All Forum Posts by: Rachel Davis

"Only a Sith deals in absolutes." - Obi-Wan Kenobi

Am I quoting Star Wars on a real estate forum? Yes.

Is Obi-Wan Kenobi wrong? No.

Hi Forrest, welcoming to the addicting world of real estate investing! 

In all honestly in your situation, I wouldn't put any money into real estate until securing stable employment. Real estate is a very expensive game and you need to make sure that you are financially stable and able to withstand potential losses. Patience is a virtue. 

Getting a mortgage without a job will be near impossible without going with an alternative loan product that will come with a high down payment and high interest, which is not the "househacking" way. 

This is why so many people hate being landlords. For many, it doesn't feel worth it. You didn't even mention tenants who don't pay rent, evictions, vacancies, HOA violations, the consistent rise in taxes and insurance, bad property managers, and the many other issues that cut into your profit.

This is also why so many landlords are moving toward alternative strategies such as short term rentals, medium term rentals, PadSplit/coliving, sober living (like me), and more. 

You can definitely get HELOCs on investment properties, but the interest rate is high. I've been told by Ormond Mortgage Group that they could get me a HELOC on an investment property at around 10% interest, 10 year term. DSCR doesn't typically source funds so it's possible to use as a down payment.

Full disclosure: I have not gone this route personally, and this is definitely a high-risk scenario. Just sharing what I've found in my own research trying to solve this same issue. 

Dave Ramsey had $4m in real estate in 2007 and then lost it all in 2008. His takeaway from his loss was that all debt is inherently bad and people should only buy investment homes in cash. 

This is an irrationally risk-averse take on finances. 

You could potentially talk with a financial advisor to help you understand how much risk would be appropriate for your personal financial situation. 

Hope this helps!

At the end of the day, the law is the law. Does this particular law get enforced often? No. 

Is there a risk that it could be enforced? Yes. 

Is it a good idea to base an entire business model around something that breaks the law? No. 

There are many other cities out there who have less restrictive occupancy. I've researched this in many cities and have never even seen one as low as 2-3 unrelated individuals.

I own and operate 5 sober living homes in Florida and would be willing to connect. I would not recommend any online courses like the above reply suggested. 

Whoever said that an assisted living facility is a passive real estate investment is lying. It's a full-blown business with staff. 

The medical industry is fueled by referrals, so you'll need to get out there and build relationships that will keep your facility full. 

It's also about filling the gap in your area for insurance. For example, in your area are there no assisted livings that will accept Medicaid, Blue Cross Blue Shield, etc.? These days insurance companies have the reputation for paying you for the service and then trying to claw back the money later. 

Can you make money? Absolutely! Is it passive? No.

What I do is sober living, which is a bit similar in nature. Some things that jump out at me:

1) Many cities have codes that establish the number of unrelated individuals that can live in the home, so you will need to do some research on this in your area. 

2) You may need commercial property insurance, as your insurance company will likely consider this a business exposure. This can be quite expensive. 

3) Make sure you buy furniture with a high weight capacity. 

4) This arrangement doesn't attract the best tenants. If you get a bad tenant, the rest of your tenants have to live with this person until you can successfully evict them. Have you thought about how you might handle that situation?

Hope this helps and good luck!