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All Forum Posts by: Preston Wallace

Preston Wallace has started 6 posts and replied 9 times.

Post: Co signer on an owner occupied loan for a duplex (Househack)

Preston WallacePosted
  • Investor
  • Birmingham, AL
  • Posts 9
  • Votes 1

I'm working on getting my finances in line before looking for a duplex to house hack in early 2022. Based on the quick and dirty underwriting I have done, I'm pretty sure my DTI is going to create a hurdle. I'd be turning my current residence into a rental, but because I don't currently have any income on this property I already know a lot of lenders are not going to allow that expected income to go into their calculation.

If I were to get a cosigner, would the cosigner have to be a relative if I were to go with a conventional 5% down loan?

Post: New Investor in Birmingham, Alabama

Preston WallacePosted
  • Investor
  • Birmingham, AL
  • Posts 9
  • Votes 1

@Nick Dahal Nick, were you ever successful in finding a duplex or triplex? I’m moved to Chelsea from the Montgomery area in January of 2021. I’d like to find a duplex, triplex, or Quad in a good area to house hack in early 2022. I keep an eye out on Zillow and relator.com but only see something I’d be confortable with pop up once in a blue moon.

Post: Debt to Income affecting ability to purchase

Preston WallacePosted
  • Investor
  • Birmingham, AL
  • Posts 9
  • Votes 1

@Zakiyyah Potts the size of the bank could make a difference as well, if you are going through a large National or regional bank, they are likely going to have hard guidelines. If you can develop a relationship with a community bank or credit union they are more likely to be flexible on their lending requirements. The rate may not be as low but it should steal be decent.

Post: Firing a Property Manager

Preston WallacePosted
  • Investor
  • Birmingham, AL
  • Posts 9
  • Votes 1

In January 2021 I turned my first primary residence into a rental when I took a new job and moved about 1.5 hours away. I had a lot going on at the time between starting a new job and getting settled in at my new home so I elected to hire a property manager thinking that would be easiest.

Turn the page to April, the tenant has been in place for 6 weeks now and April 1 was the first month rent due that was required upfront. On April 15th we have not received rent and the tenant will not reply to any communication. On April 12th see provided a 7 day eviction notice, following state laws. Ultimately, I think the eviction route is gonna cost more than we will ever recover so I have proposed to the PM that we offer a semi cash for keys if the tenant will move out by the end of day April 17th she will drop all late fees and if no damages have been done to the property she will return half the security deposit. Holding the other half as April rent. 

I plan on firing my PM after this is settled. I've never managed a property before but even I could do a good enough job to put a tenant into place that doesn't pay after one month. Any advice from anyone that has fired a PM before. The termination portion of the agreement reads as follows. "TERMINATION. Either party may terminate this Agreement at any time upon thirty (30) days
written explanation and notice to the other party. In the event of termination of management agreement
by owner during a lease term already negotiated by the manager, all service fees for the full lease term
become due and payable in full."

If I notify of termination after the current lease is terminated, do I have to wait 30 days before I can rent it out on my own? Or since no lease is in place can I fill it with a tenant of my own?

Post: Looking to purchase in the Birmingham Metro Market

Preston WallacePosted
  • Investor
  • Birmingham, AL
  • Posts 9
  • Votes 1

Hey All,

This week I accepted a job with a company in Alabaster. This was long over due as I had to put my search for my next house hack on hold back in May because I was uncertain if I wanted to remain in the Montgomery area. Now that I know where I will be I am happy to be back looking for that next house. While I could commute from Prattville, which I will be doing until I find a property, I know I will grow tired of this quickly. Thus I am setting my sights on the Birmingham market. I do have some familiarity with the neighborhoods already, as I spend a good bit of time on the weekends visiting friends. But I would love some feed back from some locals. 

I'm keeping my options fairly open at this point in terms of location and degree of work needed to be ready to move in but I do have a few things in mind. 

-Multifamily up to a quad - I have been house hacking a SFH for the past two years. I am not bothered by having a roommate. But I have a dog that can be rambunctious at times and I get paranoid that he might be annoying to a tenant. At the same time I feel guilty leaving him in his kennel all the time. I know a multifamily would give some of the financial independence that is great about house hacking but also provide some privacy so Chipper can enjoy his life outside of a cage. But I imagine like in the Montgomery area, these properties are hard to come by.

