All Forum Posts by: Robert Leonard

@Dieggo Goncalves @Jason D. Thank you for the input - I agree completely.

@Andrew Flora Brutal, but true. That's exactly what I think as well.

@John Reardon if the numbers make sense, jump in.

I personally agree with you, but his argument is that he "legally" lives there. 

Robert Leonard

@Nicholas Paros That's right - it's ultimately to qualify for the 3.5% down conventional residential mortgage.

@Trent Ecklar that’s great! Good luck with the property.

I do not have any properties in Ohio, yet. I expect that I will within the next year or two. Right now I am currently focusing in New Hampshire, but will be looking for opportunities across the country.

A friend of mine and I were having a discussion about his current situation the other day, and I'm curious to hear others opinions, specifically those active in the BP forums. 

He currently lives with his girlfriend and 6-month old baby in their single-family home, which they bought in April 2018. He wants to get into real estate investing with the little money saved that he does have. I told him to look at house hacking a multifamily property, but his girlfriend doesn't want to live in a multifamily property. 

He was wondering, once he has lived in his single-family for more than one year, can he purchase a 4-unit multifamily property as an owner-occupied property, if he just changes his legal address to the new multifamily property but doesn't "live there"? Since the property would be in the same town/state as his single-family residence, changing his driver's license/mailing address/legal address wouldn't be a big deal. He was saying the new property would be his "legal" home, and they'd just have a second house (the single-family residence where they currently live). He would make sure that he DOES NOT rent out one of the four units, to keep as "his unit". He also said that if the other three units at least broke even (or made a small profit), that'd be fine for one year, at which point he could rent out the fourth unit and increase his cash flow.

We talked a bit about this, but I wasn't sure what advice/guidance to give him. This seems to be somewhat of a "gray area". What do you all think?

Robert Leonard

@Debra Bennett In short - when you refinance, you get your cash back out, but you also increase your mortgage expense. If you are able to increase your rents because you rehabbed the property and it covers the increase in mortgage payment, GREAT. If not, you'll have to make sure you run two scenarios before purchasing the property - one with the cash flow numbers before it is refinanced, and one with the cash flow numbers after it is refinanced at the higher amount. If the numbers don't still make sense after it's refinanced for a higher amount, then the deal isn't a good BRRRR candidate.

Robert Leonard

@Adam Scheetz Personally, $120 per door, or even $135 per door, doesn't excite me. Especially given where we are in the market cycle. I'd continue looking for other/better opportunities with a higher margin of safety.

Also, I have a spreadsheet I use to analyze properties if you're interested in using it. Just shoot me a PM.

Robert Leonard

@Trent Ecklar curb offers only and you're not estimating any repair costs? I would certainly estimate for some repair costs, and I'd estimate on the heavy/conservative side. The closing costs also seem a bit low, although that is possible - it varies from lender to lender.

Your vacancy rate is WAY too low... I usually estimate 8% for normal properties (one month per year). Your CapEx and Repairs are also a bit lower than what I would usually use, especially on a sight-unseen property. I usually have them at 15% total.

If you increase these estimates you'll see your monthly cash flow come down, and likely not be as appealing. You'll also see your CoCROI come down when you include your repair costs.

Robert Leonard

@Konstantin Klitenik Are you moving into a bigger place in Cambridge, or somewhere else? Are you open to using your profits to buy a bigger rental property outside of the Cambridge/Boston area? If so, I personally would sell the condo and use the ~$275k profit as a 25% down payment on a $1.1 million apartment complex outside of the city.

Robert Leonard