All Forum Posts by: Paul Clemens

Quote from @Devin Peterson:

Quote from @Paul Clemens:

Hello all,

I was looking for some advice with possible best next steps to expand on a newbie portfolio with 1 live in duplex (live on bottom, rent the top floor) rental. Especially in this market with high interest rates, high competition, and low supply. Here is the situation I'm in and what my goal is....

I currently live in central Connecticut about 30 minutes from Hartford. My wife and 5 children currently live in a duplex where we rent the top floor and live on the bottom. Our total mortgage is $2,300 a month. We rent the top floor for $1400 a month, leaving us paying $900 a month for just our house. We do not have much savings so could not afford to put another down payment on another multifamily , but since buying the property for 295K in 2021, the estimated price of the home currently is 407-430K. We put 25K as a down payment. With that said, are there any possible low risk steps we can take to acquire more property? I know the basic concept, but would an 1031 exchange into a more valuable multifamily be a good step to build our portfolio with the low savings we have, but the increased appreciation and potential equity since buying the property in 2021? We are locked in a 30 year fixed at 3.3 percent for this property. 

PS. If you need more information to give better advice, please do not hesitate to ask.

Paul, I am local to you in Middletown. I deal with a lot of situations like this. Is your current loan an FHA loan? If it is, you will have to go conventional. If not you are clear for FHA. Depending on your income situation you may be eligible for some DPA through local government grants and programs. Additionally, we can use the expected rental income from the current unit you occupy towards the qualifying income for your new purchase. Feel free to connect any time you'd like!

 This property is in my partners name. We’re not legally married and I have yet to have a home in my name.

Quote from @Ryan Muska:

If your monthly payment on the property is only $2300, then you could most likely cash flow with the second unit rented out. So, I would suggest house hacking. Move out of the home and put a 3.5-5% down payment on the new primary home. That way you keep the old property and are able to obtain a new one.

As far as getting financing for the new home's down payment and closing costs, you could get a HELOC or Second Position mortgage on the old property to help finance the new purchase. You could even roll in the closing costs into the cashout/HELOC.

Quote from @Dave Foster:

@Paul Clemens, I wouldn't give up that interest rate lightly. I believe that @Ryan Muska is on the right track for you. You can create a positive cash flow by renting both of the units. And once you have lived in that unit for a year you should be able to purchase another multifamily - primary residence loan using the low down program.

That makes sense and thank you for the guidance. With 5 children and the scarcity of multifamilies (mostly in “class B- to C+ areas as I have read and listened about) would it be wise to buy and move to a single family house with the current market and situation I’m in? Our house appreciated 100k+ in 2 years, is buying at this high level smart in my situation or should I wait a little longer until/if prices drop a little, although our home price would drop as well if that were the case I’m assuming. That’s why I reached out here because with little savings, and a family of 5, I do not want to make the wrong move. Thanks again!

Quote from @Dave Foster:

@Paul Clemens, I wouldn't give up that interest rate lightly.  I believe that @Ryan Muska is on the right track for you.  You can create a positive cash flow by renting both of the units.  And once you have lived in that unit for a year you should be able to purchase another multifamily - primary residence loan using the low down program.

That makes sense and thank you for the guidance. With 5 children and the scarcity of multifamilies (mostly in “class B- to C+ areas as I have read and listened about) would it be wise to buy and move to a single family house with the current market and situation I’m in? Our house appreciated 100k+ in 2 years, is buying at this high level smart in my situation or should I wait a little longer until/if prices drop a little, although our home price would drop as well if that were the case I’m assuming. That’s why I reached out here because with little savings, and a family of 5, I do not want to make the wrong move. Thanks again!

Quote from @Joshua Christensen:

Quote from @Paul Clemens:

Hello all,

I was looking for some advice with possible best next steps to expand on a newbie portfolio with 1 live in duplex (live on bottom, rent the top floor) rental. Especially in this market with high interest rates, high competition, and low supply. Here is the situation I'm in and what my goal is....

I currently live in central Connecticut about 30 minutes from Hartford. My wife and 5 children currently live in a duplex where we rent the top floor and live on the bottom. Our total mortgage is $2,300 a month. We rent the top floor for $1400 a month, leaving us paying $900 a month for just our house. We do not have much savings so could not afford to put another down payment on another multifamily , but since buying the property for 295K in 2021, the estimated price of the home currently is 407-430K. We put 25K as a down payment. With that said, are there any possible low risk steps we can take to acquire more property and build our portfolio with the low savings we have, but the increased appreciation and potential equity since buying the property in 2021. We are locked in a 30 year fixed at 3.3 percent for this property. All advice is wanted and welcome. Thank you so much. 

PS. If you need more information to give better advice, please do not hesitate to ask. 

 Hey Paul,

With very little savings, I'd consider a couple of things.  There is some good pointers provided.  Think about this.  You have 5 kids living in what could be an additional income unit.  