-Live N Fix/BRRRR - My plan is eventually to start BRRRRing properties and I'm actually reading the book on estimating rehab costs currently. I would like to give it a test run before I dive head first and kind of have that safety net to fall into of it being my primary residence if things went not as planned. Biggest down side would be potentially extending that 2 hour round trip commute a few months longer than planned depending on the degree to which the property needs to be improved.

- Move in Ready - For simplicity, I have considered the move in ready route then attempting option 2 in a year once I can move out. I would look at a SFH for this and try to find a roommate that I know well enough to trust living with and would also not care about the dog. Obvious down side is the lack of value add, maybe I could offset this in a high appreciation area though.

Like I mentioned, this is a very fluid process but I would love to hear any feed back or ideas. I do plan on holding this next property as a long term rental as well.

Post: Analyzing a House Hack (Prattville, AL)

Preston WallacePosted
  • Investor
  • Birmingham, AL
  • Posts 9
  • Votes 1

I have been looking for my next house hack for a little over a month now. For the most part most of my analysis on a property is done based on expectations once I move on and this becomes another rental property. The issue I am running into is I cannot seem to find anything that meets either the 50% rule or the 1% rule in the Prattville Alabama market. Maybe I am being too picky in the area I want to live in the 1-2 years I am there. Are there any other house hackers in the area that use any different analysis when looking for an investment that will be a house hack initially? When considering the 50% rule I am factoring a 3.5% down payment on the property.

I have been monitoring the market in my area for the past few months looking for a second home to house hack. So far the only houses I have viewed have been built within the past 15 years and only need minor cosmetic updates or homes that have already been rehabbed. However, I have not had much luck finding something that checks the boxes and is within the price I'm looking to spend. 

I have monitored some listings that would require more than paint and floors to achieve maximum value, but I have not made the time commitment to view them because I am not as familiar with the financing options for these homes. I have done some light reading on the FHA 203K loan, but did not find as much on Conventional rehab loans. I'm still waiting on a response from my lender as well with more information on these options. Does anyone else on the forum have any experience with these loan types?

Originally posted by @Greg Parker:

Nothing so far. But, diversity in your portfolio is always a good idea. STR folks may be experiencing some income loss. Not sure what's gonna happen with all these folks that decided to not pay rent. My tenants paid.

My flip project is almost ready for sale.  Thankfully, the prices have not dropped, yet.

Greg,

Do you think we might see any pull backs here in Central Alabama on rents or a drop in housing prices? My gut tells me nothing drastic, I'm close to a few different lenders and they indicated the banks they work for are going to avoid foreclosures if possible. Granted I assume that is based on the idea that most of the state and jobs are back up and going within the next month.

I currently house hack a home in Prattville that I purchased in 2018, I have been looking at houses the past two weeks. Plan is to purchase a house for me and my current roommates to move into and rent out my current house. I have a renter lined up if I can be in my new home by the end of July. I am torn between taking my time and playing a potential pull back for a good deal or finding something that meets my criteria and pulling the trigger. I plan to keep this second house as a rental too so I'm thinking I have a little wiggle room to pay a little more and not worry about a small short term pull back. Thoughts?

Post: House Hacking (Fixer Upper vs. Move In Ready

Preston WallacePosted
  • Investor
  • Birmingham, AL
  • Posts 9
  • Votes 1

Hey everyone, I am new to the BiggerPockets community. I have been listening to the podcast for the past few months as I have been exploring the idea of building a portfolio of rental properties. I am an accountant in my mid twenties in the Montgomery, Alabama area. I currently have one property that I am already house hacking but that started unintentionally as a new employee at my firm needed somewhere to leave and I had just purchased a 3 bedroom house in the area. 

Since I have begun listening to the podcast, I have developed the strategy I would like to take in building a portfolio. I hope to be able to buy a new house every 1-2 years. Move into the house and get a roommate, preferably two. and do this until I have 5 rental properties. After that I would aggressively payoff all the mortgages. Housing in my area is rather affordable so I have faith this strategy would work well. 

My question is I am not sure what type of property I want to pursue next. Top of the list would be a duplex, tri, or quad. However, those are hard to come by in my area so I'm not getting my hopes up. Next would be an ADU, but again there does not seem to be a huge market for these in the central Alabama area. So that leaves me with finding an older home that needs a face lift but I could likely start with more equity and a lower payment, or moving into a newer home for more money.

I would love to hear any advice from other members of the community that experience in these areas.

Side question. I was able to get a CRA loan on my current property. Does anyone know whether there are any stipulations that would prevent me to turning that home into a rental property? I have already lived in the home for one year. I do not want to have to refinance if I can avoid it.