All Forum Posts by: Rory Coyle

Hey Jennifer - I assume property needs to be delivered vacant? Would they be alright with one unit vacant?

I'd also start networking with other flippers in your area. I've found IG to be the best platform for that. There's probably at least a couple flippers in your area that are hosting meetups (depending on weather / how bad the covid spike is right now).

But if you've never flipped a home before, books/youtube can only take you so far. You need to surround yourself with folks who've been doing it. Those relationships are everything.

Hey Jake - I got into a duplex househack in San Pedro last year, rehabbed the rental unit and placed a tenant in November. Just like you, I was blown up asking if we accepted Section 8. We ended up with a non-S8 tenant, but we had a couple S8 candidates we were excited about. The main reason we went non-S8 was speed and timing.

I've got an S8 tenant (which I inherited) in an Ohio duplex and it's been a great experience. I'd be happy to take another S8 whenever she vacates.

To your question, I don't think you're going to come across too many S8 applicants with good credit. But they are out there. I'd lean into employment history and references. S8 has a few more inspection hoops to jump through, but so long as you are delivering quality product you should be just fine.

If you haven't already, definitely check out Joe Asamoah's BP podast. He's got some great tips for screening S8 tenants: https://www.biggerpockets.com/...

Jennifer Donley is another excellent resource for S8: http://www.section8educate.com...

Rory

Hi Nema - I'd consider getting your own roofing and painting quotes for the SFH. Have the contractor take care of the heavy lifting (ADU project).

I agree with Bruce. Outside of roof, costs seem fairly expected. That roof seems expensive though... without knowing the footprint/sf of your SFH.

Hey Alex - welcome to the journey! I'm a fairly new investor as well - house hack in San Pedro and investment duplex in Ohio.

I'm happy to chat anytime too.

Good luck!

Rory

Hey Jason - congrats on taking action! In all honesty, one isn't better than the other. Whichever one gets you moving first is the right one, at least imho.

If you are trying to decide between the two strategies, it really comes down to what your short-term and long-term goals are... as well as your current capital position.

While it takes more work, it's definitely possible to house hack in LA on a 3.5% down FHA loan. You likely won't be cashflowing out of the gate (even with your tenants), but you will experience the other benefits of owning RE: a) tax benefits, b) principal paydown, c) appreciation / equity growth. So, you may buy something and still be "paying" as much on your mortgage as you are on your current rent. But you will have created a wealth building tool and put yourself in a position for long-term financial growth.

If immediate cashflow is your highest priority, then I'd recommend exploring an investment property out of state. I've got properties in LA (a house hack) and Ohio (investment duplex) and they are apples and oranges in terms of price points. But I'm very grateful for both.

Feel free to reach out anytime if you've got any questions. Happy to share my experiences.

Good luck!

@Edward Tamayo - Totally get the skepticism, but I second Rick's assessment. Get into a residential multi-family via FHA. It may take a little longer and the buyer would do well to work hand-in-hand with their agent.

I bought a duplex in Los Angeles in April 2021 with an FHA loan. It took about three months, but I looked at new listings everyday and analyzed 5-6 properties everyday. Made offers on three properties. First one, lost out in a bidding war. Second one, seller decided to remove their property from market. Third one was the charm and closed the deal.

BTW - the FHA loan limits are far higher than 600-700k. Here are the 2022 FHA limits for LA County: https://www.fha.com/lending_li...

The key to making a multi-family work in LA is rent. You need to find a property that 1) will be delivered fully vacant (ideal scenario) OR, 2) has existing rents within 80-85% of market rent. The majority of rents will be substantially under market rent. You just need to keep analyzing deals every single day and target properties will show themselves.

@Account Closed - Congrats, man! You're in an incredible position to get started. It's pretty much where I was 18 months ago. And I went back and forth on the same question - Do I invest in an OOS property, just to get started and start generating cashflow/appreciation/tax benefits... OR... Do I try to get out of my apartment and into a house hack in my home market, which like you is one of the most expensive markets in the country.

(Side note - I wouldn't get too hung up on buying OOS property through an LLC. Perfectly fine to buy in your name. You can always set one up after the fact, especially if you've got a growing portfolio.)

I decided to buy a duplex in Ohio first. Six months later, I bought a duplex in LA with an FHA loan. But now with some distance in my rear view, I honestly think there isn't a right or a wrong way to go. You could start with one or the other. The main thing is just to get started and get into one, especially with interest rates so rock bottom low.

One note I will say - if your primary goal is live rent-free with one property in Paterson, you may want to consider a conventional mortgage with higher down payment, just to decrease principal so that your monthly payment is lower and easier for tenant rents to cover it. But if you're willing to cover a portion of your monthly mortgage, then FHA is a fantastic option. And you may even find a solid 3-family that will bring you closer to breakeven.

BTW, here are the 2022 FHA loan limits for Passaic County, NJ: https://www.fha.com/lending_li...

Hey Andy - congrats on taking action! I'm happy to help and show you to analyze MF house hacks.

Thanks @Christopher J Driscoll - makes total sense. Was thinking about that last night how I had completely forgotten about updated parking requirements on new units. Thanks for chiming in!

Hey Daniel - Unsurprisingly, I'm sure, this answer will be different investor to investor. It really depends on what your big picture goals are. Do you want to be an active investor? A passive investor? Do you want to be part of creating deals, flipping properties, building a portfolio, buying a househack? Or are you simply seeking the highest CoC return in the most passive manner possible?

I'm in LA too and invest here, as well as Ohio. I'm a big fan of both in-state and out-of-state. I never considered turn key properties because I wanted the forced appreciation I could create in value-add opportunities. But I also wanted to be an active investor. That said, I've also been a private lender which is far more passive and was simply the CoC play.

I'd encourage you to first focus on your goals/time commitment/risk tolerance and then choose your strategies from there.