Have you considered finding a single family home with a 3.5% down FHA loan that you can move your family to and immediately start generating positive income from your currently occupied unit? Yes, interest rates are a little higher these days (down this week into the 6's), so you marry the house and date the rate. You can always refinance down the road. Unless you have a lot of overhead expenses and personal debt, your $170k income can more than qualify you for a house.

How are the rents you're charging?  At market rate?  Below market rate?  Can you raise rent?  Can you get 15 or 1600 per month for the unit?  

That would give you a positive $600-700 per month swing that could help offset your new mortgage on a single family for you all.

Look around for Off Market homes that the seller may consider owner financing.  less down, you could negotiate a lower interest rate in your deal.  

I bought my current home in 2019 with $500 and took over the guys house payments.  I refinanced and bought him out in 2023.  I'm in negotiations for another one around the corner now and I'll rent my house out.  

There are ways to make it work with the right creativity.  

That’s probably the best advice I’ve heard so far. what do you suggest is the best way to find someone offering seller financing. I do not have a lot of time working 2 jobs and having 5 kids. How did you find yours?

Quote from @Bill R.:

@Paul Clemens What do you do for work? How much time do you have? You can do some wholesaling to build up some cash for buy & hold properties. Reach out to me if you have interest, I can point you in the right direction. 

I am a full time BCBA in a school district and supervise in home cases as a second spare time job about 170k a year. I’m more looking for advice on the situation at hand. I know I don’t have a lot of options with not much savings. My wife is in school to become a BCBA as well, which we’d pull in 300k plus when she does. However, that’s 3 years away and I am floating the majority of the bills now, which is why I’m reaching out to see if there are any lower risk options with the situation we’re in. 

Hello all,

I was looking for some advice with possible best next steps to expand on a newbie portfolio with 1 live in duplex (live on bottom, rent the top floor) rental. Especially in this market with high interest rates, high competition, and low supply. Here is the situation I'm in and what my goal is....

I currently live in central Connecticut about 30 minutes from Hartford. My wife and 5 children currently live in a duplex where we rent the top floor and live on the bottom. Our total mortgage is $2,300 a month. We rent the top floor for $1400 a month, leaving us paying $900 a month for just our house. We do not have much savings so could not afford to put another down payment on another multifamily , but since buying the property for 295K in 2021, the estimated price of the home currently is 407-430K. We put 25K as a down payment. With that said, are there any possible low risk steps we can take to acquire more property? I know the basic concept, but would an 1031 exchange into a more valuable multifamily be a good step to build our portfolio with the low savings we have, but the increased appreciation and potential equity since buying the property in 2021? We are locked in a 30 year fixed at 3.3 percent for this property. 

PS. If you need more information to give better advice, please do not hesitate to ask.

Quote from @Paul Clemens:

Quote from @Matthew Crivelli:

@Paul Clemens

You would only be able to access your equity if you sold the property. You bought the house for 295k in 2021 so you owe almost the full loan amount still. If the property is worth say 410k and you did a cash out at 75% LTV the new loan amount would only be $307,500. That's not enough to justify the hit on the interest rate you would take.

 Do you feel selling the house with the appreciated value would be worth it to possibly purchase 2 more multifamilies both now with higher interest rates? How much do you think we would net after closing costs if we sold for 410k? Or would the best option be saving more money and putting a down payment on a second multifamily and keeping the one we live in.

 Would a 1031 exchange be a decent play here for a more valuable multifamily property with the situation I’m in? Or would the interest rates make it not worth it even with the 100k* appreciation since 2021?

Quote from @Matthew Crivelli:

@Paul Clemens

You would only be able to access your equity if you sold the property. You bought the house for 295k in 2021 so you owe almost the full loan amount still. If the property is worth say 410k and you did a cash out at 75% LTV the new loan amount would only be $307,500. That's not enough to justify the hit on the interest rate you would take.

 Do you feel selling the house with the appreciated value would be worth it to possibly purchase 2 more multifamilies both now with higher interest rates? How much do you think we would net after closing costs if we sold for 410k? Or would the best option be saving more money and putting a down payment on a second multifamily and keeping the one we live in.

Hello all,

I was looking for some advice with possible best next steps to expand on a newbie portfolio with 1 live in duplex (live on bottom, rent the top floor) rental. Especially in this market with high interest rates, high competition, and low supply. Here is the situation I'm in and what my goal is....

I currently live in central Connecticut about 30 minutes from Hartford. My wife and 5 children currently live in a duplex where we rent the top floor and live on the bottom. Our total mortgage is $2,300 a month. We rent the top floor for $1400 a month, leaving us paying $900 a month for just our house. We do not have much savings so could not afford to put another down payment on another multifamily , but since buying the property for 295K in 2021, the estimated price of the home currently is 407-430K. We put 25K as a down payment. With that said, are there any possible low risk steps we can take to acquire more property and build our portfolio with the low savings we have, but the increased appreciation and potential equity since buying the property in 2021. We are locked in a 30 year fixed at 3.3 percent for this property. All advice is wanted and welcome. Thank you so much. 

PS. If you need more information to give better advice, please do not hesitate to ask.