All Forum Posts by: Pavel Bennett

Hi folks,

I'm looking to acquire a property as a "second home" that is a SFR, but that can be divided into separate living units. I suppose this is similar to just renting out a room or two in a SFR, while still living there myself.

What I'm unsure about is these requirements I've seen mentioned, which apply to conforming second home mortgages:

* Must not be a rental property or a timeshare arrangement.

* Cannot be subject to any agreements that give a management firm control over the occupancy of the property.

My questions are:

1. As long as I'm living in one of the sections of the property and renting out the others, does that meet the requirement of not being a rental property? Note that the tenants may be renting for the entire year or longer.

2. How long are these restrictions in effect for? Is it 1 year? ... after which it's fine to rent the entire thing and even hire a property manager?

3. If the property is listed for sale with a tenant in one of the sections while all others are vacant, would I be required to remove the tenant prior to closing? What if the tenant has a lease that allows them to stay?

Thanks :)

@SD Young: Aside from upfront cost, is there a difference between an already non-conforming building and one that I can convert into a non-conforming building?

And no, I am quite new to the islands. If you have any suggestions for topics to read up on, I'd appreciate them. I know there are some unique challenges associated with Hawaii, especially certain areas, but that applies generally to living in those areas and not just owning multifamily properties. What are the neighborhoods that you are referring to?

@SD Young Good to know about the parking requirements. Most likely what I'd end up doing is having a building that is almost to code as a single unit. It can be separated by locked doors and may have an extra kitchen which can easily be converted into a wet bar for any inspections. In this case, the parking requirements for a single unit would apply, yet multiple sections can be rented out.

If I divide the space using walls and give them separate entrances, is that what technically makes it multiple units? Locked doors instead of walls can still be seen as one unit since doors can theoretically be opened?

Duc, you are popular! We are already in contact, but given that it would be a substantial investment for me, I'm checking with the community in addition in case there are any risks we haven't considered.

Hi folks!

I see this a lot in the listings that meet my criteria: "Number of bedrooms/bathrooms does not match tax records. Buyer to do own due diligence. Sold as is."

I'm looking for a parcel of land that has structures on it with a total of 3-5 separate living spaces (each with a separate entrance and not connected to others via doors or otherwise) so that I can live in one and rent out the others (to long-term tenants). Typically, this is on lots sized 5000-7500 sq ft and zoned R-5. I will need to finance it using a conforming loan or a jumbo.

What are the risks of doing this? My concern is that I may at some point be required to stop operating it as a multi-unit rental and have to sell at a loss at a time when potentially many other landlords are in the same situation.

Thanks!

Zillow's rent estimate is $2,700. Do comparable houses (post-renovation) rent for $4,250 in that area?

Also, it's listed for 575k. Is it realistic for you to get it for 425k-450k?

While it may seem slightly off-topic at first, what @Joshua Auel is suggesting is related to an idea I would suggest for you as well. If you got a better deal on everything you bought (a 2-6% discount), would it make you feel better when buying what you should buy anyway? Better yet, instead of getting cash back, you might get back rewards that you can only spend on travel. Then it won't feel like money, but more of a budget that you have to enjoy and can't earn a return on, so you're not likely to be too frugal with it. Assuming you have excellent credit, you could get approved for a high-reward credit card. I just had one that gave me 5% on most of my spending, but that particular one is going away in a few months. There is currently a good travel deal from Chase if you're looking to travel more.

To summarize, earning a small bonus on all of my purchases makes me feel even better about them, and if it's a travel reward, it could get you thinking about your next trip, which is always a pleasant thought.

@Julie Marquez, seek happiness in what you have, not in what money can buy. I've experimented with this enough times to conclude that my equity is there to make me independent of employment and not to shower myself with fancy gifts which would end up being taken for granted without raising long-term happiness. If you decide to start spending more, I suspect that your happiness level over time will remain the same or even decline. Nothing wrong with seeking good value :)

I'd say that unhealthy frugality is when you're paying less and getting a LOT less than you would if you had paid more. For instance, if you cheap out on food too much and pay for it with your health, that is unhealthy (pun not intended) frugality and is not good value. Also, sometimes you can spend more time finding value than you end up saving. It's okay if you enjoy the process though.

I work in the Seattle area (east side) and have been searching for a house that I could live in and also start renting out a room or two. This would allow me to put my rent money towards building equity and also would be a great learning experience. The problem is that I haven't been able to find anything worth looking at as the prices are too high for positive cash flow. The only way to make this work (possibly) is to bet on future appreciation, but I'm not interested in speculating.

I was thinking about looking for deals out of state, but it won't be a place I can live in, so I miss out on being able to tax-deduct interest payments on the primary residence and other such perks.

What do you guys think I should be looking into?