All Forum Posts by: Robert Leonard

@Jamee West Welcome to BP and the world of real estate investing! House-hacking is a very good way to into real estate investing.

In my opinion, one of the biggest things to consider when considering house-hacking is the property's value as an investment both when you live in it and after you leave it. When analyzing a house-hack rental property opportunity it is very important to run the numbers both ways. Most people forget that they need to consider the property from an investment perspective when they no longer live there. If it only makes sense in one scenario but not the other, it's likely not an opportunity you want to pursue. 

The biggest tip I can give on obtaining a mortgage is to be very organized and have your credit in order. This goes for all mortgages, not just FHAs. Your life will be much easier if you have all of your paperwork ready ahead of time and if you have made sure you haven't applied for any credit recently/made your credit as strong as possible.

I have created a multifamily rental property calculator in Excel that I find to be a very valuable resource. I'm happy to share it with you, just send me a PM. As far as evaluating a deal for cash flow, I can walk you through/chat with you about that using my calculator if you'd like.

Hope this helps.

Robert Leonard

@Keith Manchester CapEx and Repairs can vary from state to state, but it more varies with the price of the home. Since the major repairs you'll have to do are relatively the same price regardless of the price of the property, you'll have to allocate a higher percentage of cheaper properties than you would for a more expensive property, so keep that in mind.

If you live in the area, you can estimate the water and sewer yourself, or you should be able to call the town.

CoCROI is Cash on Cash Return on Investment, which the amount of cash you'll receive in year 1 vs. ALL of the cash you had to put into the deal to get it.

Yes, you can use this calculator if it is a house hack. What I do is usually calculate the figures with one less unit (the one you'll be living in). If the cash flow is break-even, that's great, that means you're living for free. If it's a bit negative, that is okay in a house-hack, that just means you'll have to pay that much for your living expense. As long as it isn't close-to, or more than, the amount you'd pay for other living arrangements, it can be a good deal.

That being said, you'll want to run two analyses for a house-hack. The one I just mentioned, for when you live there, and then one for when you eventually leave. You have to make sure that the property makes sense from an investment standpoint when you leave. If it doesn't look good in both analyses, you should pass on the deal.

Hope this helps.

Robert Leonard

@Derek Brine Welcome!

I am an active investor in Nashua and other parts of Southern NH. I'm happy to discuss anytime! Feel free to send me a PM.

Robert Leonard

@Ara Babayan I agree with @Ryan Blake . Start building those relationships now. 

Another thing to keep in mind is a seasoning-period. How long have you had the loan/property? Some banks/mortgage companies will require you've had the loan/property for 6-12 months before you can refi.

Robert Leonard

@Drew A Roque Given that you have such a short period of time before you could pay off your student loans, I'd just pay them off and then move into real estate investing. If you were going to be paying them off over the next 10-20 years, then I'd say to look at your ROI on your investments and compare it to the interest rates your paying on your loans. However, in your case, I'd just pay off your loans and then focused on real estate investing. Also, given where I believe we are in the current market cycle, you might be better off by waiting a bit to buy your first property, anyway. You might have even better deals to buy in 4+ months once your loans are paid off.

Robert Leonard

@Annette Goin Yes, you should be able to wholesale a house from an LLC. Ultimately, you are still getting the property under contract for a lower price than someone else is willing to pay - a wholesale deal.

Robert Leonard

@Keith Manchester I agree partially with @Chandler Gene Beck . I don't personally feel your vacancy % is overly high. I usually estimate 8-10%, so I'd say 10% is a good conservative estimate. However, I do agree completely that your CapEx and Repairs are FAR too low. Those together should generally total about 15%. Also, are you missing water and sewer? How about any other expenses?

Overall, this doesn't seem like a great deal. CoCROI is satisfactory because you're putting so little cash into the deal, but the monthly cash flow is unacceptable. I'd keep searching for better deals.

Robert Leonard

@Rita Solomon-Moore It is tough to say anything to this property without knowing the area and knowing if the ARV is accurate, but overall the figures look good from a high-level perspective. Without having the estimated repairs priced out and just an arbitrary number of $50k as repairs it's tough to say if the repairs are accurate, but it seems reasonable, at least.

Robert Leonard

@Viktor Mironov Welcome to BP and starting your real estate investing journey!

Although no one can specifically tell you if this is the right investment for you, I'll provide how I would personally approach it.

At the peak of a cycle like we're at now, I personally wouldn't pursue this property/area. If we were just coming out of a recession, it would be far more appealing to me. This is more of a speculative investment, of which I am not interested at this point in the market cycle.

Robert Leonard

@Ryan Brady It could be a lot of things, so it's tough to say exactly what it is, but it could just be a poor tenant-acquisition strategy, very strict standards for who they'll rent too, poor property management company, bad advertising of vacancy/availability, etc.

Robert Leonard