

Hey Patrick! 

Congrats on making the decision to jump into real estate investing. You will have a lot of firsts in your new feature, I hope you can take them with excitment. 

I would reiterate what a few others have said. I think your best options for buying something would be a three to four unit. Depending on the market - there are a few towns along the seacoast of NH where a STR can make sense. I have found that they are fairly seasonal with the summer months being where the money for the year is made. Further north you can find a STR that might do better year round.

I would also speak to a lender to learn more about your options. With a little bit of softness in the market this last month - we have been able to get a couple of FHA owner occupant buyers under contract on multi-units. If you are confident that being a property/rental owner is in your future, I would recommend going with a three or four unit. That seems to be where the numbers make more sense and it will also give you a place to live. The property has to be lived in by yourself and can't be more than four units and the minimum down payment is 3.5% for it so you are well on your way to qualifying for a decent purchase price.

Feel free to reach out to me if I can be of any further help. I frequently am working in Strafford and Rockingham counties in NH.

 Hi,

I totally agree a 3 family would be the best option for at least having most of the mortgage paid for or maybe even cashflow. But speaking with the mortgage lender he explained to me that in order to purchase a 3 family with an FHA that the rented units rent would have to equal out to the cost of the mortgage or greater and from I've seen available on the market at the moment that could be pretty tough to find.

Side note, I came across a For Sale by owner today online that’s in an ideal location and within my pre approval, not many photos on the listing though. The realtor I’ve been working with has messaged the owner but hasn’t received a response yet. I drove by the house on my way home from work today and was parked across the street. A neighbor asked what I was lost or some thing and I explained the house was listed for sale. He suggested I go knock on the door, I didn’t. After the fact maybe I should have or should have at least the neighbor if he knew the owner.

Quote from @Jonathan Bombaci:

Hi Patrick,

Yes southern NH is a great market. We have helped people househack numerous times in Manchester and Nashua. You’ll occasionally get MF’s in places like Salem, Derry, Londonderry, and surrounding towns but Manchester and Nashua have a much larger supply of MF’s. When you run your numbers you’ll find it very difficult to live for free or cashflow in a 2 family but you should be able to live at a steep discount on market rent in a 3 family and you should be able to live for free, maybe even cashflow while living there, in a 4 family. Prices are up and interest rates are brutal but rents have been increasing by leaps in bounds in southern NH over the last 24 months. Were putting quite a bit of capital into southern NH right now and should be over +300 units in NH by the end of the year. The prices aren’t as ridiculous as MA and rents are moving up at an alarming rate. To put it in perspective, we just rented a “nice” 2 bedroom in Rochester NH for $1700 and section 8 is paying 100% of the rent… 

FHA is still a great loan on a 3-4 family househack with 3.5% down and if rates dip in the next couple years you can always refinance out of the PMI at that time.

I suggest you network in the area and try to meet local investors. We host 6 free meetups in MA and NH in fact we have our Manchester NH meetup this Thursday. It's posted here on BP under the Events tab under the name Simplified REI. If you have trouble finding it and are interested just PM me. There are many great FREE meetups all over southern NH every month. Put yourself out there, get your preapproval, and you'll officially be "started".

Best,

Jon

 Hi Jon,

I appreciate your input. I do plan to do a FHA and refinance down the road. I certainly will look into the groups and meetups. Another thing I've considered is buying on the seacoast and doing STR and off season rental in the unit(s) that I wouldn't be occupying. Pre-approval should be completed on Monday and time to start searching!

Thanks,

Patrick

Quote from @Sean Delisle:

Hey Patrick,

Congratulations on setting some big goals to invest in real estate!  BiggerPockets is a great resource.  I'm not sure it matters whether you take the money from your savings or an annuity....assuming you have the same access to either.  The important thing is that you have access to an emergency fund for just that, emergencies.

Prices are high, but I find buyers I work with get a good portion of the mortgage paid.  When they get an opportunity to refinance that will also improve the cash flow.  If you can afford the payment and the right property comes up, then keep in mind there should be an opportunity to refinance in the future.  I just closed with two separate buyers that I met through BP each buying a duplex in Manchester, NH.  It takes some time to sift through the inventory, but there are some nice properties worth considering.  Sounds like you're in good hands, so good luck with your search.  You're thinking the right way for building wealth!    

Manchester seems to be a good market in NH because there is a lot more multi families and people making it more competitive and property prices tend to be lower, I have a couple friends of friends that own a couple duplexes in Manchester. Unfortunately with me searching for a property that will also be my primary residence I’m hoping to look closer to the seacoast for my lifestyle/commuting needs. Thank you for the positive response!

Hello BP,

Pretty much my entire adult life I've planned to buy a multi family as my first property to owner occupy and offset the cost of a mortgage and not be house poor. Until recently I was nervous about making that leap and was unsure I was ready and knew I'd have to research first. I work full time as an Ironworker and the retirement benefits and such are great but I'd still like to supplement my income and somewhat be able to make my own schedule and I believe REI could do that for me. I've reached out to a real estate agent in my area who specializes in income properties and really dived into researching as much as I can and that's when I discovered BiggerPockets.

Ideally I’d like to purchase a 2 or 3 family in Rockingham County, NH to owner occupy. I have money saved, but I think I’d like to use money from annuity to put down and leave my savings as a security for expenses if needed. I don’t think it’s a terrible idea because I’d be taking investment money to reinvest in another way. I’m thinking it’s going to be tough finding a property in the given market because inventory seems limited and prices are high. Even with the high rental market it seems it is going to be tough to find a property that the income could at least cover most of the mortgage. Thanks BiggerPockets for opening my mind to all the information and possibilities to invest!