All Forum Posts by: Rik Hunter

Hello! @Joey Wilson

TLDR: Buy a duplex. Live in one side. (A VA, BRRRR-ish story)

I'm trying to figure out my 3rd! But what might help some here from my experience is how I got to my modest level. 

My current situation: I have a (previously house-hacked) duplex and now a SFH that I'm rehabbing. Becoming an investor was easy for me because I was too poor to not be! Really, I couldn't find a SFH in my budget that didn't need to be gutted, and because I was using a VA loan, it had to pass the VA appraisal process.

So I switched to multifamily and lucked out with getting the second duplex I looked at. The tenant on one side covered the mortgage, taxes, and insurance, and I could focus my money on rehab. I can't think of a better first experience (except for the tenant's some time live-in boyfriend, baby-daddy felon). 

The second property came from walking the dogs. We were finishing up the rehab of the duplex side we didn't live in and saw that a house about 5-6 doors away was up for sale. We checked it out, and loved everything but it's need for smoker remediation. Walking back a couple doors, when ran into the corner lot neighbor who was putting his FSBO sign out to take advantage of the traffic. We talked, walked through the house, and made an offer.

This was another VA loan, so it took about a month to close. After moving in, I rehabbed the duplex side we had been living in. Now I'm working in the SFH. Getting another property is going to be tricky.

1) I had already refinanced the duplex before finishing all the rehab. The rates (beginning of Covid) were too good to pass up with all the equity sitting there from 5.5 years). That funded completing the rehab and closing on the SFH. Now that it's done (November), I can't refi as a VA loan because it's not my primary residence.

2) I'll have to complete rehab on the SFH, refi it as a VA loan and use to refi the duplex as a commercial loan (I think).

3) Then I may be able to go get another property using a VA loan as long as it's my primary residence.

4) Then rent out the SFH.

It's not your standard BRRRR, but you work with what you'v got.

The backstory is that I bought a duplex in 2014, and I've taken depreciation on something at some point in some way in TurboTax, lol. This year I did lots of rehab, mostly interior, and I've been trying to be much better at bookkeeping.

Since April, I've rehabbed both unit, included new appliances, and I just finished "The Book on Tax Strategies." I knew the chapter on depreciation would be important, but I'm still a little confused, and I'm pretty sure I'll need to find a REI-friendly tax specialist this year.

But basically, while taking depreciation on the building, how do you also take depreciation on items like appliances and flooring? 

I'm about to start looking for a GC to build a 1/2 bath in a SFH home for me, but this summer/fall I couldn't even find someone to pull a fiberglass bath/shower combo out of another rental and replace it. They've been so busy with all the new construction and the post-tornado rebuilds. I ended up going with refinishing it because Miracle Method was available, and I wasn't going to use one of the high-end bathroom contractors because they want you to use their products—as in $5,000 for a bathtub/shower. lol.

Maybe it's the size of the project, and yours is quite sizable. You can check you J. Scott's BP book on reno costs. The new edition is 2019, I believe. Good luck!

Newbie investor, and my situation is likely atypical, this being about VA mortgages.

I bought a duplex several years ago (0 down at 3.75%; house-hacked) and refinanced at the started of Covid before I finished the rehab on both sides. We were living in one side and the other had just emptied. The rates were too low to pass up. I cashed out about $53k to pay off the rehab I had already done and to rehab the unit we were living in. 

At that same time, a single-family home down the street was sorta up for sale (I knew the owners from walking the dogs), off-market, and was below market value. I was able to purchase that on a second VA loan, bought points down with some of my refi money. Overall, it was great, but now that the duplex it done, I can't refinance it again with a VA because it's not my primary residence any longer (well, that's what the bank said). I know the value is likely up $25k-40k in my market.

Choices I see:

1. Leave loan alone and get an appraisal just so my insurance covers the greater value. 
2. Get a conventional loan and pay the 5% down? Navy Federal says it will only give me a 15 year, which takes my cash flow from $510/door to $245/door. I'd also have to have about $12k for the down payment for the new (high-end) appraised value (Not sure if I could use a check from a credit card, lol. I don't have the cash.). A 30 yr at their rates would lower my current mortgage because it's going from 3.0 to 2.125%. 
3. Or don't worry about refinancing the duplex but get a new appraisal for insurance purposes. 
4. And/or get the new duplex appraisal for insurance purposes and put that $12k that would be for a refi down payment into the SFH, which can easily be spent on putting in a half-bath (it's a 3-1) and other upgrades. Then, refinance it—fingers-crossed that the rates remain low over the next year.

Sorry if this is in the wrong forum, but there isn't one specifically for VA Loans, but maybe it's "conventional" enough. I'm a real estate rookie and veteran with one duplex that I've rehabbed and rented out (We were BRRRing, no last R as of yet, until this past July when we moved into a SFH and began rehab on the unit we lived in). I contacted my current lender, USAA, but they're "not currently" offering IRRRLs and can't say when they'll be offering this product in the future. A couple questions:

1. Could I go to another lender who is offering the VA IRRRL and move the mortgage over to them?

2. Should I order a new appraisal, no matter what happens with lenders, so I can have the new value on hand and use it to up my insurance?

3. Things I'm missing? 

Thanks!

I don't think this sort of list is all that useful (at least in all cases) because cities are large, and the crime-ridden areas are relatively small. I'm in Chattanooga, and I wouldn't invest in a particular area east of the downtown, but violent crime is quite low everywhere else. 

City-data used to have a violent crime map overlay that showed a SW to NE channel of violent crime, but I can't find that map anymore. Outside of that channel, you've got little to worry about. 

I agree with @Jessica Lombardo. $115,000 would have been a good price in an okay area 5-6 years ago, so it might need a load of work and/or be in a less-desirable area. 

I'd like to know, too, and I'm guessing that they're in short supply. I had a great one who moved. I then used his helper, but he wasn't as good as I needed. No attention to details. 

If there's more population growth in Chattanooga that means more demand for housing, and the demand is very high now. Houses from the 1950s-60s that I would reasonably price at $150k are going for $200k+. These SFHs go fast, too, so as a newer investor, I think I need to be looking for distressed properties.